Hi all, long time lurker, etc…
As a brief introduction of myself, I’ve long had an interest in my local real estate market (Gippsland area, particularly Latrobe Valley) own our PPOR essentially outright, and currently have one investment property locally. In the previous few years I’ve done a couple of semi major reno/flips that have allowed the pay down of our OO debt, and now keen to “make hay while the sun shines”, so to speak, with the new-found freedom of not having any non-investment debt to service (the investment also covers all outgoings).
So, we had some conversations with an investment advisory type company whose preferred option was a new build on the Bellarine Peninsula, and whilst I understand the tax benefits of higher depreciation, positive cashflow etc, they struggled to address some of the concerns I put to them, i.e. primarily what evidence/history/data/rationale do they have to support claims of strong capital growth they’re stating for this option when these Greenfield new estate houses often see subdued growth in early years.
The one thing that really got my attention though was when he compared the Bellarine Peninsula to Mornington Peninsula, and predicted a similar boom in coming years to that seen on the Mornington Peninsula over the past 10+ years.
What are people thoughts on that comparison, and the Bellarine in particular? Perhaps, sensing my caution and knowing I’m on the eastern side of Melbourne and familiar with M.P. he thought this would give me a reference point for growth possibilities. But again, what basis for this statement, or the possibility of this playing out… I’m not so sure!
FWIW, there are some alarm bells ringing and we’re leaning towards other options, but the comparison to “the other” Peninsula of 15 years ago definitely got my attention!
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This topic was modified 3 years, 7 months ago by
Damien.
I don’t exactly like the idea of “crystal ball gazing” the market, because expert economists get them wrong all the time, so what makes us think non-expert economists can get them right?
In the Eastern Asian philosophy, they say “you can control the Earth, but you can’t control the Heaven”.
Market is like “Heaven” to my opinion and I have no control of if it will go up or down.
So it is much better to buy something that allows you to add value. Basically, the idea is:
— Because you are adding value to make it profitable (rather than banking on wait for x years for value to increase naturally), it means even if the market growth is 0, you can still make a certain amount of “baseline” money, and you are already happy.
— If market growth is above 0, you make bonus money on top of your “baseline” money and you are even happier.
— If market goes down, you still have a degree of buffer to protect yourself and be able to at least break even rather than lose money.
I don’t disagree, and like the “value add” element. Still, I’d rather do that in a market where my educated opinion leads me to believe that the market will outperform others. There are indicators that the Geelong/Bellarine area will be one that see’s strong growth in terms of population, jobs, government spending etc, which is one good underlying factor to drive property price growth. If it goes gangbusters like the M.P. has the last ~15 years, I’ll no doubt look back and kick myself for not buying a couple in the area! But I’m just not familiar with the area to understand if it’s a fair comparison to make. :-)
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This reply was modified 3 years, 7 months ago by Damien.
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This topic was modified 3 years, 7 months ago by
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