Hi Phil, and Ches too,

I’m just wondering what are the best resources for finding information about how certain suburbs are trending and changes in the market?
I have heard of Residex, RP Data, SQM, info on realestate.com.au
Or is it best getting in and amongst the areas I am interested talking to agents and going to open houses and so on?

Much will depend on how you decide to proceed – like, if you choose to buy in an area remote from where you are, then Open Houses might naturally be forced OFF the list. I like the idea of becoming an RE agent’s “newest best friend” in your chosen area. Even if remote, much can be done by phone/email (though it would likely be smart to meet up with them when you are “sounding out” your chosen area/suburbs initially to form a relationship).

With the others you mention (Residex etc), I’ve read that some are more up-to-date than others – and some can tell downright untruths (I have noticed median values posted that seem to indicate massive spikes on a Monthly basis – as useful as an ashtray on a motorbike). A median should be a “rolling window” figure over several months so that spikes are minimised, and overall growth becomes more easily noticed, not the spikes.

In the end, IMHO, nothing beats being in touch with an RE Agent who is “living the market”. They will tell you almost instantly of changes as noted by them.

Benny

PS Glad you enjoyed the “big picture” thread !!! :)

Hi Phil,

Is the growth potential related to new things coming to the area ie. Schools, shopping, transport?

Anything that increases demand for a property in an area will lead to a lift in price growth. With more demand, supply can’t keep up, so buyers have to pay more to “get in”. So schools, transport etc can certainly have an effect. So too can adding value to YOUR place. e.g. buy a large 2 bedder that can easily be made into a 3 bedder. This will usually lead to an increase in both rental income and growth. Maybe install an air conditioner, or a garage or carport – can have the same result. BUT, all of these depend on the area in which you purchase and the demographic that you are targetting. Or buy a house with a block large enough to be subdivided into the future to add your own growth – or reno the place, or change its purpose, or ……..

With a 95% lend is it still possible to find CF+ properties in the 250-300k range? Or would it have to be negatively geared?

Again, that will depend on the area. In a country town, $300k might be paying too much – these areas are USUALLY positive geared, but can be dependent on just one industry, so be careful…. Outer suburbs of major cities are usually the areas that you can still buy for these prices, and are usually positive geared. Take a look at this link below – it shows what a young bloke did in two years – all positive geared and returning him both positive income and growth (he manufactures some growth with renos too) :-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697977

While at the link above, do take a look at other posts in that thread – it was created to cover many of the “early questions”, so read ’em all – either to learn more, or for a refresher !!

I’m am just worried about not being able to find a tenant and then have this massive debt?

Good for you, Phil !! It is sensible to be considering the “What ifs” and addressing as many as possible before buying. Ask RE agents in your “area of interest” how many rentals are on their books, then how many are available today for rent. From that, determine what percentage of their rentals are vacant. 3% is considered “normal” – anything less than 3% is said to be tightening, or tight (around 1.5%). Above 3%, landlords might have to cut rents to get a tenant !!!

Benny

• This reply was modified 10 years, 3 months ago by  Benny.

Hi Frangypani,
Wow – the options don’t look too bright right off the bat…. But the “holiday rental” might be a path worth researching….

Your story could be my own – but my property is in the Gold Coast Hinterland (in the mountains). We were losing steadily until we bit the bullet and made it into Holiday Letting. Now, we are NOT on a beach, but there is a call for pristine environments and fresh mountain air – and COLD weather. Our major letting season is Winter !! Go figure….

Anyway, in a nutshell, our GROSS rental income has virtually doubled from the usual family rental. Of course, there are costs, but they may come nowhere near the $8k you are losing anyway.

Do some research on things like – expected holiday letting income for YOUR area, extra costs (laundry, cleaning), and see whether your Nett Income would increase and by how much. It “might” be worth going that route. To furnish, we used “No Deposit, No Interest for x years” deals to make it habitable quickly, and without digging into our pockets.

What do the numbers say? Share them here – we may be able to assist in that way. And welcome aboard :)

Benny

Hi Razoo,
Welcome aboard !! I gather from your wording that you are wanting a highish yield, perhaps in preference to Capital Growth? Or do you hope to have both – maybe forcing Growth via reno, development, etc. There would be many questions that should arise before launching into this – like, what are your goals?

Have you talked with anyone re what would be a good approach, based on your current situation and where you are wanting to head? In the case of your suggested purchase, what would be the demographic you would be chasing (sounds like family, so wanting to be near schools perhaps….) or is there another idea there (e.g. student accom for a higher rental take, but with more management required, etc, etc).

Knowing where you want to head, and why, are an important start to your IP career. DO let us know what you have in mind so we can maybe add some more meaningful answers.

Benny

• This reply was modified 10 years, 3 months ago by  Benny.

Hi Isabel,
I think you may have already telegraphed the answer :-

someone who charges a bit more but has been really responsive and thorough with information (this is important as its our first property

It is great that you have secured a tenant, but why give the useless PM any more of your money? As an absentee landlord, I would certainly want someone “responsive and thorough” in my corner if things went wrong. e.g. what if the water heater blew up, and you (or your tenant) couldn’t contact the PM? Or, what if the tenant suddenly decided to break their lease?

Though we can hope that things won’t go wrong, a slightly higher cost for a good PM sounds like an insurance policy that is well worth having.

Benny

Hi Ms New,

Richard >> there are plenty of other better suburbs depending on what you wanting to achieve.
Ms New >> I am currently renting and I hope to be able to buy my PPOR in say 5-6 years. So CG is more important in my situation.

Richard’s point is well made !! It all depends on what you want to achieve, and by when? The HOW comes later.

Consider this – though you may be able to buy one inner suburb property worth $600k, you might also be able to buy $1m worth of outer suburb properties (with higher yields, the banks may be more amenable to allowing you to buy 3 x $330k IPs). If the $600k property grows at 7%, your Equity jumps $42k. But the outer suburbs might still jump 5%, and 5% of $1m is $50k, and with less risk as you have three tenants instead of just one.

Have a think of your “risk factor”… (or “sleep at night” factor). Are you more comfortable having your risks spread across several lower-cost IP’s, or one higher cost (with probably lower yields) in a higher growth suburb. Then, can you afford to negative gear for a while? Or do you like a mixture of both types (negative and positive geared)?

What is your ten-year goal? And which kind of purchase takes you down the path toward it? Higher growth, higher cost, lower yield? Or the reverse?

Keep asking questions as you chart your course. And don’t be in a rush – make your first buy a cracker – the rest will follow more easily.

Benny

Hi Johnny,
In case you haven’t seen these already, do check out this post (started about 3 years ago, but some great input in first three pages…)

https://www.propertyinvesting.com/topic/4404268-30-properties-before-25-finance/

And then, there’s a catch-all thread that has a heap of links – one near the end of the first page points you to how a young bloke amassed a huge portfolio in a short time. I think he was a pizza delivery driver from memory, so not overly flush with ready cash :-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/

Take some ideas away from those, and see how they might fit with your situation,

Benny

I understand that I could hold onto the apartment and that it will be positive but I think I’ll have to hold too much money in it.

True, but then you can borrow against its Equity to become the Deposit on another IP (making the extra Loan deductible) and/or take equity to buy a PPOR. Whatever you choose, it is great to have so much choice !!!

Rock on,
Benny

Hi Rob,
Welcome, and well done. You already appear to have a chunk of equity – that is a good start for someone of your age.

Right now is the right time to identify your goals, thus your direction. Keep on reading, especially stories on here of what others are doing, who they are seeing, and how they are charting their course. While doing tht, ask yourself a bunch of questions – e.g. :-

1. Would you be prepared to stay in your current apartment for another xx years if necessary?
2. Do you have plans of starting a family, which could have you lose (or lower) one wage?
3. Are you a handyman – do you enjoy doing reno work?
4. Would you consider creating equity in other ways – e.g. developments (subdividing blocks, or rebuilding after demolition of older homes)?
5. When considering “positive vs negative geared”, take advice on long-term effects of such a path. It may be better to concentrate on equity building now, and create/purchase positive geared IPs later – or vice versa. This is where taking advice from others with real knowledge can set you on the right path (e.g. a MB or FP with “runs on the board” and a wealth of exdperience). What may be right for others may not be right for you.

You mentioned having an apartment with just $100k owing on it. You seem concerned that it has been paid down, thus not an ideal Rental (with less Tax deductions) and yet you mention buying positive geared in the future (which will also have less/no Tax deductions). As you can see, determining just WHAT is needed now to get you to your goal is paramount.

One good reason to SELL your apartment might be to enjoy CGT exemption, and liberate a huge chunk of cash. That can then be applied to whatever becomes your “next step” (buy a PPOR, or an IP – or both?) But then, there may well be good reasons to KEEP it.

For now, I’d say – keep on reading, thinking, and taking advice all around this subject. Meet up with other investors at “Meetups” that occur around the country. Discuss your family needs with your partner, and identify what your goals are. Once you know just where you want to be, plan the basic steps to get you there. Read some good books too – Steve’s books put in a lot of “numbers” that help to understand how IP investing works.

I learned how to use Excel prior to my first purchase and, following almost a year of free seminars, meetings, reading, and spread-sheeting, I had built up my knowledge to the point that I went into purchases CONFIDENTLY, knowing that I now had good knowledge of many of the early tripwires, and could avoid them. That, along with having a number of people with whom I could discuss any problems or plans, helped me immensely in my early days.

Again, welcome Rob. Get on this horse and ride it home (wherever that is for you). It is a sweet ride – mostly….. And in case you haven’t yet seen it, do check out this link for starters,

https://www.propertyinvesting.com/forums/general-property/4349450

Benny

Hi Ray,
Bsed on the updated information and the map, and your words, it seems to me that the Energy Co owns a “battleaxe block”. Thus they would own the driveway and be up for the fence.

BUT, you use the word “easement”, which usually indicates part of a block of land being made available for “others to use”, and restricting you from building on that portion. So, is it an easement on your land or does your land stop at the boundary as you said.

Is it someone else’s easement? The Registered Plan for your area should put this argument to bed. If it is someone else’s, then it is they who should be sharing the cost of the fence.

Benny