Why You Should Never Sell a Property

OK..maybe share the numbers (acquistion costs, etc) for Ormond. If you are comfortable otherwise PM...me.

These are really good suburbs.....probably around a 8-10 type in Melbourne.

I am bit anal but am looking for 40-50 plus gross on completion.

 

Property Purchased 1.47 Million + Stamp Duty(20% deposit borrowed from Bentleigh east townhouse)
Address: 30 Leinster St Ormond.

Build costs 1.2 million (borrowed 20% build costs from Bentleigh east townhouse)

Delayed by 2 months, We are adding 50,000 grand worth of Joinery, Telsa battery, 5G, decking.

Expecting value around 2.2 million each. on completion. Take out the equity to build 4 more townhouses in McKinnon School Zone.

 

I have properties in West Footscray. Hoppers City. in double digits.

Properties in Bentleigh, Bentleigh East, Ormond, Brighton. Banks are very comfortable lending me money around 80 - 95 % and the valuer always come up with a good valuation.

 

OK. Are you a Metropole/Yardney client?

So based on my numbers:
Purchase 1.47m
Build 1.2m
Stamps/Legals - 80k
Other 50k
DA, Landscaping - 50k?
Hold costs - 50k?

So total number is $2.9m.

I believe $2.2m is pretty ambitious in the current market. I think more likely it is about 1.8m. The median for 4brns in Ormond is 1.9m with a decent block of land. So profit is more like 700k....less if you have to pay GST.

That is about 25% profit...pretty good. ...but could you have made that by building 5 houses in new estates....with less complication...the answer is yes.

 

We are building 2 houses: (corner block) with 2 different addresses.

30 Leinster St
73 Hall St.

Why would I sell, such a good assest? Holding is the key.

Why would I spend 1.2 million, when I am selling it.

That's is why I would never sell.

 

Yes...so is just CF....so many people are so focused on.

Somewhere in middle is best. As it balances yield with.

Yardney and crew are running a business so what would you expect. Just like 98% of buyers agents out there. They are not looking at the asset simply executing to a clients spec. Most don't want to spend more than 10 minutes with a client.

I recall some one here who already bought from Rethink property..and the could not get more than 5 minutes from owner for subsequent properties. That says is all....

Having said that...some people on here are just grubs...they only suck info....not give.......just look on Zoom forums...people turning off cameras and giving BS excuses about their cameras being broken.

Or better still.....come to all the meetups initially....become a broker...and then suddenly they are too big for their shoes.

 

Great if you can do that....but eventually most people will run into a serviceability wall. You must have a decent income.....

The question is .....are you comfortable holding all assets in one location?

 

Once you rent the properties, your rent will increase your Serviceability and decrease your DTI.

Serviceability will never be a problem, Buy build and Hold scenarios. Sometimes you might need to build 4 townhouses and hold.

When you build, you need to take the rent into consideration. for Investment grade properties, banks consider a rental appraisal from the real estate agent.

for non-investment grade properties, banks consider a conservative rental.

Normal resi loan
Premium resi loan
Private banking resi loan
Wealth client resi loan.

Rules differ, which type of loan you get. Similar interest rate, but you will fall into a different category.

 

of course, I would rather hold one Chadstone Shopping centre.

Similarly, happy to hold my assets in a few suburbs only.

 

Try to get a 100% loan building all 5 properties in fringe suburbs. (20% from the existing property) .

and try to convince the bank, you are planning to hold them.

Same amount, different suburbs, different rules. Some lenders won't look at 5 properties built in one suburb.

Some lenders won't even go there.

 

Your argument is about to be tested with changes by APRA and potential DTI changes.

See below...

https://www.domain.com.au/news/prop...age&utm_medium=link&utm_content=pos5&ref=pos1

Its about to get smelly in Sydney and Melbourne. But some silver linings for well located walk up units there....

 

I have done the 100% lend in outer suburbs. If it is Officer or Armstrong Creek no issues....but if it is Wyndham Vale the forget it.

 

It doesn't affect all the clients. Some of them yes.

Once you become a private or wealth client, there are exemptions for negative serviceability
and DTI above 10 is fine too.

But, our strategy, Serviceability will never be an issue.

You need to manufacture growth + able to service the loan via rents. It's how this whole buy, build and hold works.

while you build new ones, old properties you hold will increase in value and rents will go up as well.

 

OK...I think you believe the coolade will last for forever...I don't ....great if this happens as I will be over $20m by then...but can't see that.

I am invested in the 5 major states.....I do agree on quality but typically I want 5-7 type of property. Will be interesting to see how you go with quotes on the new builds...building costs are rising rapidly....and at the same time funding costs.

Be careful with Wealth dept...they will drop you like a sack of potatoes once their credit areas make it harder for people like you. Have seen this many times over the last 20 years....

 

How about Lara Lara. can we get a 100% loan / 80% construction loan and for 5 properties at a single time with the same bank.

But can this happen in Bentleigh and Bentleigh East? I am doing it with CBA and no problems at all.

They never ask me to sell any of those. No problem with concentration risk. Exemption until 5 million dollars per security under Residential loan.

None of the build or loans is commercial or private.

That's the reason investment-grade properties are very very important

 

crossed that while ago. Still borrowing.

Finance is the key to acquiring more and more properties.

 

CBA huh?

Have you got the loan for the other 2 developments yet?

In Lara you could have got 100% a couple of years ago.

I think Metropole have you drinking their coolade you hook line and sinker.

Not poo ppoing what you are doing...but I have seen all this before thus why I have moved markets.

 

Yes it is...you should be writing a book then...

 

Waiting for DA approval.

Get your Rental appraisal and get the loan. while you are getting your DA approval to rent the property.

If you hate them, you should call them.

But this thread is about never selling a property. Not put someone down.

 

Thank you. I am not interested in writing a book. Just become very wealthy.

Most ideas are already out there.