Intro & Investments So Far - Any Thoughts?

[Tim86]

Hi, I just stumbled on this forum today, looks like a great place for information and advice.

I thought I'd post about my property investments so far and my future investment plans as way of introduction, but also to get your thoughts and feedback.

12 months ago I had no property at all. So all these purchases are since then.

A summary if you don't want to read the full details:

Property One, Principal Place of Residence. No profit so far just sinking money into reno's right now.
Property Two: $115 000 capital gain and currently breaking even with costs/income.
Property Three: $48 500 capital growth with $120 per week profit.
Future plan: Develop property one in order to temporarily rent downstairs and pay down mortgage.
Possible 4th property purchase in the next month if possible, otherwise I will go straight into developing my own property.

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In more details:

PROPERTY 1:
Principal Place of Residence: 8 k's from Brisbane City on the southside in Salisbury. 809m2 land. Purchased for $412 000. House is an old 100m2 workers cottage that I'm currently renovating. Project plans are to have the house raised and extended over the next 12 months. I'll be doing a lot of the work myself. House will end up being around 400m2 (2 stories 10mx20m). Cost will be $120 000. Will do downstairs as dual living temporarily to fetch an extra $350-$600 per week depending on whether we rent room by room to students or we rent to a couple.

PROPERTY 2:
First investment property. Was next door to my property. 1600m2 land. Post war stucco house probably 170m2. Purchased at a mortgagee auction for $370 000. Total cost including stamp duty and extensive renovations (new bathrooms, new rooms, finished unfinished walls, plastering, painting, etc...) = $385 000. House was uninhabitable at time of purchase. It is now a newly renovated 4 bedroom house with 2 bathrooms currently rented for $650 before bills. It currently breaks even, but after finishing the grannyflat it will make me $200 per week profit. House is also worth about $500 000 now after the renovations. So capital growth was $115 000.

PROPERTY 3:
2nd investment property. Still in Salisbury. 630m2. Post war house, originally 3 bedrooms and in poor condition. Now a 5 bedroom house since I converted the sunrooms into bedrooms. Purchase price $305 000 due to it being a deceased estate. Total costs after renovations and stamp duty $323 000. The property is worth approx $420 000 now. Current rental return = $755 per week. This one is particularly profitable but me and my wife went in halves with my sister, so we only see half the profit. My half of the capital growth = $48 500. My weekly rent profit = $120.

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Please note I don't rent to any more than 5 unrelated people in any of my properties as per council regulations. However these properties are rented on a room by room basis with bills included in the rent, so rents are higher than if rented as a whole house. The properties are positioned in a good area with high demand from students of the nearby university.

I also do get the renovations done at about 15% of their normal cost because me and my dad do the work. My dad is a tradie and has taught me how to do the work (I'm actually a childrens counsellor so haven't got a trade myself).

Anyway that's my current situation. The goal is to get to the point where I can work just 3-4 days per week and my wife doesn't have to work.

As all my properties will be positively geared I will just hold onto them for the foreseeable future and use the rents to supplement my income.

It's been a long hard year with not many days off, as I've been renovating in all my free time. But it's starting to pay off. I figure $163 500 capital growth and positively geared properties paying just over $300 per week profit for the foreseeable furture, is a pretty good effort in my first year of property investment. Especially considering the market has just been going sideways lately.

Would be great to hear some feedback/tips and I look forward to reading about everyone else's projects and investments on here.

Thanks

Tim

 

[willair]

PROPERTY 2:
First investment property. Was next door to my property. 1600m2 land. Post war stucco house probably 170m2. Purchased at a mortgagee auction for $370 000. Total cost including stamp duty and extensive renovations (new bathrooms, new rooms, finished unfinished walls, plastering, painting, etc...) = $385 000. House was uninhabitable at time of purchase. It is now a newly renovated 4 bedroom house with 2 bathrooms currently rented for $650 before bills. It currently breaks even, but after finishing the grannyflat it will make me $200 per week profit. House is also worth about $500 000 now after the renovations. So capital growth was $115 000.

Very few resi-blocks above 1600sqm's in Salisbury and i think i know the property,but just have to ask one question what sort of insurance do you use?,may even been standing behind you at the auction..welcome..

 

[Tim86]

Technically it's a 1315m2 block on paper but it's actually 1600m2 which is just a nice bonus. I have 2 golden retrievers that love the extra land to run around in (as the property is next door they get use of that land too).

I use landlord insurance through westpac right now. They pretty much told me that if I didn't use them they wouldn't give me as much of a discount on my variable rate.

Thanks for the welcome Hopefully I don't see you at too many auctions... you'll drive the price up lol.

 

[RPI]

Hi Tim
Dual living is illegal in Brisbane. I have several Salisbury clients in trouble with Council for doing so, enforcement is increasing, more staff and bigger budget next financial year to catch more. Gumtree is a great source for Council for catching people. I am getting new enforcement notices about this almost daily. It is expensive and messy to deal with or cop it an let the tenants walk.

Why not subdivide block and make money that way, possibly hook you up with a free house and move it on to block and have a second legal dwelling.

Granny flats may not be rented separately to the house, again illegal. Qld Court of appeal decision has reinforced as such. City Plan 2012 makes it much much worse and way easier for Council to catch you, no grey areas at all in the new one.

I can help you look at other development potential, Pm me the address and will happily explore options in public through the forum (Identifying info removed). I would much rather you spent money on professional fees with someone else making money, then have to pay me to get you out of trouble. My record for appeals filed against enforcement notices for granny flats in one week stands at 11. I fear I am going to break that in the new financial year.

D

 

[Tim86]

hi thanks for the info. we wont be renting anything seperately. the house with the granny flat will just have 5 people on the one tenancy agreement.

our own house will have just the one tenancy agreement too. will set it up as if we are just renting rooms but there will be a kitchen downstairs as well. downstairs will be connected via a staircase so it will be more so like we are just renting out spare rooms.

not too sure if that solves all the issues but hopefully its on the right track.

 

[RPI]

Hi Tim

As long as it is informal, no leases no bonds, no legal right to exclude from an area you should be OK. It is a question of degree in each case but sounds like you are covered enough that a response from you to Council to a show cause notice will make it go away.

D