Forum Replies Created
Hi.
While I can’t say that I’ve hit rock bottom I did have, at one point, ‘bad’ (read as Credit Card) debts totaling about 1/3 of my yearly income. With planning, solid professional advice, lots of self education and a little good luck (leveraged, I have no doubt by my positive attitude and education) I got out of the hole and now have a modest though growing investment portfolio and NO credit card debt.
The pivotal point for me was reading George S Clason’s classic and powerful ‘Richest Man in Babylon.’
As for the family’s attitude, why not begin by making barely discernible lifestyle changes like buying the cheaper brand at the supermarket (amazing how little changes make a difference over the long run)?
Best of luck!
Art.
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi.
Where and when is this seminar?
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi.
Anyone else remember when ‘Current Affairs’ wasn’t a euphemism for ‘Tabloid S#!t’?
Still, that’s a dodgy law.
Oh, and if you want a Today Tonight giggle check this out: http://www.youtube.com/watch?v=ewhleenoxr0
(WARNING: Some off colour language from Naomi Robson…but watch to the end for the real truth.)Cheers,
Art.‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hola.
Personally I found that when starting out it was good to read a couple books with broad coverage of the property investment field. From there I identified my target niche (development) and started picking up some more specific texts.
In the beginner’s department I found Dolf De Roos’ ‘Real Estate Riches’ (part of Robert Kiyosaki’s Rich Dad’s Advisors series) to be a great introduction. He waves the real estate flag pretty hard and omits a lot of detail but it’s a good overview on the property investment world and is pretty easy to read. If you can’t find it in your local try online sources.
The second book I found interesting and inspirational is Australian author and speaker Dale Beaumont’s ‘Secrets of Property Millionaires Exposed.’ Sure, it’s a slightly cheesy title but it has interviews with a dozen or so successful real estate millionaires. All of them take a different approach to property investment and it’s a great eye opener in terms of the different approaches to wealth creation using property as a vehicle (buy and hold, renovate for profit, development etc).
It also helps a great deal to check out the monthly magazine Australian Property Investor – well worth a look.
In terms of general investment you simply can’t go past the all time George S Clason classic ‘The Richest Man in Babylon.’
Best of luck,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi AO.
I would also drop the coin on the inspections – it’s good regret insurance if nothing else.
More importantly I would closely examine the minutes from Body Corporate meetings (if applicable). If there is a known problem with the structure and/or public areas it should be noted there. If you feel there is a potential problem then look at building a clause into your contract exempting you from contributing to any applicable special levies should they arise.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Howdy.
I ran across a situation similar to this in a small NSW city last year. Someone was selling a place (a 6 bedder, I think) near the university there and was advertising it as having the potential for +ve cashflow returns. I took a look at the place out of interest and I have to say that alarm bells were ringing from the minute I walked in.
The place looked good. It was new, had all the mod cons built in, two bathrooms, broadband internet potential in every room, etc. However, I started wondering about how you would find insurance for such a place. And that led me to think about whether or not it was legal to run what was essentially a boarding house in the area.
Anyway, I called the Council and (without giving the specific address of the place away) asked them what the skinny was. The planning officer told me that the zoning of the area didn’t allow for boarding houses but that the Council was aware that, with a heavy student population in the area, people did run this kind of operation by sub-letting (a-la your real estate guy). I got the feeling that strictly speaking it was illegal but that a blind eye was turned for the most part.
I spoke to a RE agent who said that she could let it to one person for a bucket of cash and leave it up to them (the lease holder) as to how they recouped their money (ie sub-letting to other students). To me it just seemed like way too much of a legal grey area headache to get what was potentially a very modest cashflow return. And what if, god forbid, there was a fire? Would the place be covered by insurance? And what if Council got tough and changed some by-law out from under me?
Anyway, good luck to your real estate guy…I think he’s going to need it. That and a bunch of headache medicine.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi there Smiley.
I think the asbestos question is getting some good coverage from other posters here but are you sure this is the reason for the low price/good deal you’re looking at? Loads of older places have asbestos thrown into the deal and it doesn’t generally affect price.
If you have already done the rest of your homework on the place (including a professional building inspection) and all seems fair bar the asbestos then you simply have to weigh up the cost of your asbestos-related options. I’ve found that most building inspectors are happy to chat about options after they’ve been paid to inspect a place and, as has been pointed out in this thread already, you may not have to worry about it unless removal, renovation or demolition are on the cards.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi DLPP,
We’re with NRMA in NSW. We haven’t registered a claim so I can”t comment on the efficiency or quality of their ‘after sales service’.
When we were looking for a new insurer I just set up an Excel document (though a good ol’ piece of paper and pen would have done just fine) and set out all the insurers we were looking at and all the features offered, ticking in the appropriate boxes as I went. At the bottom of each column I put the cost of each insurer (as well as discounts for upping the excess).
It took a while to do because I had to sift through a lot of disclosure statement guff but in the end it was a clear apples versus apples snapshot of the products we were looking at. In the end, for our purposes, NRMA had the most ticks and a reasonable premium (note that this may not be the case for your purposes).
Which ever way you go I can highly recommend this system for finding the right product for you.
Oh, and do a search on the archives of this site as well…there are plenty of threads on insurers.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi.
I’m familiar with Dolf’s book and know how much he loves his carports. I would suggest, though I’m no expert, that more people would be interestd in keeping their car dry than in making their house look like Fort Knox. While security is certainly an issue (and I imagine you might score value points with, say, the elderly) I’m not sure how much broad value appeal roller shutters would add.
Plus, Dolf’s point is that a carport is usually quite cheap to erect so the small increase in rent it provides basically pays for the thing quickly. How much are roller shutters?
Perhaps you could call a couple real estate valuers and ask for their advice?
Good luck.
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi Nathan.
If you want a cooling off period in WA the best clauses to insert in your O&A are, as AUSPROP says, a 21-day Due Diligence clause (meaning that your numbers and reports have to stack up for you to be satisfied with the deal) and a 28-day Subject to Finance clause (but be sure this is worded such hat the finance has to be on your terms otherwise the seller could turn around and offer financing at 40%pa and you might be obliged to accept it).
Two issues ago (July, 06) in Australian Property Investor mag there was a great piece on clauses. I’d recommend reading it if you can find a copy. If you can’t find a copy or order a back issue, send me a PM and I’ll scan the pages for you.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hello Grant.
I’m a former WA native now residing in NSW and while I’m nowhere near being an expert in the Bunbury area I did investigate the Peel scene recently.
Firstly, I concur with both Simon and Derek’s points entirely and encourage you to take them under serious consideration. If you aren’t au fait with any aspects then read up, research and by all means ask questions of the forum and of industry players. Also, take Derek up on the number crunching offer (sorry for pushing extra work on you, Derek :*>). The reason I say this is when you’re looking at an IP the most important aspects are the numbers and the ‘fine print’ (meaning doing your HOMEWORK). If they both check out then all there is left is the final decision to push the ‘GO’ button.
Secondly, on the whole Bunbury-specific prospect you have to consider the following:
1) Perth is at or nearing its peak. There may be a year left in the strong growth, there may be 6 months…maybe 18 months? Even after the boom there may even be a little bit of single digit growth as things settle down so if you buy now you may have let’s say, for the sake of argument, 2 years of growth before a slowdown/retreat. However, with the Mandurah rail punching through and the freeway soon to follow there likely has/will soon be an additional little spike in value around the Peel region which may filter through to Bunbury and the South West a couple months after.
2) In my opinion (and this is only my opinion) the SW will continue to be a draw card for cashed up sea changing Baby Boomers for the coming decade. However, soon they will be getting to the stage where they don’t want to climb stairs (ie. beware of double storey places if this is your age market) and soon after that (like in 10-15 years) will fall off the perch or look to downsize (ie. a possible glut of large 3-4 bedroom places).
3) Having said all this, the freeway will conect to south of Mandurah by 2009 (Salter Point area from memory) and Bunbury will become that much closer to the city meaning that new retirees will be able to enjoy the Bunbury/wine region/sea change lifestyle and be less than 2 hours from the city. To me (again, don’t take that as anyting more) this means long term growth potential.
4) Perth’s current boom is off the back of a resource bonanza which will, because the resource is non-renewable, eventually come to an end. Some say this will gut the WA market and I’m tempted to agree. However, as long as there is the lure of the sea there will likely always be grey haired freedom seekers with leisure boats stuffed full of fresh whitebait and a ballast of cash. That’s assuming a rise in sea levels doesn’t make Bunbury akin to Atlantis.[whistle]
So there’s a pile of somewhat contradictory thoughts to take into account. For the record, the reason I didn’t end up buying into Mandurah was that my target area went up almost 8% in 4 weeks and, with my portfolio, made my numbers unworkable (as I said, numbers are the key). I ended up casting my eye further afield and bought into a seaside city on the East coast for over 100K less than the Mandurah average and have been happy with the results. Remember: The DEAL OF THE DECADE comes along once a week. Don’t believe the hype, do your homework and don’t borrow more than you could reasonably service through two years of rainy days.
Best of luck,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hola.
Friends of mine cut a little slice out of a laundry for a second bathroom once. They were concerned because the laundry was where the dog slept and where things got hung out to dry in the winter months so they needed a fair amount of room in there. In the end the second bathroom was pretty small (just a dunny and one of those little half basins) so they didn’t lose much out of the laundry but still got the value added onto the home. I can’t give you a dollar figure on the value adding but they seemed happy with it.
It sounds like you’re doing your due diligence anyway but I would suggest speaking to a couple RE agents about second bath vs. big laundry, get some quotes from some bathroom people (or from a bathroom store/auction house if you’re DIYing) and see if the figures stack up. If, indeed, the rental goes up $20-30pw ($1000-1500/year) with a second bath then work that into your calculations as well.
All of that was no doubt already taken into account but it can’t hurt to hear it all again I hope.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Dito, Foundation.
Please start a new post on the topic.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hey Marco.
Best of luck, mate.
The only piece of advice I would pitch in is the old chestnut: All that glitters is not gold. Due Diligence is the greatest weapon you have against real estate sharks and dud properties. Better to take longer than 8 weeks to achieve your goal with the numbers and reports to back you up than to end up with a pocket full of Iron Pyrite and an empty bank account.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
;-}
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hello again.
One of the great things about this forum is the fact that you get all kinds of varying (and often contradictory) information. The best thing to do is to research, research, research and make up your own mind. By all means, ask questions…but make sure you do your own sums and investigation before acting on any of the answers given to you here.
In short… due diligence pays dividends.
Having said that, as I’ve said in a previous post on one of your other topics, get rid of that personal loan ASAP. If you have money left over (which you should if you’re thinking of budgeting to pay off a mortgage) then stick it away in an interest bearing account until you have your deposit, plus a little gravy for unforseen events.
Remember, too, that you’ll have to factor in 5% closing costs like conveyancing, inspections, stamp duty (if you aren’t living in the place straight away) and the like on top of your deposit. If you’re claiming the FHOG then your stamp duty will be less (or non existant) so your closing costs will be lower but remember that you won’t be able to claim deductions while you’re living in the place.
I’m not an accountant so I’m not sure what tax implications there are with sub-letting rooms in your own home, nor am I a lawyer and I’m sure there are insurance issues to look seriously at, but I will, in relation to sub-letting to friends, offer a couple words of caution.
Living together in a rented house is quite different to living together in a house that one of the parties owns. Even if you only plan to do it for a year to claim your FHOG I would suggest strongly that you get everything in writing when it comes to the sub-let/boarding. After all, investment is a business and you don’t want the risk of suddenly losing all your flatmates (and your rental income) over some small or unforseen incident. I know it’s weird to say to a friend ‘here’s a lease to sign’ but it just guarantees that everyoine is on the same page (so to speak) and takes the arrangement seriously.
There’s my 2 cents. But again, the choice and responsibility is entirely yours.
Good luck,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hello.
Back up inMelbourne now?!
Future growth potential of established sbrurbs can be pretty accurately determined by examining the average annual growth over the previous decade. Barring any major public works (such as a sporting arena, shopping centre, highway, sewage works etc) the value of these areas should keep level pegging with the previous decade’s figures.
This being said, my recommendation would be to drop some (tax deductable) dollars on something like the Residex Future Growth Predictions Report for Melbourne (www.residex.com.au). It will set you back around $185 (a small price to pay in relation to the cost of real estate) but it will give you stats and graphs for every postcode in the Melbourne area. Look at the average 10-year growth and determine if the suburb you’re examining has performed at over 10%pa capital growth for the last 10 years. If it has then you’ve taken your first step towards determining a suburb’s continued long-term growth potential.
The next step I would take would be to look on the local council’s website to see if there are any major works sceduled for the coming months/years and what effect they will have on the local community (positive or negative). You can also call the council and talk about any future plans thay may have. Don’t worry about feeling a bit silly…it’s their job to tell you and they do it every day.
If both the stats and council info look and sound good then you can start loking at the local market to see what places are going for and what your affordability levels are. Remember, though, that some suburbs have ‘good’ and ‘bad’ areas so it pays to talk to a coulpe local RE agents about the local scene. Looking near the airport, for example, you might want to find the exact flight path of night flights and make sure they are not DIRECTLY over the place you’re looking at buying.
You are looking to make an investment that will increase your nett worth and perhaps be the first step on your path to financial freedom so make sure you do your homework. It’s okay to ask questions and to get a feel for what you are doing before diving in with your cash – we all have to start somewhere. But do make sure that your investment decisions are based on Objective Research and not Emotion.
Good luck.
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hello again.
We live in a modest apartment in Sydney’s east. The rent is cheaper than the mortgages we’re paying on our IPs so we stick around. Plus, it’s a great place and the landlord is great (when things break they get fixed straight away, things are kept clean, gardens tidy etc.). Last year the rent went up $20/wk (around 8%) but the place is so awesome that we stayed on anyway. After all, moving is such a giant pain in the neck that $960/year is more than a fair price to pay…especially when we would have to pay about that much more per annum in a new place anyway.
My point is, as a tenant you have to expect rent raises. So raise the rent $20 and if the tenants stay on then great. If not, you’re still charging market rent so you’ll attract tenants who will be happy to pay what your place is truely worth.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hi Sarah.
Aside from tourism, what has Tassie got to fuel growth? I’m not being rude to Tassie here (it’s one of the most beautiful places in the world) but for my investment dollar your options for future growth might well be improved by looking elsewhere elsewhere.
Have a look at Adelaide. Cheap real estate compared to the rest of the country and with the Howard Government pushing nuclear energy there very well may be strong growth there in the next 5-10 years as uranium mining companies look to move operations in.
Just a couple thoughts.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
Hello.
Can you use Excel or any other spreadsheet program? I’ve often found it’s easier to build your own simple calculators than to hunt around or pay for them.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
