Somerloft's rookie questions.

[LJ]

Dear SS, Hallo.

I have been lurking for a while. I would like to say guten tag and ask a few questions.

The journey is just beginning for me and ze partner. We are mid 20's, and have half deposit saved for our first home. By the end of ze year, ve should be able to afford this first PPOR. We have both recently learned to stop spending on the crap that keeps other menschen pleite.

Mein questions are more "What would/do you do". So here we go.

1: First step on the equity journey.
We looked at building our first home in vic, but the H&L packages were crap, and for our price range we could get a decent immobilien - which matters to us. I believe that this rules out the fast equity rise that people see when they build (sometimes). Which in turn rules out the leverage that can be unlocked by the equity to use to get our first IP. Meaning that we would need to increase equity by renovating/gardening/something else in order to leverage it that way. Does anyone have any thoughts/experience with this?

2: Record keeping.
What/how do you record financially? We don't have an IP/PPOR yet, but just for good habits I'd like to begin recording things that will matter when tax gets more complex. What do you record, and what systems do you use (excel?). Also, what do you get receipts for?

Thats it for now. Will probably add some more later.

Regards,

Somerloft.

 

[Blacky]

www.pocketbook.com.au

Does all the hard work for you.

Keep any business related invoices.

Blacky

 

[Moneyman_85]

I just looked at that pocketbook and I got to the "pocketbook will 'securely' conncet to your bank

seems sus? or am I just old lol

 

[D.T.]

Guten abend

If ze mrs will permit it, buy a piece if crap ppor. Procced to reno ze ppor to obtain a higher valuation then start buying ze IPs.

Alternatively, live somewhere cheaply (rent or housesit), and buy all ze IPs. That way ze bank wont take into account ze non deductible debt.

 

[LJ]

Hi DT, yes, this is true. Ich bin besorgt about the lack of equity we can leverage from the initial home. I was hoping for an easy way to leverage some deposits. At least with the final solution to the debt question in place a deposit should be easier to get for the first IP.

That pocketbook app scares me a little too.

 

[Blacky]

Maybe it's all a big con.

I've been using it a while now with no issues. But you never know.

But I shop in dodgier places than pocketbook. So if I'm going to get fleeced it won't be from pocketbook.

Blacky

 

[Liberator]

Naturally I wish you both well on your property journey but I've got to say I think the mix of mock German with the phrase 'the final solution' is somewhat crass.

Regardless... in terms of question 1, as you would have seen from your lurking, there is a LOT of info on the forum for you to explore, and you would probably get more answers to your thread if you are more specific with your questions. Also, it's not clear if you have an end goal in mind as to why you are investing in property in the first place.

For question 2, have you spoken with an accountant at all? It's often worth exploring things such as structures, tax considerations & record keeping even at this early stage. Personally, I get receipts for everything; not just in terms of property paperwork or items that are tax deductible - really, everything! But I also freely admit this approach is over the top for most!

Good luck with developing and implementing your strategy.

 

[BayView]

We looked at building our first home in vic, but the H&L packages were crap, and for our price range we could get a decent immobilien - which matters to us. I believe that this rules out the fast equity rise that people see when they build (sometimes). Which in turn rules out the leverage that can be unlocked by the equity to use to get our first IP. Meaning that we would need to increase equity by renovating/gardening/something else in order to leverage it that way. Does anyone have any thoughts/experience with this?

Regards,

Somerloft.

With renos, my observation is the higher end properties will return a better bang for the reno buck.

This is a generalization of course.

For eg; a $250k unit in "Averagetown Heights"; 10% reno spend ($25k) you might get back $300k on valuation or a little bit more. (I have done 3 of these with our buy and hold IP's). Not really worth the effort.

But, buy a really run down $1.5 mill in say; "Wilberforce-Smythville" and spend 10% ($150-$200k) it is not uncommon to double the reno bucks spent - it will usually put the property in the $2mill bracket for value.

We have done two renos on PPORs - neither really "high end", but up there for their area at the time.

One - purchased for $480k, reno cost approx $30k (new bathroom, painting, carpet and other minor cosmetic stuff - most work done by ourselves) and sold for $750 2.5 years later.

Two - last PPoR before reno was valued at approx $650k, spent $approx $75k on reno and sold for $850k 6 months after pre-reno valuation. Did a lot of work ourselves, but more structural stuff done by professionals - new above ground balcony deck, plumbing, electricity.