john the builder

[john the build]

Hi everyone,
this is my first time using Somersoft there is some interesting stuff talked about
and you can always learn something new its great. The astute investors have a 7 to 10 year plan and then they flip them and replace them with new ones again
I believe that this is the best way they have found for tax deductions, need to look at what your own situation requires but this is a general rule of thumb
scenario .

 

[WASP]

Hi John

Why flip rather than access equity?

 

[Cards]

Flip Flop!!

Never Sell! - Unless the IP is under performing.

 

[john the build]

Hi Wasp,
from what I have learnt from some of the investors I have built for is that
after 7 years the warranty period is over and the home needs a freshen up
but some times they need to hang onto it for a couple more years to maximize the capital growth hence 7 to 10 years ( please keep in mind I am no expert in investing I am a builder and still learning allot about investing in rentals).
I hope I have answered your question in an understanding way?
with some of the homes I have done for my clients I have been lucky enough to have been able to be on site with the valuers and I have found that they have valued the home at between $10,000 and $20,000 more than what I had just built it for , that gives me a great feeling that I am doing what I should be Doing for my client.
Sorry mate looks like I'm doing a commercial here ay
Please feel free to ask more questions
Regards John

 

[D.T.]

I have been lucky enough to have been able to be on site with the valuers and I have found that they have valued the home at between $10,000 and $20,000 more than what I had just built it for

No offense, but that sounds like a complete waste of time.

 

[Corey Batt]

No offense, but that sounds like a complete waste of time.

After interest costs, the investment to date might be going backwards.

 

[john the build]

Hi Cards,
I am still learning about rental properties and in some cases I think you are right
I think that while these investors are still in the work force they keep flipping them for tax reasons but I think that eventually when they retire they go for ownership so they don't
have a mortgage hanging over their head at least that is what I would do.

 

[john the build]

Hi Dave,
Townsville is just a large country town and we are a family business and rely on word of mouth and repeat business and I have found that a small bite of the apple is better than no bite at all .

 

[Corey Batt]

Hi Cards,
I am still learning about rental properties and in some cases I think you are right
I think that while these investors are still in the work force they keep flipping them for tax reasons but I think that eventually when they retire they go for ownership so they don't
have a mortgage hanging over their head at least that is what I would do.

So they sell, and pay a giant wad of capital gains tax to get some marginal depreciation benefits? Bzzt.

If it's a fundamentally sound investment, they could just access the equity and buy more, build more or whatever they liked.

Churning properties generally doesn't make for strong long term investment.

 

[depreciator]

John, what Dave means is that most investors would hope that after a house is completed the valuation would be more than $10-20,000 over the cost.

 

[Cards]

Hi Cards,
I am still learning about rental properties and in some cases I think you are right
I think that while these investors are still in the work force they keep flipping them for tax reasons but I think that eventually when they retire they go for ownership so they don't
have a mortgage hanging over their head at least that is what I would do.

Hi John,

Are you trying to replicate what they do, or are you planning on developing your own (tailored) investment strategy?

What works for one person, may not work for others!

 

[john the build]

Guys,
all very veiled points that should be considered and explored like cards said everyone's situation is different and we all need to speak to someone like Corey Batt before we put our hard earn t money anywhere or for that matter sell any investment.
Some of the Investors I built for had the 10 year plan and they been doing it for 12 years that I know of , I just ask all these questions because I would like to be self funded at retirement as the pension won't be enough to live on in a few years.

 

[john the build]

Thanks Scott, David
These homes were only $216,000.00 to build so they were between 5% and 9% capitol growth straight up , I don't know what they paid for the land.

 

[MTR]

Hi Wasp,
from what I have learnt from some of the investors I have built for is that
after 7 years the warranty period is over and the home needs a freshen up
but some times they need to hang onto it for a couple more years to maximize the capital growth hence 7 to 10 years ( please keep in mind I am no expert in investing I am a builder and still learning allot about investing in rentals).
I hope I have answered your question in an understanding way?
with some of the homes I have done for my clients I have been lucky enough to have been able to be on site with the valuers and I have found that they have valued the home at between $10,000 and $20,000 more than what I had just built it for , that gives me a great feeling that I am doing what I should be Doing for my client.
Sorry mate looks like I'm doing a commercial here ay
Please feel free to ask more questions
Regards John

Hi John and welcome

I am just throwing it out there as you are in the building game... I have been told that dual key living is quite popular in QLD???
Have you looked at this?? If you can achieve good cash flow from this product and growth perhaps this is a good way forward, or at least investigate this and there could be a nice niche market for investors.

I have a friend who is currently looking at this market in Perth, its basically one home which is designed for dual living, could also include separate entries. Interesting concept.

CHeers
MTR

 

[Cards]

Guys,
all very veiled points that should be considered and explored like cards said everyone's situation is different and we all need to speak to someone like Corey Batt before we put our hard earn t money anywhere or for that matter sell any investment.
Some of the Investors I built for had the 10 year plan and they been doing it for 12 years that I know of , I just ask all these questions because I would like to be self funded at retirement as the pension won't be enough to live on in a few years.

Questions are good!
Have your end goal for retirement in mind, and then work it backwards!

After that, the fun starts!
Set yourself short term goals - and write them DOWN. Pin them on the fridge, use them as your screen saver. Look at them weekly.

Tell your friends & family, this way they will be sure to remind you of your goals & take the P**s out of you if your lagging behind.
Its good motivation & I have achieved some great things proving people wrong!

 

[Jaggannath]

Sounds like a way to pay a lot of tax for peanuts of income... you'd be better off getting a bank to value, and using that equity for the next property. That way you'd have a number of properties rented out, gaining value while you're moving on. When they appreciated adequately, and you need the money for your own home, you sell the properties (which have now increased in value, while your mortgage has remained the same), and hey presto

 

[john the build]

Hi John and welcome

I am just throwing it out there as you are in the building game... I have been told that dual key living is quite popular in QLD???
Have you looked at this?? If you can achieve good cash flow from this product and growth perhaps this is a good way forward, or at least investigate this and there could be a nice niche market for investors.

I have a friend who is currently looking at this market in Perth, its basically one home which is designed for dual living, could also include separate entries. Interesting concept.

CHeers
MTR

Hi MTR,
I can only speak for Townsville and you are rite duel occupancy is becoming the way to get into the market I am soon to start the first of many duel dwellings , this is how we are doing it here , the Townsville city council has past new by laws that allows almost every block of land to be subdivided or strarter titled as of right so basically we are buying land that has a 20mtr frontage and spliting it into 2 blocks each with 10mtr frontage then I build a 4 bed 2 bath 2 car garage on them , I like to do it this way so that the investor has 2 homes (if they buy the whole package) but either way it is alot easier to sell and get more for them ( they don't have that slummy look like the traditional duplex). Very good investment.
Regards
John

 

[john the build]

Sounds like a way to pay a lot of tax for peanuts of income... you'd be better off getting a bank to value, and using that equity for the next property. That way you'd have a number of properties rented out, gaining value while you're moving on. When they appreciated adequately, and you need the money for your own home, you sell the properties (which have now increased in value, while your mortgage has remained the same), and hey presto

Hi Jaggannath,
100% right my accountant advised me not to sell any of mine just yet as the market here is about to head north , I am however putting one of mine on the market now it is a 2 story and it's under performing but I will still make ok money out of the sale and free up some cash (all though my not so good bank will take the lot , I will be changing banks in the near future)

Regards
John