Forum Replies Created
Hi, Darryn. To be a bird-dog means finding good deals to people who don’t have the time to look for them. In other words, you have to know how to find a good deal FIRST before you can be a bird-dog. What are you bringing to the table? Just having time and a good attitude isn’t enough (though it’s a great start).
My suggestion :start looking at properties. Get some knowledge, and network.
Uh, a $250k – $300k Sydney property would probably only rent about $200 – $250 pw max. Why not suggest to your friends to rent a $200 – $250 pw property and save the difference? They could save at least $10k a year. The Sydney market isn’t exactly jumping so there’s no big hurry.
Incidentally, I think anyone who can afford $450pw in rent and complain they can’t save a deposit needs to get their financial priorities straight first.
AlexThe facility would turn your loan into a big FX punt, doesn’t it? Does it change the currency of the principal of the loan into some other currency? If so, and your main salary, rent, etc is in Australian dollars, you lose/gain money when the FX rates move.
I thought about using a Japanese yen mortgage (1.0% or something) but I decided having that big a yen exposure to FX risk wasn’t worth it. History has shown I would have been better off as the AUD has strengthened against the Yen, but it could just as easily have gone the other way!
AlexI think Kellie-Lea has left FREWS, but I agree that FREWS is good. I’ve used them a couple of times and the staff are always friendly and happy to help you.
AlexAnyway, I’ve read the book. Some interesting ideas (such as buying physical gold as a hedge) though a bit too scare-mongering at times (e.g. a government can cancel its currency at any time: theoretically true, but unlikely to happen in any of the big Western countries).
Also lacks some follow through. He talks about buying some unit in Bondi for less than $100k and another unit was put up in front of it, blocking the view. However, even two blocks from the beach in Bondi these days would be worth a lot of money!
Some interesting anecdotes on how he financed a commercial building by negotiating for increased rent before settlement, etc.
All in all, a decent book with some good ideas. A bit too wafflely and selective at times and doesn’t give as much solid advice as I would like. But then you don’t expect to learn everything in a $20 book!
You have to look at him as a reverse role model as well: he says things like living high with boats and Rolls Royces, etc and I thought “ok, so I should be more conservative than that.”
AlexHere you go, Wilandel.
http://www.oum.qld.gov.au/?ID=29
Very interesting. So far those developers who bought cane land around the coastal strip are screaming. The government may reverse it’s stance down the line, but these things tend to be self-fulfilling, right? If the government insists on the plan for 5 years, say, the developers are going to start developing homes (such as the new subdivision in Edens Landing: I just bought a house NEXT to the new subdivision) and infrastructure according to the plan.
If the government holds on enough, developers will fulfill the plan for them. As someone else said, transport is ALWAYS a problem everywhere, so you’d do well to stick to the current train lines instead of hoping new tracks will be built.
AlexGenerally, if there’s a body corporate, treat is as a unit (townhouses, units and villas would be included here). If there’s no body corporate, it’s a house.
My own definition: if I can blow it up without asking the neighbours first, it’s a house!
Generally, the more land content and the bigger the place the quicker it appreciates. So a townhouse will appreciate more than a unit especially in later years. New developments get smaller and smaller. So if all around you are new smaller units and you have a big old townhouse, your townhouse looks a lot better. You can always renovate inside and out: you can’t enlarge townhouses and units.
Houses will appreciate faster especially over the long term, as the density changes. In 40 years areas either become luxury houses or turn into medium density. If you’re thinking long term, houses are best because the big money comes when you can change its use: i.e. from a house to units, etc.
5 years is a little short-term for property unless you’re in a hot market.
AlexAt what age did you start investing in property?
First property (Brisbane townhouse bought for $170k, current value $260k – rent $255 pw) at age 20. Now 27.What difficulties did you have in doing this?
Not much. I had enough cash for a 10% deposit + costs, and I was employed at the time (bank lent me $150k on a $35k salary).Was your first property an IP or PPOR?
IP. I was living at home at the time.How long did it take you to back up your first purchase with another?
8 months. First IP settled Jan 2000. Second IP (2 bed unit in Brisbane, bought $162k, current value maybe $240k) settled Sep 2000. That was when I realised the banks are willing to lend gradually, since the bank would never have lent me $300k in one hit. Make me realise that I really CAN build a big portfolio even at lower income.How long did it take to acquire 10, 20, 30 or more properties?
Just settling on my 6th property. Missed out buying anything in 2001-2002 (kicking myself now) but picked up some ‘less hot’ (houses in Perth and the Gold Coast / Brisbane corridor) in 2003-2004.What are your plans for the future, ie. how many properties will get you to where you want to be financially?
The goal is $1m net after tax cashflow per year, so as many properties / shares etc as it takes to get there.The more income you have and the more assets you have, the easier it is to invest. A holiday will kill off your savings, though you’ll have a great experience.
Why not combine both? Say in Europe, get a Working Holiday visa, and work while you’re there. You get to meet the locals and make a few Euros.
I did it for the UK (2 years) then came to Japan (almost 2 years now). Money AND experience.
AlexWhy would you need $1m a year? Ferrari, Armani, waterfront mansion in Manly (I’m a Sydney boy), summer in the Hamptons, winter in the casa in Italy, flying First Class all over the place….
I’m with you, Sonny JIM. My goal is $1m as well.
Now, the $1m question is: what plan have you got to get there and/or what are you currently doing every day to progress towards your goal?
Hi, gmh454. I agree. This has not been a normal cycle in that it has been a lot more volatile than before. I think anyone who bought Sydney properties at 3-4% yields are in for a LOT of pain in the next couple of years.
My point is this: there is a massive difference between buying at (of valueing existing property at) 5% yield and the ‘median price’ or whatever price the newspapers are touting implied a yield of 3.5%. Median price is important, but in a market as inefficient as property it’s misleading.
Therefore, if you buy a property renting for $200 a week for $200k, and suddenly the market drops by 30%, are you in a hole? Not necessarily. The ‘market’ was valuing your property at 3.5% yield of $297k, because a lot of people were buying properties around you at that sort of price. So even if the market dropped 30%, the ‘median price’ just moved back to your purchase price.
My own strategy is time in the market, but I also do some cashflow analysis as well. I mean, buying at 3% yields in Sydney would have been insane. I’m now starting to see ‘average’ yields rise to 4.5% or so, and if I look hard enough I’ll see some 5%+s in Sydney.
Exactly. My properties are cashflow neutral (they’d be positive if I didn’t keep re-financing to buy more), and I’m still young. I’m planning for 7.2% average annual gains, and I’m guaranteed to be rich by 50 even if I do NOTHING from now until then.
Obviously I’m going to do more than sit on my hands. (Plus the more I see the world the more money I realise I need: currently up to $1m net income a year with at least $5-10m needed for the property (-ies?) I’m going to live in myself!
I’m literally drooling over a market correction in Sydney properties. I’m from Sydney and I didn’t buy from 2000 – 2003 (always thought it was too expensive). I’m currently overseas but when I get back in 2005 I’m going to actively look at properties. Pick up just one or two a year until the boom that’s going to come in the 2010’s.
I just find it funny how people keep saying ‘But the market won’t boom again until at least 2010!’ Heck, we’re almost in 2005. 5 years is NOTHING when it comes to property investment! Compared to the 40 years you’d have to work for an inadequate super payment….. ugggghhhh!!!!
Exactly. A down market will sort out the true investors from the people who just (luckily) caught a rising market.
Personally, my own prediction for the Sydney market (missed out on the Sydney market this time around, though I bought a few places in Brisbane between 2000 and 2003):
2004-2005: the market stays flat. Interest rates go up slightly. Nothing much happens in the market.
2006-2007: people start realising that those expensive properties they bought at the peak of the market (and are losing 3-4% a year on because they ignored rental yields) are not going to appreciate anytime soon. Interest rates will go up and people panic and sell.
That’s when people who have been preparing for it pounce. I only need 2 or 3 good house deals a year to get set for the next boom. So in 2006 – 2007 I buy maybe 5-6 houses ($300k each, say) and when the boom comes in 2008 I just sit back and get rich!
My personal goal is “To do whatever I want, whenever I want, wherever I want”.
Definitely have to buy insurance, just because you can’t quantify how much you’re up for in the event of an accident.
I just settled on an IP in WA. A week after settlement the PM emails me and says part of the fence blew down due to strong winds! Luckily I had insurance from day 1.
A few hundred dollars for a good Landlords Policy is NOTHING compared to the potential losses in the event of an accident.
AlexHi, Yorker. I’ve seen some blocks (6-8 units) one single title, so you have to buy the whole building in one gulp.
