When KBrodee first started this thread, questioning his own thoughts re Frankston North, one of the parameters that can be useful is to consider the Median Values for an area. In this case, for reasons mentioned earlier, the Median was WAY South of reality. Have a read from here (link below) where I first questioned KBrodee about his purchase price of $376k vs the then Median Value of $316k.

https://www.propertyinvesting.com/topic/5029447-australia-undervalued-suburbs-opportunity/#post-5029584

That led (over the next few posts) to a few lightbulb moments re “Median Values”. Have a read. It is not that Median Values are “valueless” – but more that the calculation of the Median needs to be considered to be able to determine its accuracy (or otherwise).

In short, if values are moving quickly, the Median Values just can’t keep up as they are calculated via a 12 month “rolling window”. In his case, the Median when he was looking (around Sep 2016) was $316k, asking prices were around $380k at that time.

Today (May 2017), the Median is showing $394k, and asking prices tend to be in the early $4’s – so the Median today is not so far out of whack – but it is still a little South of the truth.

As a lagging indicator or as part of history, the ol’ Median is quite useful. It also works well if values in an area are either stagnant or slow-moving.

But all bets are off if an area has been spotted as “under-valued” and folk are knocking down doors to buy in that area.

Benny

• This reply was modified 7 years, 5 months ago by  Benny.

Sounds good, San.

You asked “How can you check?” and the quick way is to take a look at the Median Values for the area.

They show $400k for Acacia Ridge 3/1 houses, so you paid way under that – tick !!
Also median rent for a similar house is 4.5%, so if your gross rent is $360 a week or better, then another tick.

Other than that, asking around the RE agents can give you the warm fuzzies too. Meanwhile it sounds like you have done well, as you seemed to do all the right things for an outta-towner. Well done !!

Benny

PS I had a chuckle over your typo – the 600 sq foot land. I know you meant 600m2 as the HOUSE would be bigger than 600 sq ft, right?

Hi San,

Biting the bullet for the first time can be knee-trembling, eh? But if you have been smart, and have taken on board some of the earlier replies and have stayed away from “gotchas”, then all should be fine.

To that end, maybe YOU can answer some of your own questions (let’s see, eh?) ;)

1. Is there a way I can check value to make sure it is a great deal? I only used comparable sold properties.

Good move – so, how did it stack up? You don’t say how many bd, ba, or ga it is – wanna share? How big is the land? Did you check it against flood maps? How close to rail, schools, etc? What kind of area is it in? Are they ALL older homes, or is this in an area of gentrification? etc, etc.

2. What are the key steps from here to make sure I improve cashflow

Don’t spend too much – beware of spending dollars that won’t add much in either rental return or in equity. Did you check with the RE agents in the area re “just what tenants are looking for in this area?” e.g. is it a young family area, a yuppies area, an older people’s area, etc. That question should have been asked before buying, but maybe knowing the answer might steer you toward an answer to “what do I need to spend money on?”

3. What advise you can give me on doing this reno? how to decide what action will improve the rent?

Specifically, in some areas, you wouldn’t fit a new granite benchtop – but you might be able to find a “seconds” benchtop on Gumtree (or even a whole kitchen for $1500 from a “pre-loved kitchens” shop – there is one in Beenleigh that I know of). A fresh paint job can lift a place quite cheaply, but if it is clean already, why would you? Paint is useful to hide a ghastly colour scheme, or to hide recent walls knocked down, or erected, so can be mandatory in some cases – but is paint NECESSARY in your case? If not, don’t! Houses are good when clean and bright. Is this one clean and bright without paint?

See my answers to 2. re actions to improve the rent. Keep in mind that everyone wants to protect their vehicles – so even a cheap double carport can lift expected rent by $10 to $20 a week (compared to houses without them). So, what if you found a secondhand one, and got it fitted for $1000, then got an extra $20 a week in rent – it is paid off in a year, but it keeps on paying you over time. Or you borrow to have it built, and the extra rent pays for the loan !! Whatever works in your case – like, does a 45 year-old house need a NEW carport? I say No – what do you say though – you know the house.

Main thing is re tenancy though – if going with your gut (self managing), good luck. I used an Agent for all of mine. I like to have them being the “interface” even if it costs a bit more. If you get a crook agent, you can swap them fairly readily – but if you get a crook tenant, you have a problem. So, check out the managing agent carefully before choosing them. Check with other people around re “Who they use” so you can learn who to go with, and who to stay away from.

Food for thought. And well done too, :)

Benny

Hi Simon,

Wow, you doing it all yourself then? Well done.

I find myself now however with lots of finishing off small jobs to do & little time to get them done.

Depending on WHAT those small jobs are, is it worth paying some “handyman” type to race through (with or without you) to help speed you to where you can get an income from it. e.g. if it will take you another 3 weeks to complete, but a handyman can be working this when you are “at work”, you could perhaps bring in 2 extra weeks of rent that you wouldn’t otherwise…..

What advice do you have to get everything finished & NOT continue to add small bits to the list of jobs?

As above, it really depends just what those jobs are. Maybe have a RE agent come look at it with a view to picking up the mgmt of your place – have them tell you what is really needed, and what is “not necessary”. Again, I am firing blind here, as I don’t know just what these small jobs are.

What does the wife think? Or is she the one who is saying “We must do xxx before we rent it” and is adding to the list….. ;)

Benny

• This reply was modified 7 years, 5 months ago by  Benny.

Hi Brett,

I am considering buying another investment property.

Good to hear – have you always bought new? Or OTP? And always in Adelaide? Just wondering…..

I am a bit interested as I hear some saying “Buy new for max depreciation deductions” and it always just seemed to me to be a strange reason to buy new. And if you HAVE always bought new, were they always bought complete rather than OTP?

Anyway – sorry but I can’t help with your primary questions, though one of your comments did have me think things seemed strange – this comment:-

about 10 developers are all listing the same property.

My immediate reaction was to query whether the same company has ten different names – and alarm bells went off immediately.

But, I don’t know if there might be legit reasons for this to occur, so I will step back to see if others can come up with answers for you.

Benny

Hi Simon,
Gold Coast apartments have had quite a checkered history. In the late 80’s (was it?) apartments were often changing hands for double and triple their original price – and then the bottom dropped out when we had “The recession we had to have” – Paul Keating. They then dropped markedly in value (had been well over-priced by marketeers), and they then languished for MANY years.

In the early 2000’s we had another boom in Brisbane. I wasn’t watching the Gold Coast then, but I suspect values would have climbed once more until about 2006 (a year before the GFC) then once again stagnated, as did Brissie’s prices. Recently people are talking of Brisbane “starting up again” as Syd and Mel values keep rocketing upward – at some point, many will look “elsewhere” and at that time, Brissie and Gold Coast will come into their own again.

After the last boom, Brissie’s median house price settled near to Melbourne’s median level. Right now, Mel’s median is WAY above Brisbanes – so I think there is a lot of room to move. And a quick search revealed where an Australian RE guru John McGrath is saying “Gold Coast is next!” here :-

Real estate mogul John Mcgrath has tipped the Gold Coast suburb of Mermaid Waters to be the top growth suburb nationally in 2017, according to The Australian, as renovations lift values in the area close to exclusive Mermaid Beach.

…from this link:- http://www.news.com.au/finance/real-estate/buying/property-2107-gold-coast-set-to-boom-but-still-no-end-in-sight-for-sydney/news-story/0d10fe1f6ec94ddc1e1698eee52dc368

Is John McGrath right? I would think so – SEQ has been marking time virtually since the GFC with some signs of an upturn appearing last year. There is still lots of “room at the top” in my opinion.

Just one sign (to me) that SEQ may not boom as much as last time comes from the overall economy right now – with wages not increasing much, unemployment not robust, and interest rates looking like “the next move might be up”. I don’t think it will stop a boom in SEQ values, but they may not reach the heights of previous years. Of course, Syd and Mel might have values “settle back” too – that means SEQ won’t need to climb so far to meet Mel’s median again !

Benny

Hi Lewis,
Good to hear you mentioned a “compaction report” as this would be one thing that would be mandatory after such a “fill in”. e.g. if you are building on land that has been untouched for generations, the weather has compacted things to the point where footings or a slab would remain in situ for many years without concerns. But, as soon as you dig up, and then re-fill, compaction becomes necessary and (in the past) it also needed a time delay prior to building on it again.

Ask any engineer who is handling that side of things “How soon can we build once compaction is completed?” and see what the answer is. Maybe even check with any friends who might be builders. btw, I am NOT a builder – I am only speaking from “general knowledge”, and things may have changed over the years. But I think it is one to watch closely, and to ask lots of questions about.

Benny

Hi Warren,

https://www.propertyinvesting.com/topic/5034793-sunshine-coast-property-group-meeting-tuesday-9-may/

You missed that one by three days, but keep your eyes open for other meetings up that way. If you are OK to travel a bit, you might want to visit the Brisbane meetings too. Go to the “Heads Up” forum for posts that alert our members to up-coming events.

Brisbane meetings seem to happen more often than Sunshine Coast ones too, so if you can travel, you will get to meet a heap of people quickly who are interested in investment properties.

Welcome aboard too – I hope you get a lot from our website,

Benny

Hi fxdaemon,

I too will eagerly await an answer from those who know. In a quick reading, I get the impression your accountant is being a “good bloke” by owning up to not being an expert. In essence, I think I would be looking for someone else to handle my IPs. He might be great with “businesses”, or with Super – just not with property.

As I understand it, things aren’t as onerous as he has made it sound. e.g. I believe there is a time period where you might have a “PPOR overlap” without creating any problems for yourself. or, if you don’t move immediately into your new PPOR, so long as you do move in (no-one else rents it) there will be no issue to call it your PPOR when it suits you. i.e. you don’t have to nominate it as your PPOR immediately after it has settled.

Anyway, as I said – I’ll look forward to a proper adviser type who will come along and paint a better picture for you. Me, I just wanted to help you relax a little, as I think it can/will all work out with few issues.

Benny