Making money from property in 1-2 years

They do. But they also have knowledge, skills, experience and networks.

 

Regional town? Are you kidding?

 

Bought a piece of land in Sydney north west in early '15 for $1015/m2
The same land is now valued at $1275/m2 in early '16.
+/- $100K profit & 25% growth in 12 months.

Would I do this again? Sure I would.
Would I do it again NOW? Nope.
The train has left the station.

 

Because they have better holding capacity and can easily withstand a downturn. They will prolong their holdings.

Will you? You said you have to exit in 1-2 years.

 

Does it look like I was kidding?

Moranbah median house price


2009 - 189k
2010 - 459k
Profit = 270k

2012 - 710k
2013 - 375k
Profit = -335k

When you are talking about 50k in profit after costs within 1 year you at 500k you need to work backwards to find out how much increase you are looking for..

So lets look at this 500k purchase;

Stamp duty - 25k (VIC, depends on state)
Mortgage repayments - 16k (400k at 4%, which you can fix rate 1yr if you are borrowing equity from somewhere else you should use 20k as you are borrowing 100k for the initial deposit).
Solicitors fees - 1k
Inspections (B&P) - .5k (using round numbers)
Bank fees - .5k
Rates - 1.5k (guessing this again)
Total - 44.5k (48.5k if you are borrowing the full 500k)

I have not included land tax, renovations, maintenance, LMI, applications to councils, architect fees, town planning fees or deprecation (this is a cost).

So to get your 50k profit (after costs) you will need 100k increased in valuation from your purchase price.

If you are looking at withdrawing the equity the bank will typically value your place lower than market price usually so you would need a MV of 650k to get a valuation of 600k. Which will require you to get 30% growth to get to 650k MV price.

Or you need to sell which you will typically pay the REA 10k + marketing of 2k total 12k.

If you have 500k I can tell you how you can double your money in within 5 minutes (or less) but you have to be okay with the risk...

Like I said if it was easy then more people will do it.

 

Great example. So it can be done. Would it be wiser to buy 2 properties at half the price in different locations to increase you're chances?

 

Yes and yes.

The question was asked if it can be done. And what strategy if so.
Thanks.

 

It can be done of course, however if I was having a bet I would bet that you will be unlikely to get your 50k profit (after all costs) within 1 year and I mean no offense to you or your ability - you are talking about doing what probably less than 0.1% of all investors are able to achieve consistently.

Buying 2x 250k properties would increase your stamp duty to 10k each (20k total/4k more) for VIC.

If you bought one in one town that did nothing it would then mean the other property in another town is required to increase by 60% to get you to the same as a 500k increasing by 30%.

Anything is possible it really depends on your risk tolerance, like I said I can have you double your money in an instant, however you can also lose it all in an instant.

Risk vs reward - If I knew a place was going to grow by 30% in the next 12 months, I would surely not be on here.

 

I know people buying up land in parts of India and that land was going from say, something worth 10k and 12 months later it was about 100k. But can you find somewhere that hot now?

Otherwise, buying under market value, reno, rezoned areas are possibly options.
Find an out of area agent, out of area vendor, distressed vendor can work. I've seen places near where I live that sold for under 1.2 mill where they should have sold at least 1.4 mill.
Of course there's a lot of stamp duty you'd have to stump up for purchases like this so there might not be much immediate gain if any.

Another strategy, requiring little or no cash... become friends with old people owning homes. If they like you and they have no family, they may leave their homes to you rather than donate it to a charity.

True story....

 

Tip it into a Development Fund that returns 10%+. That'll soak up 2 years.

 

You could pay a BA to find a cosmetic Reno job somewhere, plenty on the sth and Nrth coast last year that would of netted a hundred

 

You would need to find properties that you can "value add" via subdivision or a renovation. These both take a particular skill set.

They would need to consider a lender who will take the new val amount as opposed to the original contract price. NAB have done it before for me.

 

I have turned way less into way more in a 2 year timeframe. It's more than doable.

I used a combination of land and unit subdivision, OTP flicking and H&L builds for sale and keep.

A combination of profit and re-valuation equity will see circa $50k turned into circa $1M in a little over 2 years but prob took a year in the making to start, and may end up taking a further year to completely realise. Even still your goals are more than easily achieved. In Melb buy and hold in several suburbs would see you making a 20% gain over the last 2 years on purchase price add some gearing and your home and hosed even after entry and exit.

 

Brilliant

 

That's fantastic. How does the land and unit subdivision work?
Buy an existing house and build another, knock it down build a few?

 

I did a land only subdivision in a low price growth area with a money partner. This was buying a super lot and cutting it into smaller lots all settled.

I also bought a block of land that could be subdivided into two lots built two units on it and sold them. They will shortly be settled.

This is my skill set though. Not for the inexperienced.

 

find another train

 

So true.

Plenty of stations and plenty of trains.

If one looks hard enough they might just catch one.

 

Yeah..like Brisbane.
Don't worry about returns..just park your money here and us Brisbaneites will take care if it

 

I suspect Tassie may give you guys a run for your money, seems there is evidence inner city is moving...BTW, I am not recommending investors buy, but do the homework, easiest way to make money is when is in rising markets as mentioned by others