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Diving in the deep end...

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easylikesunday

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20 June 2010
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Hello all.

Im 25 and have just brought my first property. I was lucky enough to get it well below market value, and as it sits now, Im about 30-35k up. Going off recent sales in the area, and several real estate sharks.. I mean agents!

Being in the trade I plan to renovate the house and IF possible, sub-divide the block and build 2-3 units down the track. As I have only just settled on the house my first question is how long do I need to wait before I can re-finance?

Secondly, I have around $27,500 cash to invest. I plan to put $7,500 straight into the house to make it more "liveable" so that leaves me with around $20,000 to gamble with.

I have brought and sold a few shares just to say I have done so, but Im a complete amateur when it comes to investing. All I know is 6.00% from ING isn't going to fill my pockets any time soon.

Im not after stock tips or secrets, just some advice in what direction to head?

Gold?
Shares?
A racehorse??

Cheers!
 
easylikesunday said:
Im not after stock tips or secrets, just some advice in what direction to head?

Gold?
Shares?
A racehorse??

Cheers!
Click to expand...

WOW! Looks like its your lucky day.......I have the deal of a lifetime!

Just so happens i have ONE position left in my investment club.

Please send cheque/money order for $19,999.00 to .

Deal of a lifetime
P.O box 1234
Nigeria
 
He won't have that much left after he sees my investment offer on the first page of the above linked thread.

You might have to offer a 40% early bird discount.
 
Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.

I plan on renting the house out in the future which should nearly cover my repayments.
 
nunthewiser said:
WOW! Looks like its your lucky day.......I have the deal of a lifetime!

Just so happens i have ONE position left in my investment club.

Please send cheque/money order for $19,999.00 to .

Deal of a lifetime
P.O box 1234
Nigeria
Click to expand...



Im still waiting for my 10% share of 20 million from Benin..
 

Well done Easylikesunday on buying at a discount. $20 000 to 'gamble' with.. I take it that is a poor choice of word, ie dont gamble, that sort of money dont come easy!
Renovating the property, and subdividing, I assume you can subdivide and keep the original residence - otherwise why renovate if you eventually knock over the house. (I appreciate $7500 is not much when it comes to renovating). Here again watch the timing of your renovation wrt to renting - may need to consider the best timing for tax, depreciation, capital gain, adding to the cost base of property. Talk to your accountant.

easylikesunday said:
Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.

I plan on renting the house out in the future which should nearly cover my repayments.
Click to expand...

If you eventually rent out the property, be careful with what you do with your $20 000, and you pay it off the loan, you may be better to park it in an offset account instead. In a nutshell talk through your plans with your accountant before you commit to any course of action. You can lose some significant 'benefits' just by doing something simple like parking the money in your loan and redrawing it.
 
easylikesunday said:
Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.

I plan on renting the house out in the future which should nearly cover my repayments.
Click to expand...

i assume you have considered the POTENTIAL capital gains issues of renting.
i say POTENTIAL as they can be avoided.
are you prepared to 'rough it' and live there immediately while renovating, thereby establishing it as your main residence and having the CGT exemption apply ?
once established with the exemption then you are free to rent for 6 years.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm
 
easylikesunday said:
Hello all.

Im 25 and have just brought my first property. I was lucky enough to get it well below market value, and as it sits now, Im about 30-35k up. Going off recent sales in the area, and several real estate sharks.. I mean agents!
Click to expand...

Congratulations!!

Being in the trade I plan to renovate the house and IF possible, sub-divide the block and build 2-3 units down the track. As I have only just settled on the house my first question is how long do I need to wait before I can re-finance?
Click to expand...

Depends upon a couple of factors, residential property is usually able to borrow 85% as a maximum against the security value of the property. If we take your upper figure of 210,000, your maximum borrowing capacity would be $178,500 (since you borrowed $155,000 this would mean you could potentially borrow a further $23,500). If we take your lower figure of $180,000 you are maxed out already.

Be aware however that the 85% figure is dependent upon other factors such as serviceability or your ability to repay the borrowed funds, tightness of credit within the bank amongst others.

So the valuation is what will determine whether you are able to borrow additional funds against the value of your investment. Be careful however about using the same comapny to value your house as you use for other investment purposes. If your house is revalued down because someone was generous in their valuation you could lose the lot. A La storm financial.

Secondly, I have around $27,500 cash to invest. I plan to put $7,500 straight into the house to make it more "liveable" so that leaves me with around $20,000 to gamble with.
Click to expand...

Go to the casino if you want to gamble.

I have brought and sold a few shares just to say I have done so, but Im a complete amateur when it comes to investing.
Click to expand...

Go buy lots of books and and keep reading until you realize how bad what you said just sounds, coz what I heard was "I'm not a Marine Biologist but I was hand feeding the white pointers while my mate was throwing chum in the water......."

All I know is 6.00% from ING isn't going to fill my pockets any time soon.
Click to expand...

So what you want to be rich now now now? Leave it there whilst you learn what you need to know

Im not after stock tips or secrets, just some advice in what direction to head?

Gold?
Shares?
A racehorse??

Cheers!
Click to expand...

Good Luck

Cheers


Sir O
 

Yes the future plan is to fully renovate existing house and subdivide the rear block. I dont intent on knocking the house down.
I know $7500 wont get me far but I could live in the house now as it stands so $7500 will go towards smaller things to make it a little more comfortable during reno's.
My biggest problem is convincing the missus to move in.. I could sleep inside a whale carcass if I had too, her on the other hand...
 

I know its a must I have to live in the house for 6 months (of the first 12) which isnt a problem as I plan to be there for at least 12-18 months.

How long do I actually have to live in it before I can rent it out with the tax man biting me?

As far as renting out goes, if I happened to put a family member or friend in there as a private agreement where cash was used, who would know??
 
Sir Osisofliver said:
Go buy lots of books and and keep reading until you realize how bad what you said just sounds, coz what I heard was "I'm not a Marine Biologist but I was hand feeding the white pointers while my mate was throwing chum in the water......."
Click to expand...

Haha. Yes well I only invested measly amounts at a time just to see what it was all about. I have since signed up for an eTrade account but at the moment its empty! I think all up I invested around $1400 and walked away with nearly that back.

Id like to get some books but again the only successful investor I know of is Warren Buffet.

Whats a good book to start on for an amateur like myself?
 
For $20k or any other amount, an effective return of ~7% tax free in a loan offset account is better than 6% before tax, regardless of how long it's there.
 
I would put $5K into some investment property courses. Look for a course that costs money (often a lot of money) as free courses are usually just there to sell you something.

I did one with Knowledgesource - Dympna Boholt however there are a lot of good ones out there. Before you commit to a course do your due dilligence. Try to find people who have done it before. Google the presenter and make sure that they are successful themselves and practice what they preach.

Find one that offers after care support and a forum where you can keep in touch with the presenter and the other course takers.

it might be a lot of money, but money spent on education pays, and can stop you from making horrible mistakes.

You're in a great situation right now, you have the property already and can act on advice. You may know a lot about property already, I don't know what 'in the trade' means. But if you are a builder there is still a lot more to learn - tax, asset protection, positive cashflow vs negative cashflow.

I am in the same boat as you - I am 24 and will be buying in a year to renovate and then sell/rent out depending on finances. Best of luck with your adventure!
 
When your pushin 50 like me i wonder if there will be anywhere left worth going too.
Don't forget to have some fun!
 
Carina86 said:
I would put $5K into some investment property courses. Look for a course that costs money (often a lot of money) as free courses are usually just there to sell you something.
Click to expand...

Save your money and research it all yourself on the net.
 

the tax man doesnt have any minimum time you HAVE to live in existing houses - simply establish residence (evidence of furniture/mail/living in the property). minimum 3 months for new houses.
the minimum you do quote i think is to do with the owners grant.
as far as a cash payment and a wink - yeah sure, youd be unlucky to get caught - but it does happen.
 

Yeah being a FHO I think I need to live in the house for at least 6 months of the first 12.
 
Also I would like to know if anyone here has invested, or is investing in old classic/vintage cars?

I was doing this as an 18-21yo and it paid for the copious amounts of piss I drank during that time.

Im thinking of getting back into that kinda thing as some of the profits were huge when I think about it. Im a bit of a Holden nut and have been watching the oldies and their prices for years. I reckon there are a few bargains out there at the moment as the ass fell out of the classic market during the FC!

I wrote down a few of the buys and sells I could remember and profits averaged around 55% with some as high as 170%

Most of these were brought and sold within a couple of months, sometimes weeks. Most of the cars were old restorers so they were sold with no REG or RWC and always paid with CASH!

Just thought Id ask as the idea popped into my head!
 
Carina86 said:
I would put $5K into some investment property courses.
Click to expand...
Crikey Moses!

Making Money Made Simple and More Money by Noel Whittaker have gone up a lot. I paid less than $50 for both books in the early 90's.
 
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