Investment Opportunity???

[mike2002]

I need some advice on an investment.

I have secured two new townhouses in Yarraville.
They will settle in 12 months, and are 25 squares each and valued at $550K each. I have negotiated to get them both for $400K each, maybe a bit under that.
They will be built by an award winning builder and
have better fittings than the comparable properties next door, which are selling for the higher price. That development is called "YV".
The properties are located on Foggarty's Rd, Yarraville.

I have no equity, so I was going to offer one townhouse to an investor in return for securing my deposit bond for the other house.

Do you think anyone will do that?
Mike 0402 216 106

 

[Tony]

Hi Mike,
Just out of curiousity what the hell are you doing trying to buy property with no equity (i assume no cash either)? ...........lol
Have you had the property indpendently valued by a panel valuer?
Also i am curious why a developer would sell you a property for 30% under marker value. Usually the developer's margin is 15%-25% so why are they discounting it so much, especially in a climate where they don't really need to discount quite so much.

Don't forget that the builder/developer needs to pay GST on sale price (approx $44,000) although they do claim some GST input credits. So if i'm correct GST on sale of $400,000 is $44,000 + any GST input credits. Therefore builder sells at $400,000 then must pay GST of $44,000 plus claims any GST paid for goods & services used in the construction of the building. So if property cost $250,000 to build GST paid is probably equal to $27,500, which is refunded later on when paper work is lodged with ATO. So $400,000 - $40,000 + $27,500 = $383,500, this is how much i think the builder will pocket if my assumptions are correct. But the point i am trying to make is why is he discounting the property so much? Has he done his calculations incorrectly or is he desperately in need of cash, or maybe your estimations are wrong?
Also Mike how many properties in the development? Maybe these are presales & he is prepared to discount to obtain finance?

Also what is the expected yield?

Not sure i would give you anything for sourcing the deal other than a thank-you & a beer. Although you have sourced the property, you need an investor to assist you with the purchase, so i suppose that each brings something to the deal so why should the investor pay for that?

Maybe i'll call you to discuss this & maybe i can assist.

Regards Tony.
PS. Sure your an investor & not a marketer/reseller?

 

[mike2002]

Reply

As discussed last night on the phone, I'm just a young 27 yo guy trying to make his first million before the age of 30, without many assests!

Can anyone help me???!!!
Mike

 

[ocean view]

first million

mike

I see where your idea is going!
The answer is yes,,but

1) The property market with that post code must be rising at least 25% p/a

2) The home will need to also move that % after purchase date

3) Off the plan or delayed settlement is almost mandatory

4) Your lender has no problem with the increased valuation!

Mostly these areas are near the ocean.

It mainly comes down to the demand in the product!!

But it can be done! & good profit obtained! A lot of home work needed!!!!!!!!!!! a lot.. But it's fun learning

We have completed a dozen over the past 24 mths!!!!!!!!!
But u have plenty of time!!!!!!!!!!

cheers & good luck
Bribie

 

[ocean view]

re: investment opportunity!

This relates to Mike 2002 question!

Also needed is someone to help u with the deposit!! That part I can not help you with.

I use bonds through my own sources.. But If you have a nice relative you can get a bond against a house! (Your cooking!)

But as per last message you better be sure of the growth factor%

The last 3 we bought settled at LVR 73% AFTER ALL COSTS enough room to borrow 2 years int in advance.. That's an IP!!!!

cheers bribie

 

[foxysilvers]

How can I say this nicely..............Fogarty Road backs on to the West Gate Freeway and is well within humming distance.
It shares a Spotswood/ Yarraville entry in the Melways but a different postcode...........but hey Yarraville stretches nearly to Geelong now according to the local agents.
I looked at this stuff about 12 months ago when the market was hot and figure that today a block would be worth about $150,000 and a 25 sq. dwelling at $10,000 per sq. equals $250,000........Total $400,000........and I still would not touch it.
These properties are just investment grade and full of renters and unlikely to appeal to Bill and Ben and their 2 dashounds or Simon and Sacha and their BMW..........just a little too far from the village.
Seriously , there will be some great buys coming up in Yarraville in the next 12 months so spend a little time checking comparable sales and asking advice from people without a vested interest.
Better to be a millionaire at 35 than a bankrupt at 29.
Cheers

 

[mike2002]

Thanks for your advice.

I checked out the comparable sales in the next door development "YV", and they are selling for $550K, equivalent to my one.
I was concerned about the freeway too, and there are powerlines overhead!

The YV development is 70% full of owner occupiers, according to the marketing manager.

I think I'm already a bankrupt at 27!!!

Mike

 

[july]

Hi Mike
Just a word of caution, make sure that you have all the facts, just don't take the word of the marketing manager that 70% of the properties are owner occupied. It may well be worth getting an independant valuer regarding the seemingly high price of the property, $400,000 can buy you something really nice in a good central location in Yarraville not to mention what $550,000 would fetch. Have a talk to the many agents in the area, many of them are oversupplied with rentals at the moment and I know of one particular agent who is actually refusing to manage some properties.
I do wish you well with whatever you decide.
Best of luck.

 

[mike2002]

Thanks to everyone who has offered me advice.
I've decided to give the Yarraville townhouses a miss, however I will find a new deal this week and let everyone know ASAP for your words of wisdom.

Mike