澳洲Australia property Who on SS has made 20% profit after ALL c


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


I haven't found anyone so far on SS or doing Google searches online that has made at least a 20% profit after ALL buying & selling costs including CGT within a short period of time (ie. 3 months). Residential only.

I want to be proved wrong but frankly the best profit margin I have found is 10%. And then there are others who have said they wouldn't be bothered buying & selling unless they could make a big profit (ie: I wouldn't do it for $20,000, or unless I could make at least $50,000).

Please - this is not an attack on SS or others, I just wanna know how someone else is doing it so I could do the same. Just exploring this option rather than buying & holding during a falling market for what could be 5-7 years.

Sure in a rising market; you can make loads of $$$ without even trying too hard; but I'm yet to find someone making a 20% + margin on a residential property deal.

I read on PI forum about an investment salesperson who stated he'd bought, renovated & sold a house - purchase price was $240,000 & sale price was $320,000 - now that's a $80,000 gap; but by the time you added up the buying, renovation, selling & CGT expenses; it worked out to be around $10-$15k nett profit; even though he'd bought under market; $10-$15k profit is hardly worth spruiking about (not that he was spruiking), but that sort of profit hardly seemed worth it.

Don't reply saying you've made a 20%+ nett profit in a falling market recently, UNLESS you're prepared to give actual figures in your response. I'm sick of reading about people saying they're making squillions of $$$, but cannot back it up with real hard evidence.

I await REAL examples please :)  

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Yeah I can put my hand up for that, except that it took 6 months not 3. Bought a block with a single 2BR dwelling zoned for 3 separate dwellings with max 2 storeys in height for 600k. Rezoned to accommodate a 4 storey complex and up to 13 2BR dwellings. Based on sales of similar or less advantageous blocks in the same suburb in the past 2 weeks, value is sitting at about $1.5M. If I decided to cash out (I'm receiving cold called expressions of interest from other developers, but don't go even so far as to talk price - the land is OA territory) I daresay that I exceed the 20% mark significantly.

edit: dwelling on property rents out enough to wipe out all but about 100pw of loan. Even so, the appreciation is so massive that that sort of money is inconsequential. You count it, I'm not doing it :D  

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Bought 430K Sold 595K + 10K cash for furniture (Sold in 3 months) settlement 8 months later

So the figures are :-
furniture (Staging furniture used in previous rentals - depreciation till the end of life)
Purchase price : 430K
Renovation costs :15K (painting, plastering, bringing down walls, permit, new floor tiles, glass wardrobes, floorboards, underlay etc)
Stamp Duty : 19K
Body Corp : 3K
Mortgage Repayments : 9K (over 1 year - low IR plus low gearing)
Bank Fees : 1.2K
Solicitor Fees : 1.2K
Agents Fees : 12K
Rates :$800
Miscellaneous : $500

total would be 492K

So 605K -492K = 103K
103K/492K = 0.229 ( round up 23%)

Still ranked as the highest 2 bedroom after selling nearly 2.2 years ago (a 3rd floor apartment beating the 11th, 12th, 13th floors which is the exact same size even today). Back then all apartments were in the 400K+ range but i was the first to bring it to 500-600K.

I have not included tax as everyone's situation is different and is not applicable.

A lot of reno ppl use bank valuations - but a property is only worth as much as a buyer is willing to pay.  

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Ocean Architect said: ↑
Yeah I can put my hand up for that, except that it took 6 months not 3. Bought a block with a single 2BR dwelling zoned for 3 separate dwellings with max 2 storeys in height for 600k. Rezoned to accommodate a 4 storey complex and up to 13 2BR dwellings. Based on sales of similar or less advantageous blocks in the same suburb in the past 2 weeks, value is sitting at about $1.5M. If I decided to cash out (I'm receiving cold called expressions of interest from other developers, but don't go even so far as to talk price - the land is OA territory) I daresay that I exceed the 20% mark significantly.Click to expand...
have you sold it Ocean?  

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Melbournian said: ↑
have you sold it Ocean?Click to expand...
Got plans going through for 12 2BR apartments approval already articulated by council in email and phone, 6 weeks left to go, buyers lined up (one guy offered to buy all 12. Another offered to buy 8. yeah no). The development potential is too great to let it go to someone else. The numbers on the development, even via third party builder, are disgustingly high

hi5! :D  

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Ocean Architect said: ↑
Got plans going through for 12 2BR apartments approval already articulated by council in email and phone, 6 weeks left to go, buyers lined up (one guy offered to buy all 12. Another offered to buy 8. yeah no). The development potential is too great to let it go to someone else. The numbers on the development, even via third party builder, are disgustingly high

hi5! :DClick to expand...
Those are good figures - i too want to go down that line (build like a 12 apt 3 storey) but unfortunately time and work factors forbid me and the market in melbourne is not as active as before. Kudos to u ocean!  

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Was the market falling or rising Melbournian?  

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Was the market falling or rising OA?  

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BigCol said: ↑
Was the market falling or rising Melbournian?Click to expand...
Market didn't rise yet. 4 months after it sold it rised.

I have done this in both falling and rising markets

One just recently - probably the worst located apartment in the whole area (below 2 carparks, bedrooms just outside garbarge bins and trams lines 50m away).  

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BigCol said: ↑
I haven't found anyone so far on SS or doing Google searches online that has made at least a 20% profit after ALL buying & selling costs including CGT within a short period of time (ie. 3 months). Residential only.Click to expand...
Well, you've ruled out developments. 3 months?! What's your rush?

I have developments completed and some in the process all much much greater than 20%.  

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yup - there should be no rush unless you're in need of cash.  

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BigCol said: ↑
Was the market falling or rising OA?Click to expand...
Falling. At that time (late last year) construction came skidding to a halt, with 15 large apartment complexes being shelved for lack of finance and oversupply of apartments. They still havn't gone ahead.

When I began the rezone process, the average price obtainable for a property like mine was $150 000 per 2BR apartment that you can build in the complex. I can fit 13 on there, but have decided to build 12 for the sake of symmetry/complexity of design, which would have then put the value of my land at $1.8-1.95M at the height of the peak.

The market fell a little further (mostly due to developers being unable to find finance for new developments, or in fact, offload the old ones) and I was anticipating the value to be something like $1.2M, but it didn't make a difference to me as the developer since my economics revolved around the price of the final product

Then a couple of weeks ago, 2 auctions occurred in the suburb and the price reset upwards to the $1.5-1.6M mark. With the quality of the plans I have, and the likely pricepoints, I can probably move that block to another developer for a quarter mill on top of that, easily.

So yeah. Long answer to a short question :)  

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Now this is a profit
http://www.somersoft.com/forums/showthread.php?t=70791  

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I have made about 10-20% on purchase after costs on recent purchases...but it has not been tested as I have not sold these.

The reason I have not sold is that I lose CG in tax.  

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Yes thanks for your contribution, but not relevant to the original question of buying & selling.

sash said: ↑
I have made about 10-20% on purchase after costs on recent purchases...but it has not been tested as I have not sold these.

The reason I have not sold is that I lose CG in tax.Click to expand...
 

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Thanks OA for the detailed reply. Not into developments myself, just simple residential buy & sell houses or units. Thanks for your input & congrats!

Ocean Architect said: ↑
Falling. At that time (late last year) construction came skidding to a halt, with 15 large apartment complexes being shelved for lack of finance and oversupply of apartments. They still havn't gone ahead.

When I began the rezone process, the average price obtainable for a property like mine was $150 000 per 2BR apartment that you can build in the complex. I can fit 13 on there, but have decided to build 12 for the sake of symmetry/complexity of design, which would have then put the value of my land at $1.8-1.95M at the height of the peak.

The market fell a little further (mostly due to developers being unable to find finance for new developments, or in fact, offload the old ones) and I was anticipating the value to be something like $1.2M, but it didn't make a difference to me as the developer since my economics revolved around the price of the final product

Then a couple of weeks ago, 2 auctions occurred in the suburb and the price reset upwards to the $1.5-1.6M mark. With the quality of the plans I have, and the likely pricepoints, I can probably move that block to another developer for a quarter mill on top of that, easily.

So yeah. Long answer to a short question :)Click to expand...
 

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Ahh, no it's not because they haven't sold & not relevant to the original question.

Yes, they've made a 25% increase on paper, but no mention of purchasing or selling costs which would add another $40,000-$50,000 in costs PLUS CGT to pay which would be around $30,000 at least, then the numbers are: $710k sale price less ($542 + $45k + $30k = $617k) = $93k or 14% nett profit.

Good effort (and I take nothing away from the good effort from Sassarassa); but again I'm still struggling to see how anyone can make 20%+ nett returns in a falling market on buying residential houses or unit; without having to do a development like others have mentioned. Melbournian could be an exception.

BV said: ↑
Now this is a profit
http://www.somersoft.com/forums/showthread.php?t=70791Click to expand...
 

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BigCol said: ↑
Thanks OA for the detailed reply. Not into developments myself, just simple residential buy & sell houses or units. Thanks for your input & congrats!Click to expand...
How about this - buy houses in areas primed for a rezone. Go into the department of strategic planning, buy a planner a coffee, and pick their brains as to what areas are next in line. Factor that into your purchase because the capital appreciation you get out of a rezone utterly annihilates what you get out of flipping  

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Hmmm....you have got to be kidding right?....development is the higher risk proposition. It is harder to get a 20% net return on development...this is some of the stuff I am buying because the banks have repossessed. Most of these are because developers did not do their number correctly. And when I do buy them I get less then replacement costs.

There are plenty of people doing a quick reno and flip in Sydney sure they aren't making 50k plus in the market but they are happy to walk away with 20-30k per deal...most are doing 2-3 at the sametime so it makes it worthwhile. You probability of success is highest in Sydney, Newcastle, Wollongong, or the Central Coast of NSW.

Forget doing it up where you are as I suspect the market is not as good.

As for numbers...I recent purchase in Wollongong which if wanted to flip could easily make me just under 20% if I wanted to flip ....trouble is the 45% marginal rate for me.

The deal:

3 Brm house in Barrack Heights - bought for $246.5k
Stamp Duty $7150
CBA Low Deposit Premium $3000
Legals and Settlement costs $1350
Update to house $1000
TOTAL $256K

The median price in Barrack Heights is about 340k.

If I had to sell it at a firesale it, I would price it about 329,990 and sell at $320k.After selling costs of 5k....I am left with 315k minus 259k in costs....which givens me about $56k.

Even allowing for 50% tax...I am still left with about 28k!

I suppose people have told you this.....but there are differing markets throughout the country. Currently, NSW is stronger than most parts of Australia.

BigCol said: ↑
Ahh, no it's not because they haven't sold & not relevant to the original question.

Yes, they've made a 25% increase on paper, but no mention of purchasing or selling costs which would add another $40,000-$50,000 in costs PLUS CGT to pay which would be around $30,000 at least, then the numbers are: $710k sale price less ($542 + $45k + $30k = $617k) = $93k or 14% nett profit.

Good effort (and I take nothing away from the good effort from Sassarassa); but again I'm still struggling to see how anyone can make 20%+ nett returns in a falling market on buying residential houses or unit; without having to do a development like others have mentioned. Melbournian could be an exception.Click to expand...
 

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BigCol said: ↑
Ahh, no it's not because they haven't sold & not relevant to the original question.

Yes, they've made a 25% increase on paper, but no mention of purchasing or selling costs which would add another $40,000-$50,000 in costs PLUS CGT to pay which would be around $30,000 at least, then the numbers are: $710k sale price less ($542 + $45k + $30k = $617k) = $93k or 14% nett profit.

Good effort (and I take nothing away from the good effort from Sassarassa); but again I'm still struggling to see how anyone can make 20%+ nett returns in a falling market on buying residential houses or unit; without having to do a development like others have mentioned. Melbournian could be an exception.Click to expand...
I don't advocate buying and selling in 3 months - it is not something i would do. The only times it has occured is when someone puts in an offer to buy a place of mine whereby the price is 100K higher as opposed to other places in the market and other times is a downfall in the market and someone still wants to buy my place.I haven't sold anything in the last 1 year duration until just recently. I prefer to hold my portfolio and wait for rental returns but not go overboard. As sash mentioned tax on CG - however timing plays a part to it if it settlemnet of the sale is in Jan or Feb - it gives time to arrange to pay interest in advance of 4-5 properties thereby miniziming CG to a minimum.

I'm not sure about queensland or brisbane but Melbourne Inner City market property (units) is very different to outer and rural and my preference has always been higher end buyers who can afford to buy or rent so in the event that you will sell, someone is ready to buy. Thereby, some are foreign buyers (china) who require FIRB - and if they like your property, they would have to apply for it to buy it. Majority of these buyers are only here for like around 1 month and it is important to showcase your property as why they would buy it. which is where the "feng shui" factor comes in. Then again i had an aussie italian buyer before however each market is different and this kind of strategy would not work in outer suburbs only due to the fact of the target market. Many people who can't sell just don't renovate properly in the inner city apartment market and just sell it stock standard with ugly carpets and blinds without much thought into who they market to. It's like those "selling houses australia extreme" where minor comestic changes could make a big difference.

Just as buying outer suburbs. there was a poster so fixated on subdivisions in an outer suburb without even realizing the target market, demographics could not afford it.

As for valuations - i had a place which is currently rented which i bought last year for 490k and revalued from a bank at 850K (that's a 65% increase in 8 months )- but realistically - it's only worth max 700ishK. positively geared - so i will just leave to rent. at the moment no point to take equity out unless interest rates drop. This has happenned to a inner city unit (by another seller - not me) bought 515K sold 810k in 1 year. I think the owner stayed in the apartment but she did a lot of feng shui enhancements which sold and made a record in 1 building.

LIke i mentioned in another post, a retired ex-banker from singapore (met him at crown) is looking to buy a penthouse in eureka or freshwater place. already owns like land in pakenham, holiday house in rye and other investments. Only spends 2-4 weeks a year in melbourne. Doesn't really care as long as the "feng shui" is good. Water aspect most likely. These are the kind of people who will be willing to pay 200-300K more depending on how you renovate. So renovation style and interior design is a big factor too. you can't have mirrors in ur bedroom directly facing the bed or like darkish outlook to the apartment. i have seen many super dark tiles bathroom - it's a bit of a turnoff to these buyers.  

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