Renovating in Sydney with mates

Hi guys
I've been lurking in the shadows here for a while now, really helped me work out where to buy my first unit. So i thought it's about time I post something and ask my own specific questions.

As the title says, myself and a few mates are looking at buying a rundown/older place around Sydney or the central coast (probably leaning more towards Sydney). Doing a renovation on it and selling it in as short amount of time as possible. In the group we have an electrician, a carpenter a landscaper and a real estate agent (commercial). So we defiantly have the skills to do the work, I'm more looking for ideas on the best way to structure the set up of the venture? We are looking at doing it as a business as we Already have our companies which we can contract to do the work. Also just wondering what people's thoughts are on the st George area or places like sylvania, oyster bay caring bah etc or any we haven't looked into
The main thing I'm really wanting to hear is anybodies ideas on things we should look out for and maybe scenarios where people have been stung before...

I know I'm asking a few things but Any help will be much appreciated as a couple of the boys are getting really exited and I'm trying to hold them back a bit
Thanks in advance
 
Haha yeah, luckily I'm not the carpenter. The carpenter and the landscaper are in business together though, so they are both pretty good across the two trades. Hopefully that lightens the load for him a bit.
 
Just keep in mind if you sell it in the shortest time possible and that being within the first year of buying the property then you won't be entitled to the CGT discount. So any profit that you might have made would have been eaten up.
 
Why a carpenter would bother with it is the big question.

To make money. Just because he CAN do the work doesn't necessarily mean he'll be physically doing the whole reno. It's just handy because he knows what to do so can project manage.

Ditch the real estate agent. Just kidding:p.

With so many people in the mix it might be hard to make a decent enough profit to share. Unless you want to get into some major structural reno stuff.
 
The carpenter is the main one pushing it to be honest,
And I was reading somewhere on here the other day, that if we went the business option we wouldn't need to pay cgt but we would the 30% company tax, does that sound right?
 
To make money. Just because he CAN do the work doesn't necessarily mean he'll be physically doing the whole reno. It's just handy because he knows what to do so can project manage.

Ditch the real estate agent. Just kidding:p.

With so many people in the mix it might be hard to make a decent enough profit to share. Unless you want to get into some major structural reno stuff.
Yeah we were thinking there may be too many people in on it. when you talk about structural renos, do you think there is more money to be made say adding bedrooms/bathrooms etc? Do you think that would be more beneficial in the better/more expensive areas.?
Thanks for the help with this, much appreciated.
 
A business partnership would be the easiest structure

However you will not be able to get a 50% CGT deduction as it is a passive income generating asset

So maybe a trust if you are really serious - terry w is the man to ask

Bear in mind that to get the 50% off you would need to hold the asset for 12 months

Sounds like a good idea but capital gains tax would take the fun out of it!

Of course if the owner of the property lived there then it would be CGT exempt but you would have to be really good mates!

would be tricky to get the funds but if a cheap property mayb some personal loans (should be able to get 50k each so around 200k)and negotiate access prior to settlement to negate interest costs.

Or... you will be buying with 'cash' so you can negotiate a low ball quick settlement which should save a fair bit. The higher interest rates on the personal loan would then be cancelled out
 
The carpenter is the main one pushing it to be honest,
And I was reading somewhere on here the other day, that if we went the business option we wouldn't need to pay cgt but we would the 30% company tax, does that sound right?

A company and a business arnt the same thing

If you were a company and made 100,000 profit then company pays 30k tax the 70,000 is split 4 ways

The depending in your marginal tax rate you might pay a bit more tax or receive a refund in your individual return

Paying 30% tax is not a good thing , particularly when it could be higher if you have a high income (over 80k)

If you were to get the cgt Discount in individual names or trust then you would pay tax on 50,000 at individual rates (assume 30%)
So 15k in tax

Or just move in to the place and pay nothing. If your going to do it as quickly as possible you might as well just suck it up
 
Hi, when you do not structural renos there's only so much you can improve. A 4 bed house is still a 4 bed house after the reno but it's just more attractive.
By doing strucural renos you are adding to the build.
Look at Cherie Barbers stuff. She buys houses in the Balmain arera and makes $100,000's but she's been doing it a longtime. And she buys houses close to $1M. She doubles the size of the houses sometimes.

The moving into the place can work but it's not a repeat thing. The taxman will question you if you do it more than once.

Maybe hold it for 12 months to get the discount?

The thing you REALLY need to get right are your figures (particularly when there are so many people). You need to have a good estimate of your reno costs and your sell price BEFORE you buy anything. The reno costs and sell costs (as well as holding costs etc) will determine your buy price.
Get this wrong anmd you lose money (as well as your time). I've seen lots of this happening since reno shows became popular. Everyone thinks you can reno a whole house in a week, and that anyone can do it.:rolleyes:
 
Hi all,

I think that the original poster is wanting to renovate a unit with his mates... my understanding is this would limit you even more as there is limited structural changes that you could make to the unit to improve value (and they would need Body Corp approval)

If you have that many people I'm wondering why/how the budget doesn't stretch to a house?

Just my 2c
 
Thanks for all the input guys,
yeah we are looking to go the house option. Going to have a look at balmain an the surrounds now, but I'm pretty sure that's going to work out as a bigger outlay than we were hoping to start off with. No harm looking though!
 
Thanks for all the input guys,
yeah we are looking to go the house option. Going to have a look at balmain an the surrounds now, but I'm pretty sure that's going to work out as a bigger outlay than we were hoping to start off with. No harm looking though!

Mate of mine made 100k profit on a house that cost 220 sold for 360 3 months later
Was in geelong

Maybe regional areas are better as markets are less efficient and less investor competition
 
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