Our new venture

[Tizzy]

Hi James. Yes he is a partner in his firm (also a relative ) and very familiar with property trading. His projections forward were for 5 years on the spreadsheets he prepared but he isn't finished yet.

He was quite clear that the 3 month turnaround from settlement to sale was too optimistic and it would be easy to end up in the negative if we go over budget on a house or sell under expectation. Thats why we've had to review so many things such as the capital we invest and how many projects we take on.

I'm glad we have our accountant as it would have been so easy to launch in to this without accounting advice and come unstuck later.

Hi Count, when we talked about additional capital, lost earning was part of the calculation. I take your point though (you are saying some of the same things our accountant warned us about) and we don't want to do renos for fun and no money. I should know more next week.

 

[kum yin lau]

Hi Tizzy, an observation from me for you to consider.

I've noticed that renos in itself makes a little money, cap gain makes a lot of money.

Have you considered the reno & hold a la Rob Williams? Obviously, this would impact your desire to replace income with this strategy.

Reno to sell = working for a living.

Is that the same as investing for a living?

A lot of us know about Cathy Jayne Pearce [my apologies for mentioning you Cathy]

If she hadn't sold the Glenelg reno, she would have made another few hundred thousand easy instead of the 50-100 thousand.

Keeping the properties for rental income would be my preferred method, that way you know the investment stands on its own feet.

In other words, what I'm saying is relying on reno as an income doesn't quite get you financial independence cos whatever you make is spent on the cost of living.

Whatever you choose to DO for income, it is the realisation of net worth that sets you free.

Sorry to be so long winded. It is something I'm fixated on.

KY

 

[Tizzy]

It would be great to keep all property we reno, but this venture needs to replace an income for us, so it must bring in cash. There will be places that we rent out, but not to start with.

 

[evand]

Tizzy,

I wouldn't worry about 5 year projections, business plans (which are only good for finance anyway), i think you and your accountant are getting a bit ahead of yourself here.

Couple of points:

1. No one knows what's going to happen next year, let alone in 5 years. We could have another meltdown or we could have a booming economy/property market. I'd say take small steps first.

2. Most businesses start up small, manage risk, and grow. Dont walk before you can crawl.


I would go out and try to find find one good purchase using your own knowledge and the huge knowledge on this forum, do your numbers conservatively. and do a cost effective reno on it and see how it goes.

If that works, do it again. Do maybe 2 next time.

By the way, nothing wrong with reno to sell. Can make lots of money above 'cost of living' to save or invest or just have a great life.

Years ago, when i had my electrical business we used to lots of work for a very successful guy that bought 6 & 8 pack units around Sydney, did quick and cost effective renos. Buying as a block, selling as individual units. This guys was absolutely loaded doing these. Of course he didn't do any of the grunt work himself, as i wouldn't.

See if you can work a deal with an RE agent where he can source you great deal properties if you list through him. They know where they are.

This is where you need to put your business hat on, do some deals with agents. Get out and talk to them, do some deals.

Or source yourself and sell yourself. You might find the numbers come up better with the former or you can do a combo of both.

 

[13910]

I would go out and try to find find one good purchase using your own knowledge and the huge knowledge on this forum, do your numbers conservatively. and do a cost effective reno on it and see how it goes.

If that works, do it again. Do maybe 2 next time.

Difficult to fault this advice. Let the process evolve naturally. It might mean you can't cut-out an entire full time job immediately and therefore won't have that glorious one day feeling of freedom, but I believe it is a wise way to work towards your longer term goal and minimise risk.

Cheers
Greg

 

[Of The Vultures]

I've been looking through the forum and found this old thread. Thought it was worth reviving, there's some great advice there.

My situation is almost the same as Tizzy's, except I'm the one at the mines and my husband can't wait for the day I quit! I'm very much interested in the same strategy as Tizzy, that is buy-reno-sell as an income-replacement method, and to build up a cash kitty to fund deposits for buy-and-hold acquisitions.

I was getting ahead of myself as well, thinking and overanalysing but Evand's advice brought me back down to earth. The key is to start small and go from there, but you must START.

It's been a few years since the last post so I'm very keen to hear how Tizzy's ventures are going!

Cheers,
OTV

 

[INVSTOR]

Tizzy hasn't been on the forum for many years.

 

[INVSTOR]

but then again..... Last Activity: 14-03-2012 12:47 AM

 

[Tizzy]

... I have a look every now and again

 

[INVSTOR]

Nice to see you still around

 

[Of The Vultures]

Great, have you had much success with your plans Tizzy? There's a fair bit of negative sentiment towards buy-reno-sell as a viable strategy at the lower end of the financial scale so it'd be great to hear your experiences.

 

[matto_]

Tizzy,

any stories for those of us still dreaming/.

How had it gone since 2009?

 

[Tizzy]

It has been interesting reading back over the plans we had.

Well in a nut shell, we did not proceed with the lower end property renos because the profit margin was slim and too risky for us. The dropping market didn't help.

Mr Tiz still works but only works away sometimes. We bought one place that I spent 3 weeks working on with the help of hired trades . Then we put a tenant in. It is in a good suburb so has sound growth potential.

We also bought a run down beach front place and we are living in it now and completing a full renovation. I even went to Bali to buy granite, marble , tiles and tap ware. That was a fun trip and I was able to buy higher spec goods for my budget. The container arrives in a few weeks. I probably saved about 40% by bringing goods back , even factoring in the import duty and GST. We will either sell the beach house and repeat the reno process again somewhere else, or move out and turn it into a short term holiday rental. It will depend on valuations at the time we complete the project.

I still look out for lower priced property to renovate.