Advice

Is it really worth $380k if the bank valued it at $340k. My experience is that bank values aren’t that far off. After CGT and sales costs how much are you actually expecting to walk away with? Assuming you have an 80% LVR you’d probably get enough to buy elsewhere I’d just confirm that before committing. Plus the purchase cost as well.

My other consideration would be whether it’s now generating a passive income which might be more useful than a deposit – although it sounds like you need cash and your serviceability is fine.

Either way just run the numbers and see what decision best matches your goals. For me a passive income and lower chance of growth sounds pretty good to me.

Hi bla,

Well done for looking to increase your wealth by looking for property in an area with subdivision potential.
I think that it is always a good idea to learn different ways of increasing knowledge. I wish I was thinking similar
to you when I was only 23 years old. I made a point to read some of your older posts so I know that the place you want
to sell is (or was) your PPOR.

You may have overlooked something important about your current circumstances (with the refinanced property).

You are thinking of selling the property because it has recently increased in value & you believe that its value
wont increase again for a long while. Do you have reasons why you think that the increase is slowing for you?

If you sell, you are thinking of buying in the suburb of Sunshine Victoria. Sunshine has also experienced a recent
property value increase. Can you see my point yet?

Buying in Sunshine (now that it has recently increased in value) means that you are also purchasing the inflated price.
Your property has recently increased in value & now you are selling to crystallise that increase. The Sunshine
seller will be thinking & doing the same to you. The wealth you make from one place is immediately spent in the other.
This is more of the mark of a property trader rather than a property investor.

Did you think about buying in Sunshine before the suburb increased in value? Answering that question now is not “wealth”, asking yourself that question 3 years ago, is “wealth”. Purposely deciding to (or deciding not to) invest in a product before it increases in value is my goal.

Buying a product that has had a recent value increase (before I bought it) means that it will have to increase in value again soon for me to make any money from it. I would hold onto a product that was purchased before its value increased because it has already proven to give me wealth (it increased in value after I bought it). If all we had to do was look for property that increased the most in value then we would all buy in Hawthorn & Toorak & we’d all be rich now – unfortunately NO.

Investing is knowing “why” you’re buying, “why” you’re selling or “why” deciding neither for the moment. Sometimes the suburbs with the largest value increase is followed by the largest stagnant trending values – & conversely, sometimes large increases are followed by even much larger ones. Some people sell-up too early and “slaughter their cash cow” which could leave the new owner/investor to milk most of the investment rewards instead.

You may want to live in Sunshine & that may be your purpose for selling up & buying there (your “why”). The decision to buy does not solely need to be money based. You asked for a financial planner, you will find out that a financial planner cannot answer your “why” but they will ask you to search deeply for it. Happy findings!

Wishing more wealth to you mate.

Hi Bla,

It’s great to read that you are putting your money & your mind to good use. I’m pretty sure that I was playing with my Sega Dreamcast video game console at your age.

I tend to agree with you about Sunshine, it has done (and probably will continue to do) extremely well over the years.
There has been a big shift in attitudes regarding its prospects. I don’t think that it was easy to predict how well that property values have risen over there & in other locations.

I think most people thought that “empty nesters” would sell their homes and downsize closer into the CBD (live in cbd apartments), thus leaving their homes for new home buyers – but that did not happen for the most part. The cbd now seems over stocked, empty nesters are subdividing their larger blocks, still living in their dwellings & selling off a smaller parcel of land to other home buyers. Some empty nesters build a dwelling on subdivided land, others sell empty block(s).

Obviously I am generalizing but what it does show is that an investor/developer, that has been involved in the property industry for decades, has a similar chance as “the new comer” of becoming successful through property. But……this is not the case in reality, is it? Investors/developers with the experience & wisdom seem to succeed more often. There are many reasons why but one reason for this discrepancy may be because the empty nester bought their property before its value shot up & they have had an opportunity to capitalize on the back of that fact. They are creating wealth from thin air. They did nothing more than to give themselves that chance to succeed. Some are very smart & wise people – others are not. IQ does not matter very much – wealthy people just think differently, not necessarily smarter.

By your admission, your current place has had a value increase so it’s not something to let go of without being sure that you are going to better it. Are you able to buy in Sunshine & evaluate this 2nd property whilst still owning the currently owned property? If so, you will have a lot more power than always moving all of your eggs from one basket to another. If you cannot afford to own both, ask yourself “why” and work towards giving yourself a better chance to owning both…….& then owning more. I don’t mean for you to over leverage, or to over extend yourself with loans, I am saying that you should hold onto the success in your life. By all means, get rid of non-performing property – however you should accumulate “performing” property because that’s your end game. You are the only one to judge whether you have a “performing” property or not. Does it get you closer to your goals?

I can say that I’ve had properties that went up in value & then seemingly stagnated in value for 5 years & then went back up in value again. In reality these are false conclusions, property is not very liquid (thankfully) so my property could have lost in value (for a time) but I just didn’t know it. If I sold during the 1st “sideways” movement then I would have missed out on the biggest value increases to come afterwards. Like everyone, I love that property values increase but my next comment is going to sound very strange & many readers may raise an eyebrow or two after reading it……..: I also love the “sideways” movement with respect to property.

It is the sideways movement that makes the property affordable to an entirely new group of buyers. Then the property values shoot up after this new group buys & values again go into a sideways movement for another new group to catch-up & afford it.

Buying in suburbs that have already increased in value makes you one of the “new groups” that I am referring to. It just means that the most time has to pass for this new group to wait out for another value increase. If the “new group” buys & then sells before the property has a chance to increase in value then they could be setting up another identical situation of perpetually “missing out”.

Anyway, I think that I write too much & go way off topic with my replies but the members on this forum are super polite & have not kicked me off it yet. Apologies to everyone that prefer the simple / logical replies, they’ll have to skip my entries lol.

Keep well & good luck.

Hi mate, you can message me anytime you like – no problems.

I know what you mean about there being a bit of an information void with respect to the property industry – I think that this site does very well to help fill that void. Some replies may be lax in word count but those same replies usually make up for it in content accuracy. Some professionals answer in a very minimalist fashion but those same professionals are normally the first ones to reply to people needing quick replies & they are the ones who have contributed to thousands of entries. They are the ones who really write too much, not me!! That’s the argument that I will make to anyone that wants to silence me….hehehe.

To me, this site is a living, breathing library of wealth – everyone here (experienced or not) has a lot to teach & a lot to learn.
What I take from this site is getting a feel of the different mind-sets of investors/brokers/developers etc. Somehow it helps me to react better when I talk to bank staff, when I’m in an intense auction situation & it also helps me have a better marriage……….OK, I was joking about helping me in my marriage because my marriage is already perfect. I just wrote that for a laugh (in case my wife reads it). There needs to be some % of fun factor in every important decision in life (property stuff included) so hearing how others think & feel is exciting & fun for me.

I think that your approach to learning & getting closer to your dream job is a wonderful mind-set. I’m sure you will achieve that. You will learn heaps but will never learn it all before you start – some of the learning can only be done after you start.

Cheers & good luck.