How do I know what price to pay? | |

CMA’s Become a Valuer How do I know what price to pay?

When it comes to Buying, there are two things you must determine: 1.You are paying the right price 2.Your strategy will make money It is odd, but sometimes a bargain buy still doesn't make you money CMA’s

CMA = Comparative Market Analysis It is hard evidence of a property’s value If adding value, complete a CMA for the finished product CMA’s

Ask real estate agents for comparable sold properties as well as those for sale – Include time on the market Also use RPData Compare like with like: – Number of bedrooms – Land size – Position – Condition Remember, for sale is not a sale!

CMA’s CASE STUDY Asking price $450,000 Say you could buy it for $420,000 You carry out CMA for the finished product (post reno) The question is...

CMA’s Will you make money?

CMA’s EXAMPLE 1 You find from the CMA that similar renovated properties have sold for $575,000 Hands up if you would buy A: the $420,000 reno property and reno it. Hands down if you would buy B: the $575,000 finished property The $420,000 buyers… keep your hands up …. Property A: RenovatorProperty B: Renovated Purchase:$420,000CMA: $575,000

CMA’s EXAMPLE 2 CMA shows similar renovated property is selling for….$525,000 Keep your hands up you would still buy A: the $420,000 property and reno it Hands down if you would buy B: the $525,000 finished property The $420,000 buyers… keep your hands up Property A: RenovatorProperty B: Renovated Purchase:$420,000CMA: $525,000

CMA’s EXAMPLE 3 If CMA shows similar renovated property is selling for….$490,000 Keep your hands up you would still buy the $420,000 property Hands down if you would rather buy the finished property i.e. pay $490,000 The $420,000 buyers… keep your hands up Property A: RenovatorProperty B: Renovated Purchase:$420,000CMA: $490,000 Who has no idea?! Let’s find out…

CMA’s Reno and Rent – Qld Investor Asking Price $450,000 You buy it for $420,000 Conveyancing/buy costs $16,000 (3.5-4% of Purchase Price) 4 week reno $42,000 (10% of Purchase Price) Holding costs during $2,400 $478,000) Total (if you reno & rent) $480,400 Rent $550pw (5.95% gross)

CMA’s Reno and Sell – Qld Investor Total (if you reno & rent) $480,400 If you sell add 8 weeks holding $ 4,800 Total $485,200 Plus sell fee/advert/clean etc (3% of sale price) = $17,250 = $15,750 = $14,700

Remember – we are using Stamp Duty as a Qld Investor CMA’s Purchase$420,000 CMA$490,000$525,000$575,000 Breakeven$499,900$500,950$502,450 Profit/loss-$9,900$24,050$72,550

CMA’s Investor$13,125 Owner Occupier$5,950 First Home Buyer$0 Qld Stamp Duty

CMA’s NSW$14,390 VIC$20,270 And if you bought an interstate investment

Become a Valuer Valuation Reports Use this when buying, when valuing or when refinancing

Become a Valuer

Methods of determining value: Comparable sales - can be broken down Rental Yield Development Feasibility Land value

Become a Valuer Comparable sales Land size and value Location Property type Property condition Sale date

Become a Valuer

Low sales: Related parties No advertising Structural/cosmetic issues Flooding Pipes Good buy Other

Become a Valuer High Sales: Related parties Something special Idiots

Summary Be realistic and use realistic sales Determine the best valuation method for your product Know why certain sales were low or high When refinancing/revaluing, go for 3-5% above

What did you learn today? Buying WellJustin Eslick Granny FlatsJudith Taylor ResearchJustin Eslick Clauses for Buying Well & NegotiatingRob Balanda Joint VenturesRob Balanda Investor ProfileJon Johnson Where to Buy and WhyThe Reno Kings How do I Know What Price To PayJustin Eslick

TOMORROW: DAY 2 FOUNDATIONS FOR SUCCESS Warren BlackMatt Cosgrove Colleen Sutherland Kerri Burness Accountant/Lawyer Investor Profile Principal - SutherlandsManaging Director/Licensee Wealthsafe Property Management Equity Access Australia Group

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Tonight... We want you to think about just 3 things! RCR Model Roadblocks – Facing and overcoming roadblocks. Change – What are you doing to get the change that you want and deserve. Role models – Using role models to achieve that change.