• 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
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: Renovator Property B: RenovatedPurchase: $420,000 CMA: $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: Renovator Property B: RenovatedPurchase: $420,000 CMA: $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: Renovator Property B: RenovatedPurchase:$420,000 CMA: $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 (6% @
$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)
@$575,000 = $17,250@$525,000 = $15,750@$490,000 = $14,700
Remember – we are using Stamp Duty as a Qld Investor
CMA’s
Purchase $420,000
$420,000 $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
Become a Valuer
Become a Valuer
Become a Valuer
Become a Valuer
Become a Valuer
Become a Valuer
Become a Valuer
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
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 Well Justin EslickGranny Flats Judith TaylorResearch Justin EslickClauses for Buying Well & Negotiating Rob BalandaJoint Ventures Rob BalandaInvestor Profile Jon JohnsonWhere to Buy and Why The Reno KingsHow do I Know What Price To Pay Justin Eslick
TOMORROW: DAY 2 FOUNDATIONS FOR SUCCESS
Warren Black Matt Cosgrove Colleen Sutherland Kerri Burness Accountant/Lawyer Investor Profile Principal - Sutherlands Managing Director/Licensee Wealthsafe Property Management Equity Access Australia
Group
Write down your questions
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.
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