strategy to get out of the rat race in 2 years...

[bjw]

ok,
Shoot holes in this strategy all you gurus who have already done it please!

idea:
cut back on 5day a week job (ie ball and chain job) to a 2day a week job (still ball and chain) with other days of the week for
something you LOVE - property renovations/investment analysis/project management.

method:
Start funding one at a time buy+do-up +sell (ideally one every 12-16weeks so in and out roughly in the same market conditions according to property clock) to slowly build up equity and generate cashflow along the way.

In 2 years time, use the cashflow as "income" for the banks serviceability criteria and hopefully cut back on the full day job to a part-day job.

along the way, buy the odd +ve cashflow buy+hold property.

timeframe:
start NOW!!. (i.e. this week)
then in 2years time will allow conversion into spending days on something I enjoy. (working for myself on property deals..much higher hourly rate) not working for others.

any flaws in this concept??

thoughts greatly appreciated...
cheers,
B

[Ianacek]

Market conditions CAN change enough for you to make a loss on a renovation project. in a 12-16 week period. Techniques for reducing this risk include "back-to-back" sales & purchase contracts ( not always easy to arrange ) or a "Plan B" - add it to your rental portfolio until the market picks up. When this happens, you can either sell it or get it revalued to raise capital for the next renovation.

Imperfect as it is, the property market & its financiers seem to be telling us that we don't need so many new or majorly refurbished houses for a while. There are always niches & special opportunities but you need experience & lots of time to take advantage of most of these., I would wait until immigration picks up again, & use the intervening time to acquire as much knowledge as possible about how the residential property market works.Join your local Propertrty Investors Association if you don't already belong.

You may want to consider waiting 1-2 years for the market to bottom out, then identify properties that are not necessarily "on the market" but which you think could stand a renovation project when the market picks up again. Then negotiate an option ( but not an obligation) to buy with the owner. You would have to pay a small fee for the option. Train yourself in following monthly immigration statistics ( because these numbers move in cycles) When the immigrant numbers start an uptrend, exercise an option or 2 if the prices are right. & start renovating.

[casacamo]

method:
Start funding one at a time buy+do-up +sell (ideally one every 12-16weeks so

remember 'Capital Gains Tax' Mr Ird might consider this as property trading as opposed to property investing


also:

cut back on 5day a week job (ie ball and chain job) to a 2day a week job

where do you get a job like this that still pays a similar hourly rate ?

sign me up now !

Casacamo

[bjw]

yes Mr IRD would put his hand up thats fine just factor it in.
and the 5day down to 2day means you take a pay cut

[orion]

Hi bjw,

I think you have an excellent strategy and if you know the market well enough and costings for renovations etc, I think you could do very well. I don't agree with one of the other posts about market timing or waiting for markets to change. If you know what you're doing, this strategy will work very well in any market, just easier sometimes than others, but always possible.

Regards
Graeme Fowler

[goodinvestment]

Hi BJW,

I think the best idea is, never look at owning property for a short term profit. If you manage to make a good profit on a property in 12 - 16 weeks, great. Think of it as a bonus.

It may be an idea to look at building spec houses also.....I'm doing one at the moment and find the costs are better than I expected. 4 bedroom, 2 bathroom, 2 living areas, dining, and 3 car garage, constructed in brick. Its a kitset.
I am expecting to sell this property in 3 months for a over $400k with ease due to its location. The section has cost more than the kitset.

Just an idea.

Logan

[Gerrard]

Hi GoodInvestment - where did you get the kitset from?

Gerrard

[orion]

I think the best idea is, never look at owning property for a short term profit.

Good Investment,

That may be one of your rules for investing, but doesn't mean others can't do it.

Regards
Graeme Fowler

[goodinvestment]

Hi Gerrard,

I looked at several different kitset companies but the one I have settled with is A1 Homes. 2/3 and 4 bedroom kitsets for under $100k.
My partner found them on the net. Along with a heap of others.

Cheers
Logan