Our new venture

[Tizzy]

Well the time is here and we are going to do something we've wanted to do for a long time. Mr Tiz and I are looking at property renovating as a business. That is, buy, renovate and put back to market again fairly quickly. The plan is that we get to the point where Mr Tiz can do this full time eventually, but I'm holding on to my day job for now.

We don't intend to live in the property and CGT will just be a cost of doing business. There's bound to be the odd project that it is better to keep and rent, but we do want to generate a replacement income. I'm sick of Mr Tiz being away on the mines.

If you have any pearls of wisdom, please share, I'd love to hear it.

 

[jingo]

If you have any pearls of wisdom, please share, I'd love to hear it.

Apart from saying it is a great plan and run with it I don't have the experience in that area to add any pearls of wisdom! Just looking forward to hearing what you end up buying and renovating.

Regards Jason.

 

[Nathan]

Hey Tizzy.

Congrats. You can write your own cheques out there in the reno world. Its all up to you to make the $$. There are plenty of ups and downs though. But is all fun.

Make sure u budget well, are cautious of your numbers aswell.

I can go on all day about this stuff, but I wont.

Goodluck

 

[Tizzy]

Thank you Jason & Nathan. We've wanted to do this for years but never had the opportunity until now. I'm very excited. I loved finishing our duplex builds last year.

I think we'll be looking at a lot of places though. Just as well I like looking at houses. I need a few more agents scouting for me I think. Most of the places we've seen are really too high in price for our purpose. We have to factor in so many costs plus a profit so that will stop me paying too much.

We've got most of the tools now and the trailer

 

[Propertunity]

We don't intend to live in the property and CGT will just be a cost of doing business.

Tiz, if you are doing this as a business, then you won't be up for CGT. e.g.if you are doing it in a company entity the houses you buy will be considered 'stock' and you'll only be paying company tax rates of 30c in the $ on profits after expenses (incl his wages).
You should seek accounting advice for the right entity/s to use for this venture. All the best with it.

 

[Xenia]

Hi Tizzy,

well done. I have friends that have done this well, and we started doing it years ago. I believe in a boots and all approach, if you are going to do something make it the ultimate success.

I would recomend staggering many projects at once so that you constantly have profits coming in. You can also employ a maintenance team if the work is there for them to do constantly.

My other tip is start with a business plan and a marketing plan. All of our businesses have gone well due to proper thought out planning.

all the best. X

 

[Tizzy]

Oh okay. I didn't know it wasn't called CGT when it's for a business.

There is an accountant involved so he'll stop me making too many errors hopefully.

We had planned to buy with an application for the finance approved while we are both still employed. If the first property is bought in a company name, then we may have an issue with proving servicability. Unless we just state upfront what we are planning (novel idea).

 

[Rolf Latham]

Hiya

The company would just be a holding entity, and would not be required to have its own income, since its guaranteed by the directors in any case

ta
rolf

 

[Propertunity]

Oh okay. I didn't know it wasn't called CGT when it's for a business.

Its OK - don't get me wrong, businesses can have Capital Gains too. Your situation will be that you buy a house, do some value add and then resell. The resulting profit is not treated as a Capital Gain but as a trading profit and taxed accordingly. Just like if you purchased pillows from China for $1, did some logos on them and resold them in AU for $5 - except this time it is houses.

There is an accountant involved so he'll stop me making too many errors hopefully.

Good

We had planned to buy with an application for the finance approved while we are both still employed.

Probably a good idea.

If the first property is bought in a company name, then we may have an issue with proving servicability. Unless we just state upfront what we are planning (novel idea).

Take the advice of your accounting professional, but I think you'll find that you'll be asked for Directors' guarantees so effectively you are going guarantor for your company - so it should not be an issue.
The issue will be, I think, obtaining finance for your venture in this credit crunch environment. Although if you have equity in property as security it may be OK.

edit: rolf was posting as I was typing

 

[Tizzy]

Hi Xenia, thank you for the encouragement.

This is going to sound really daft, but if you have a basic business plan are there professional people who will turn it into something workable? I like the idea of the concept being turned into a blue print for the operation. That isn't really something I would be confident with. I'm an artist, not an economist

It would probably help us with the financing side too because we don't have unlimited cash to pay for it all and we need to convince the bank that it will be workable, so a hard copy of a business plan sounds like a great idea.

 

[Aaron Sice]

congrats tizzy - if you want some basic drafting done i'll always be available for a forumite.

 

[Tizzy]

I think I understand what you are saying.

The directors provide the "security". We only have $200,000 to start this company up though, plus there will be the prospective property as security too.

Rolf, do you think we'll need to secure our ppor against the company also?

 

[Tizzy]

Great Bluecard! You're on.

 

[craigb]

some learned rules for you! take em' or leave em!

1, don"t procrastenate, just get in there and get out.
2, Spending big on things like tiles and paint will not raise the values more!Go cheaper cheaper better, great tiles for 20m2.
3, Think of getting a young gun in ie, twenty five bucks an hr, to rip out kitchens and bathrooms, do yards etc, money well spent,
4, (try) to negotiate access to a property before it goes to exchange and settlement.such a waste of time otherwise.
5, plan, plan, desighn the kitchen etc, the day you have seen it, have it ready the day you have the keys,
6, in a rising market, take your time , but its hard to predict, to in and out in the same market is the key,
7, target the cheapest home in the suburb, you will always come out a winner, even if it becomes an average home at the end.
8, enjoy what your doing,

 

[steveadl]

Couple of thoughts, one already mentioned:

- Do deals where you can get good early access so you can do a lot of the work before you have to buy the place and start paying interest.

- If your husbands mine job is FIFO ie. two weeks off/on or something similar - perhaps he can keep the job whilst you're doing the first reno or two to keep some extra cash coming in and you've seen the results of your first couple sales and everything is going according to plan?

 

[fernfurn]

Stick to your budget. Too easy to start thinking of it as your PPR and pay just that bit extra for that really nice basin, stove, taps, etc. Quite easy, particularly if you are an artist like me, to be creative on a tight budget and create Wow factor instead of paying through the nose for it.

 

[Tizzy]

OMG! The advice in this thread are nuggets of gold! Thank you so much guys.

 

[Ausprop]

and don't forget to allow for GST!

 

[BayView]

Stick to your budget. Too easy to start thinking of it as your PPR and pay just that bit extra for that really nice basin, stove, taps, etc. Quite easy, particularly if you are an artist like me, to be creative on a tight budget and create Wow factor instead of paying through the nose for it.

I think this is also important to monitor in consideration of the area where you are doing the project.

This means; in a lower price range area - cheaper fittings may be all that is required, but in a higher income area - quality fittings are what buyers expect.

 

[BayView]

Well the time is here and we are going to do something we've wanted to do for a long time. Mr Tiz and I are looking at property renovating as a business. That is, buy, renovate and put back to market again fairly quickly. The plan is that we get to the point where Mr Tiz can do this full time eventually, but I'm holding on to my day job for now.

We don't intend to live in the property and CGT will just be a cost of doing business. There's bound to be the odd project that it is better to keep and rent, but we do want to generate a replacement income. I'm sick of Mr Tiz being away on the mines.

If you have any pearls of wisdom, please share, I'd love to hear it.

Get hold of all the Reno Kings books for some good tips.

Don't believe their "Reno in 12 hours" speil though.

Make sure you over-estimate expenses, and time for completion of the project.