So, we bought a property...

Discussion in 'Investor Stories & Showcase' started by Bayview, 1st Jan, 2016.

Join Australia's most dynamic and respected property investment community
Tags:
  1. trinity168

    trinity168 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    942
    Location:
    Sydney
    Congratulations Bayview!
     
    Bayview likes this.
  2. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    Metricon Chelsea 33 from $237k approx. Single storey.
    Compass Vogue pool 9.4m, with X-trainer spa, solar heated, and infloor cleaning, salt water chlorinated and spa heater - for about $50k all up.

    The Chelsea Home - Browse Customisation Options | Metricon

    If we optioned up everything and went beserk; call it $350k for the lot (plus landscaping and tiling around pool area which I'll do myself).
     
    Last edited: 2nd Jan, 2016
    EN710 likes this.
  3. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

    Joined:
    31st May, 2016
    Posts:
    2,738
    Location:
    Australia
    Appears build costs are so much lower there. Merticon homes are gorgeous. @Bayview what about the upgrades? landscaping etc?
     
  4. EN710

    EN710 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,218
    Location:
    Melburn
    How much is it around Sydney/ NSW? Quite curious.
    What I learn about build cost in Melbourne --> on most base price, add about $20k site cost provision, then $5k electricity and 2-3k on upgrade at the very least (for PPOR tho)

    Thanks @Bayview the pool sound like a good price. I got quoted $50k for 2x12 for concrete, all basic. No in floor cleaning etc no fence and landscape
     
    Bayview likes this.
  5. Inov8ive

    Inov8ive Well-Known Member

    Joined:
    17th Jul, 2015
    Posts:
    709
    Location:
    Sydney
    Congrats! Nice to hear good news on day 1 of the year
     
    Bayview likes this.
  6. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    I reckon the total cost for the pool, spa and house would be up around the $350k range for the top end versions.

    One of our friends did a Compass pool a few years ago with solar, gas heating and in-floor cleaning for under $20k from memory, then he did (with my help) the decking and landscaping himself.

    The landscaping I will do myself; I did the whole property at the last PPoR which we had to sell, and the total for materials, plants, rocks etc including the retaining walls was about $10k- no labour component of course.

    Took bloody months of course,and the block was sloped, so this new project will be a lot easier and quicker, but it is a rewarding activity and great exercise.
     
    Last edited: 1st Jan, 2016
  7. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    @Bayview congrats on your new home mate!! From what I have gathered of you, you've had a tough time over the last few years. I have always admired how you seem to always stay upbeat, positive and push on with an unrelenting tenacity to just get on with it.

    I wish you the best for 2016 mate. May it be a prosperous, healthy and peaceful year and every year after!

    All the best.
     
    wylie, Bayview and EN710 like this.
  8. neK

    neK Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,842
    Location:
    Sydney
    Congrats @Bayview
    Awesome start to the year!
     
    Bayview likes this.
  9. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,100
    Location:
    Sydney or NSW or Australia
    Bayview likes this.
  10. bob shovel

    bob shovel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,935
    Location:
    Lower Blue Mountains
    Congrats bv!:cool:

    In not sure the exact location, but being close to water will you be building a house on poles in readiness for rising sea levels and what not with climate change/gw? :p:p:cool:

    Great plan and preparedness, pouncing on the right house when it came along! Great work :)
     
    Bayview likes this.
  11. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    That seems about right.

    Our last PPoR had a separate spa from the pool, and due to the slope of the block, plus the configuration of the two to each other (the spa was slightly higher up the hill and flowed down into the pool) the all-up cost was no change out of $95k.

    They were both fully tiled, salt chlorinated, solar and gas powered, under-ground spa blower, in-floor cleaning system - so it adds up..

    The Compass pools are fibreglass shells basically; but they look a million dollars when finished. Not tacky looking like the fibreglass pools of the old days:

    X-Trainer Pool for Fitness and Fun | Compass Pools Australia

    In hindsight I wish we had gone with them in the last PPoR..we thought about it for a bit too.
     
  12. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    Yeah; I was looking at the pier the other day; it seems that the line of shells on the pylons at the high-tide mark has crept up a couple more mm's since 1970 when we first started visiting down here. :p:eek:
     
    bob shovel likes this.
  13. tavinium

    tavinium Well-Known Member

    Joined:
    10th Oct, 2015
    Posts:
    51
    Location:
    Melbourne
    Good stuff!
     
  14. EN710

    EN710 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,218
    Location:
    Melburn
    Looks promising! Will look into this option :)
     
  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    I hope you had another conversation with your broker before offering on this. You mentioned you'd spoken to him about buying a business and he said that was possible but that is a totally different scenario to this.

    My main concern for you guys is that you sold your million dollar home and you are now replacing it with another million dollar home. Whilst it's $650k at the start it is a negative cashflow house and will be draining on your current income. Then when you add a 350k house you're back up to $1m.

    However providing it has the same zoning as those other splitter blocks it should help it grow and also offer you a popular escape plan if you need it.

    Increasing the income from the workshop or selling that is what I'd be concentrating on so having it as an IP for those 2 years will allow you to concentrate on that.

    Congrats on finding the good deal.
     
  16. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    Yep; I am looking at increasing the turnover of the workshop via roadworthy inspections and add-on work from them this year. Estimates for this are approx $28k per year for inspections (3 per week), plus a further $75k from additional work (average of approx $500 per inspection). A couple of tyres, a windscreen and the odd suspension bush kits will soon add up to that amount of money. So; possibly another $100k per year turnover.

    Nett profit from all that is hard to estimate, but probably in the vicinity of approx 30% - $30k per year nett.

    When we had our previous PPoR, we had debt from the business purchase, the IP, our private CC, our business CC, plus some left over LOC debt from previous purchase costs on IP's, a bit of debt left on the PPoR land purchase, and some top-up loan debt from the build......total interest bill per year of more than my wage:( - and turnover still falling. :eek:

    It has levelled off somewhat now, and with only one mechanic and myself; we are actually making a surplus despite the turnover drop.

    Now; all debt is gone - $60k per year of interest gone, but still have our same combined wages (wife and I), and still have the IP rental income.

    We also have some available LOC funds from the IP if needed, and later this year (around May) we will commence receiving rental income from a project we have an interest in now - currently being built. Estimates are approx $20k per year from this (could be much higher by all reports; but work on conservative estimate), but we are not factoring in any of this income at all at this stage.

    We are also expecting a tax return of between $5-$8k from last fin year in the next few weeks - but won't be factoring in any of that income either. It will go straight onto the offset account against the loan.

    We are putting $250k cash down (funds left over from selling the PPoR and clearing all debts), so will have a shortfall of $410k plus purchase costs of approx 5% = $443000 borrowings required, approx.

    Assuming a 5% interest rate, we would need to find approx $22150k per year.

    The cash will be placed into an offset account against the new loan.

    The property is currently tenanted for $16900k per year and we are not planning to do anything building-wise until at least next Oct when the tenant's lease expires....most likely 2 years before build happens.

    So, serviceability should be reasonably good for now.

    When we inquired about a loan for the other workshop business a few weeks ago, we were told the unofficial lend would be up to $720k - based on our current fin position as described above, and the rental income from that business.
     
    Last edited: 2nd Jan, 2016
  17. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    It's great that all that interest is no longer eating into the business and your earnings. I just worry for you guys - call me mother hen from Perth :)

    The debt is all gone but now you are adding back some debt so I just worry that's all that you'll get swamped by it again. Thankfully this debt will be at sensible mortgage rates not CC rates etc.
     
  18. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    6,776
    Location:
    ....UKI nth nsw ....
    Well done,that's the best part about going through a bad period investment wise,all you see is a small light at the end of the tunnel,good to see your on the upwards side now,have a good year..
     
    Bayview likes this.
  19. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World

    BV
    if you get stuck with finance, but sounds like you are OK. RAMS lo doc lend up to $750K, accountant signing off on income, 5% interest rate. You don't jump hoops.

    MTR:)
     
    Bayview likes this.
  20. Player

    Player Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,097
    Location:
    Paradiso
    Congratulations Bayview. Start fresh with a clean slate and stop using "we will never be able to afford................." language. You've now simplified your financial obligations. Move forward and, as you are my senior by a year, with all those years of experience you would well be aware that we have no idea what opportunities lay ahead for any of us. Be open, awake and aware whilst your finances are in transition.

    Health and happiness to you and your family. What a great start to the new year for you all.