is it worth it

[tamara]

What would be the key thing things that you would be asking yourself and finding out, if you looking to buy a renovate and sell property in a key location.

I will start if you could add to the list it would be very helpful.

* How much money would you need to spend to do the reno?
* What do the comparable sales tell me?
* How much capital gain would make it beneficial?
* What would make this property attractive to perspective purchasers?
* How sound is the structure of the building?

What more?

Thanks

Tamara

[Marcus]

At a guess,

* Whats its market value?
* How little can I pay for it?
* Is it in my league?
* What needs to be done to get best value for money?
* What will it cost? (Improvements, legal, bank fees if any, agency fees, Marketing, holding costs etc).
* Can I do the deal without the bank?
* Is there enough "fat" in the deal for me?
* How much demand is there for this particular type of property?
* Can I afford to hold it long term if I can't sell it?

This stuff sounds like its right down Graemes' (Orions') alley.

I'll PM him.

Regards,
Marcus.

[tamara]

thanks marcus

Perhaps for us I should add

what is the exchange rate going to do

for us

Tamara

[drelly]

I have another question...

What is the advantage in selling something that you have just added value to? Something which in all likelihood will appreciate faster in the future because of the improvements you have made! You'd have to have a good idea of what you were going to do next with the profit.

I can understand this if you are intending to make the doing up and on-selling of houses a business in it's own right but a friend of mine is currently lovingly restoring an old Kauri house and he was saying he will get $X for it when he sells it. I asked what he was going to do with the money? He didn't know. So I asked him why he wanted to sell it and he didn't know that either...

[RentMaster]

Another point to add ...

* How much 'capital gains' tax are you going to have to pay and will it affect your other properties as well.

[Marcus]

Hi Dave,

What is the advantage in selling something that you have just added value to?

I can understand this if you are intending to make the doing up and on-selling of houses a business in it's own right

This would be one good reason.

It could be to reduce debt levels at a pace that you can dictate.

HSV (for Andrew)

Holiday.

Pay for Wedding!

Regards,
Marcus.

[Marcus]

Another point to add ...

* How much 'capital gains' tax are you going to have to pay.

I should have specified as the first cost.

will it affect your other properties as well.

Great point. Entities seem to be the subject of debate. Some professionals seem to think that using separate companies for buy/sells and buy/holds is adequate to aviod tainting, yet others get more involved using trusts or company trust combinations.

It has got to make one wonder if it is justifyable or merely a money making ploy. The obvious reply from the advocates of the more complex & expensive option is "can you afford to be wrong?".

Regards,
Marcus.

[tamara]

Thanks everyone for your input.

It certainly has given me some thoughts to expand my due dilligence process.


Tamara

[graemeh]

* Is it in my league?
......
* Can I afford to hold it long term if I can't sell it?

Hi Marcus

I'm curious, what do you mean by "is it in my league" and how does this differ from can I afford it?



regards
Graeme

[inzvestor]

Hi Graeme

One difference I can see with that statement is that it may be the difference between buying a block of units of 1 house.

Although both may be affordable, the thought of dealing with a greater number of properties may be a limiting factor.

Therefore not in that person's league.

However, once the person has done a few more deals this may well be in their league and become the norm.

Marcus, is that a fair description?
It does not represent any one persons beliefs in any way as this is only a hypothetical situation.

[graemeh]

Hi Investor

That sounds sensible, I have a similar question I use which is "Do I want to buy in that part of the market". An example of this is the cheaper areas of Porirua, I can afford to buy there but I don't want the perceived problems that come with it.

We also tend to stay away from cheaper deals as we can make the same profit margin on a more expensive deal and it is no more work than the cheaper deal, so we are getting more money for our time.

[orion]

What would be the key thing things that you would be asking yourself and finding out, if you looking to buy a renovate and sell property in a key location.

Hi Tamara & Marcus, everyone has summed it up fairly well I think.
If you are doing quick cash deals, the first cost I factor in is the profit you plan to make.
All good points the others have brought up, eg why sell?
The reason I do quick cash now is to reduce debt and so that I do not have more properties that I can handle managing - otherwise I could keep adding at a great rate and up with hundreds of houses, but that is not in my plan. If you are buying other properties to keep Tamara, then it may be best to also keep this one. If you trade as well as buy and hold, these must of course be very separate entities which you need proper professional advice on.

Regards
Graeme Fowler

[tamara]

Hi all

Thanks for the feedback.

We have now had a chance to look closely at all the information available. This property has been on the market quite some time in one of Aucklands sought after locations. It now seems that the property has illegally been split into two units. That then provides other challenges which we would be unable to finance. Even though it would be worth it in the long run it would compromise our ability to purchase more property in the near future.

20% deposit is a killer but the exchange rate is hurting us more at the moment. Our dollar is tied to the US.

Tamara