??????

Would you buy a pair of shoes without trying them on? a car w/o a test drive? or a spouse w/o……….

No-one likes rhetorical questions but you would have to be mad to buy a property without setting foot inside.

How many of us have seen stunning photos on the net and arrived at the inspection to find the place shares a wall with a brothel, smells of beastiality and backs on to a shooting gallery?

Forgetting the fact that you may buy badly, property ownership exposes you to serious liability and to take such a risk so lightly is as good as giving up your right to complain when it sends you bankrupt.

But on the upside you could really make the vendors day…..

Hi Andy,

Perth and Brisbane are OK. But for the property that you are describing I don’t know how you could go past Cairns. I just found a 4 bed 3 bath 6 year old house in a good suburb that will rent for over 7% gross on a long term unfurnished basis. It only cost a little over 200K, the vacancy rate is negligible and there is excess demand for owner occ and rental properties alike.

But more importantly you have the Barrier Reef, Daintree Rainforrest, Tully River and the best big black marlin fishing in the world.

You could furnish the place and rent it from August to March for 10% and spend the other months in Cairns when the skies are blue, water calm and temp is 25 – 30 Deg.

Mel’s right.

Bearing in mind that the valuer will probably be doing 3 or 4 vals in the day he inspects your property it makes it a whole lot easier if you or the agent can provide some reasonable comparables. They should be settled sales of alike properties in close proximity to your new purchase. It’s always worth being bullish with your estimate for a refinance because the banks will occasionally let it through without a val or have a panel valuer do a ‘drive by’ to check it out. As easy as it is, the extra equity is real money to be drawn down.

The biggest problem with generating instant equity from a purchase is that when a mortgage val is done after exchage the valuer will always adopt the purchase price as the value even if the property has been bought well. Obviously if it has been bought poorly they will adopt a price below purchase. This relates more to their legal liability than actual market value. This is hard to get around as the bank will appoint their own independent valuer and will be most unlikely to consider evidence form one you instruct.

So it seems there’s much more chance of creating ‘optomistic’ equity in refinaces as opposed to new purchases.

First things first….of course the agents are legally obliged to submit all offers to the vendor.
But whilst we’re generalising about the agents lets add the fact that like the used car salesmen, politicians & journo’s their behaviour is a reaction to what is rewarded in their daily experiences.
Not wanting to get into nature vs. nurture but having spent considerable time on both sides of the RE fence I think that a few of the responses in this thread have been a little narrow minded.
In my youger days as a eager real estate recruit I vividly remember a discussion I had with a buyer who had missed out on a house I was selling because he thought I was b*******ing him (his words) about another buyer making an offer. This was a guy who, with his wife I had come to know and like. He was nice enough to inform me that I was “just another ****ing agent” and that it was my fault that he hadn’t got the property. He’d even signed an offer stating that it was his absolute maximum.
Anyway if i ever got the appraisal wrong we didn’t charge a comission and tried to do the right thing along the way. Unfortunately I found that the agents who bought the listings got the business, conditioned the owners and got the fee.
So needless to say I left residential sales to the overquoting agents that the public rewards.

Jump in with both feet.

If you have to pay mortgage insurance, do it, if you have to buy the worst house in the suburb, do it etc.

Use the net to find an area that you can afford and meets your required property profile and talk to a number of banks, brokers etc. as they all have different criteria and you will find someone who will supply you some OPM.

Go for it

Hi Nobleone,

Thought this post may have been about my tenants from the title.

Regardless, I would think that your strategy would on a macro scale depend on your existing situation, time horizon, cash flow & reserves etc.

All being equal though if you are trying to build wealth in the medium to long term I would personally suggest the buy, renovate and hold approach. This will give you access to neutral or positive gearing in areas in which it is otherwise unavailable. It would appear from your question that you have ability in construction and you should take advantage of that if you can.

Building a house from scratch is notoriously problematic, expensive and not tax effective(as until the property is an income producing asset it is non-deductable). Selling a completed property is also expensive particularly when you can have it ‘optomistically’ valued and refinanced in a much more timely fashion. I believe that future wealth is simply a factor of total portfolio value and time so I’m all for measured accumulation.

More specifically I would find a nice little brick & tile 3 bedder in SE QLD for about $240k and another further north for about 160k if you have the serviceability to support it in the short term.

But then that’s just my 2cs

Good luck with it.
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Afternoon Daniel,

I’m a commercial leasing agent and typically we would charge 50% of our standard scale of fees being 11% of gross annual rent excluding GST for a new 3 year lease or 15% for 5. This applies to negotialtion of a new lease with an existing tenant.
This is a bit of a grey area though as I know of agents who charge a full scale. It should be detailed in the managing agents agreement and should further stipulate fees in respect to market reviews, exercising of options etc.

Cheers[^]

Morning Brian,

Whilst it may be fairly anecdotal I used to work in residential r/e in ’99 and couldn’t count the number of buyers I came across back then who were “waiting for prices to fall” because the market was “overheated and just about to crash”. I kept in touch with them in successive years as prices continued to rise and yields fall. As I watched, their requirements changed from semi’s to 3br units to 2 bedders etc.
Unless you are in the market to some degree you risk it moving against you. If it is your first one do your due diligence and jump in.

By owning property you also avail yourself to a lot of financial bonuses (optimistic valuations/ PAYG witholding variations/ depreciation) that you can be fairly creative with. And if it genuinely is CF+ what have you got to lose?

So do your homework and go for it.

Good Luck

Crashy

I too have read the more recent edition and with the obvious ‘different strokes for different folks’ out of the way the following points come to mind. I note that the figures in the 13 y.o. book may be somewhat inaccurate.
I found the ‘More Wealth’ book quite positive in its appraisal of +ve gearing with an anecdote springing to mind of Jan arguing that her +ve CF regional properties were equivalent in gross gains to those of a –ve gearing <5km city investing friend.
More generally though I can’t help thinking that in a world of televised renovation melodrama and other idiot box addictions that any book prompting people to think, plan and act for independent retirement is a good thing.
Any theory/religion/ism etc. that dismisses other categorically is the less for it. After all if all it did was affirm you existing PI beliefs then it was a valuable read after all.

I have fixed 2/3 at the moment and keep the rest on discount variable for the offset. Both IO. I think it’s an under rated method of risk reduction and locking in the greatest expense related to the properties allows me to be a little more aggressive in other areas. Beware the time that passes between signing up fixed and settling though as they sometimes adopt the settlement rate which may have risen.