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Sounds to me the very fact that this conversation has taken place should ring alarm bells for 2 reasons
1. The developer is ruthless and not supporting his team or system, which may indicate hes not trustworthy or
2. The develper has too much time on his hands and may indicate he is havig trouble moving stock or is unhappy with his agent because his agent hasnt sold much lately.Ether way remember do all your sums and base your purchase price on what the sums tell you, not what the developer and agent tell you. Negotiate hard as the hourly rate is the highest hourly rate you will ever get.
If you put to much pressure on the agent to rent it either by too high a rent or by threatening to go to another agent you will srew yourself, as they will get you a tennant. But it wont be one that meets the usually stringent criteria. (I used to be a property manager- seen it happen many times).
A strategy that always used to work was offering the first two weeks rent free for a twelve month lease. It lowers your inital rental figure but it makes your rent higher to onsell the property. You might lose $520 in rent but you will pick up $6000 or so (you do the calcs) in your sale price.
I have no experience in this area but have done a hell of a lot of reading on hotel and serviced aprtments.
It takes even the best establishments around three years to get there marketing well established and get a good crew of returning and new customers which is the key to high occupancy.
From the westpac 2006 hotel report, Perth has about 75% occupancy in the hotel market and is tipped to increased slightly in 2007 and 2008. Perth is expected to have 6% growth in occupancy for 2007 and 2008. It has 1.5% additional hotel rooms under construction and 2.8% additional serviced apartments under construction. So it would apear acoomodation rates in Perth will well and truly be on the rise.
Traditionally hotels have the highest occupancy rates accross the country. Average stays across the nation is 2.2 nights. So youd need to factor in lower rates than 75% at best. And youd need to factor in that it will take you up to three years to achieve your maximum rate.
Hope this helps. Im sure som people with actual experience can provide real occupancy rates.
Good Luck!In the current market no.
Following a major correction hell yeh.
Mid way id be in both property and shares.
Im not a stock broker or financial planner so dont act on my advice. Its only an opinion.
Any one planning to sell up would only do so after consulting a financial planner and or accountant as everyones circumstances are so different. CGT implications, etc etc.
So no im not advocating that you sell up.
But im definitely saying that i think (opinion) now would be a rediculous time to buy. Any shares i bought in the last 12 months or so ive now sold and im patieintly waiting for a correction. Which may be tommorrow or in 18 months. But rest assured when it happens the money i will make then will far exceed any that can be made at the moment.
Its so much easier to make money early than late. And its safer.
There is just little value in most stocks at present. Even Clime have stopped buying on behalf of their managed funds and are heavy in cash. They havent sold, they have just stopped buying.
The thing is the stock market retreats severly and swiftly compared to prioperty and despite a strong economy the stock market is stretched to the limits of value, given that most companies on todays prices are returning close to term deposit. There is inadequate compensation to take on the risk.
Here Here
I second that.
Your seem like a novice investor so making a living out of renos in a post boom market will be tough.
If your bosses are truly a## h#$el then look for a side ways move but dont leave the govt just yet.
Look at it a different way. Your giving it up as a way of boulstering your self esteem when in fact it will do the opposite. Staying and dealing with the issues and reaping the many benefits of the job will make your investing so much more powerful
You can use the wages to invest. The flexi-time to visit accountants, agents etc. The long service leave youve accumulated is worth a motza as its untaxed when you take it and use the time pofitably for renovating, subdividing or finding properties in non local markets.
Really think this one through as your govt job is a great tool to build an investment empire. If you use it correctly.
One of my bosses used to really tick me off, but in hindsight he/she (who may be reading this) was the motivator for me to invest and i continually appreciate that persons lack of people skills for being the driiving force for me to invest. Its marvellous how much changing my attitude has given me pure enjoyment from my job. I now use my spare time at work to invest where as i used to use it to please some tool above m, that never appreciated it.Peter
I left school in 1989 in the middle of the last major housing boom. Inflation was rife, interest rates were at 18%, and unemployment for people 18 to 25 was between 10% in the city up to 60% in country areas.
I had to move to sydney and do volunteer work in real estate agents to get my foot in the door as a property manager on $69pw. After rent petrol, rego and basic food i had $2pw.
We battled on as house prices hit totally unattainable levels. All the same headlines about housing unnafordability were around in 1989 – 1993 or so.
Time, wage rises, career opportunities fix everything.
In 1993 i went to uni and graduated in 1998 with you geussed it not a dollar to my name and a HECS debt. But by 1998 the headlines had changed. Housing was now at best afordability in 15 years. So we took the plunge. We tightened the budget, selling inside two years to buy two blocks of dirt. We are now set for life. A few wage rises and a property market boom once your an owner of one or two properties and you will never look back.
If i could do it differently i would have bought an investment property in about 1992 as even post boom thse prices have more than doubled before the next boom even started.
If you look at it from a pure financial standpoint, then the last house you buy should be the one you live in yourself.
Peter dont give up. It is a huge step when you first buy but it rapidly gets better as your wages and ental income rise and your mortgage stays the same. And from then on it gets easier faster and faster.
Read Robert Kiyosaki Rich Dads Retire Rich Retire Young
two things to note
1. Expand your context – the context you operate in limits you to that reality
2. The assets you own increases your wealth exponentially
(Assetts are only things that pay you more moneythan they cost)Originally posted by L.A Aussie:Originally posted by condog:Then with due respect you havent analysed the right companies.
ANZ, CBA, WBC SGB have all averaged a first year franked yeild of well over 7% and 15% growth in share price and earnings for 8 of the last 10 years.
In roughly a 5 year period
MND has averaged over 40%, BHP and RIO have averaged over 30%, WPL has averaged over 50%, UGL over 30%, Rinker above 10%, Wesfarmers 16%, TAH 18%, Seven network over 30%, etc etc etc.The only two here that arnt blue chip are UGL and MND, both of which have fantastic outlooks, sustainable growth and good balance sheets.
That being said no one here will be able to buy in and attain these returns at the present prices until we have a correction.
So who wants to be the last man/woman to jump on before the ‘correction’? Most people I talk to that have some shares knowledge say the correction will be big when it happens.
The last 10 years (and almost all 5 year windows in between) will show a fantastic return on the stock market. It is probably the longest bull run in history.
Will it ever happen again? I think so – but not until after a major correction. I have my check book ready for that time. I’m waiting for the winter to buy some straw hats.The difference with property is that you can buy at any time in the cycle and as long as you select the right property you will be able to sleep at night, knowing that the price won’t take a major dive overnight – if at all.
Sure the returns on property may not be as good (personally I think they are) as shares, but the return added to the relative safety of property is what I like.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
I couldnt agree more that we are due for a major correction on the share market and if you read my previous two posts in this thread thats what ive said.
No matter whether your a value investor or a charter all the indicators are that we are at the very end of a bull run that began in 1987 (post crash). There is currently little to no value in most good stocks on the stock market. But that can and will change very quickly and those who buy in post a big correction will never look back. Their returns will be unmatchable.
I also agree about property is less volatile and suffers less down years, in fact only 2 in 22 years on national data while shares have suffered 6 years down in 22 years. But for people who active invest and move with the cycles more money is made in the share market and in far less time.
The biggest problemwith the share market is as value disappears people and up buying crap because of percieved value rather than actual value. They should wait for cyclic correections to again buy in with value. The later the buyers the more chance of getting burnt.
Right now anyone going in is speculating and a very late buyer.Then with due respect you havent analysed the right companies.
ANZ, CBA, WBC SGB have all averaged a first year franked yeild of well over 7% and 15% growth in share price and earnings for 8 of the last 10 years.
In roughly a 5 year period
MND has averaged over 40%, BHP and RIO have averaged over 30%, WPL has averaged over 50%, UGL over 30%, Rinker above 10%, Wesfarmers 16%, TAH 18%, Seven network over 30%, etc etc etc.The only two here that arnt blue chip are UGL and MND, both of which have fantastic outlooks, sustainable growth and good balance sheets.
That being said no one here will be able to buy in and attain these returns at the present prices until we have a correction.
The thing is when you buy into the stock market after a crash or major correction the yeilds are unbeatable.
Dont forget the value of franking credits which means stocks pay you in tax free dollars. (depending on your tax rate).
Also good companies grow their earnings year in year out upwards of 15% pa. Now there really arent many pproperties that do that.
However there arnet many stocks you can buy and subdivide and get a certain $50,000 profit.
PIAFPU from API has a free trial. I can write almost any spreadsheet i desire as thats part of my job, but I bought it two days ago because i tried the trial version and It is absolutely brilliant in terms of its ease of use, functionality and price. (It has one or two tiny quirks). I paid $245 with no hassles because thats about a good days work and it would have taken me a good week to write this. Then i would have had to trial it and test its accurace which would take at least a few more days.
I also trailed EZ Rent and Rent Analysis which are free but very very limited. Both targeted at properties already owned.
POSH was no god either.The brillian thing about PIA is you can put multiple future scenarios into it , I even manipulate share parcels into it but you have to change the tax rates and yield to reflect the franking credits.
The only thing i dont like about it so far is that when you input multiple future property purchases it throws all butthe first property in the second year. Im sure i will work out how to do so or contact them for a fix.
Cant recommend it highly enough. No im not commisioned, but very much wish i was.
No. Not legally.
Millions try this.
http://www.census.gov/ipc/www/idbpyr.html
Its a gov censis site showing age based population for most countries in the world in 2000, 2025 and 2050
Take a look at htis site if you want to work out the effect of populations retiring on our economy. Japan has the worst situation and being the second largest population willl impact on heavily on our stock market demand.
The Aussie population hardly declines following the baby boomers, but the boomers are the first group to ever retire not followed by a massively bigger group of contributors so there will be a dent in demand. Despite compulsory super.
The US is worse than us and has a reasonable dent in population. There biggest population group are currently 47-51yrs old. They cant collect any Social Security to suppliment superannuation to age 62, and this age is under review with a look to raise the age limit to 65. In any case the USA should have continually high super contributions in its stock market for approx a good part of the next 10-11 yrs. As anyone who retires prior to that will be self funding and most likely continuallyto be partially reinvesting.
So it would seem the “Big Withdrawal ” by the baby boomers is still away off yet. Especially given China and Indias young and expanding populations. And the likes of oil rich coutries like Saudi Arabia with young and expanding populations investing in equity buy out conglomerates all over the world.
But as warned previously the we are in a stock market bubble at present that has a lot of resemblence to 1987. Graph XAO and have a look for yourself.
Principal place of residence exemption
What is the principal place of residence exemption?
You can claim the principal place of residence exemption for land, including strata lots, that is used and occupied as your principal place of residence (your home). The area or land value of the property does not affect whether you qualify for the exemption or not.A family, including dependents under 18 years, can only claim the principal place of residence concession for one property.
If there is more than one owner for the land, at least one owner must use and occupy the property as their principal place of residence.
Eligibility
To be eligible for this exemption you must:have continuously used and occupied the land since 1 July of the year prior to the current land tax year (eg. for 2005, you must have occupied the land since 1 July 2004).
Note: If the property is not occupied until after 1 July, the Chief Commissioner may grant an exemption if he is satisfied that the property is used and occupied as your principal place of residencehave used the land for residential purposes.
Note: if you have used the land for incidental business purposes, eg, if one room is used as a home office or workshop, if the business is primarily conducted at a place outside of your land, you can still claim the exemptionnot have used any other land as your principal place of residence since the preceding 1 July, other than in the circumstances described in selling your principal place of residence
be a natural person, a beneficiary of a concessional trust, a life tenant, or a person with a right to reside under the terms of a will.
Your land is not exempt if:
the land is owned by a company or jointly with a company.
Note: if the land is owned by a ‘trustee company’ (within the meaning of the Trustee Company Act 1964 or the Public Trustee) acting in its representative capacity, or a company acting in its capacity as trustee of a concessional trust, the exemption will still applythe owner/s of the land who use and occupy the land as a principal place of residence are an owner only by reason of being a trustee
the land is owned by a person who is a trustee acting in the person’s capacity as trustee of a special trust
a family, including dependents under 18, owns the land and has received an exemption for another property as their principal place of residence.
Sorry Marc i had a grey matter explosion.
If anyone here uses The Elliot Wave theory for trading in conjunction with RSI and value fundamentals as i do you might have noticed all three are ringing major alarm bells.
Whats worse the sharemarket is at a point 5 in the Primary Wave which is the same point we were at with the 1987 crash.
Now there could be extensions to the primary wave thate takes us through to sometime in 2007.Hopefully superannuation contributions prior to the July changes will sustain the market for a while but the point to note is that we are very very due for both short and long term corrections.
My reason for writing this is several people on this forum seem to be contemplating a jump from property to shares. NOW IS NOT THE TIME. If your real lucky you will get a short upside ranging between a feww weeks up to July.
But be warned………….[hmmm]
Thanks for sharing your experience.
One major difference in my situation to yours is im buying of private buyers who bought the property some time ago and have been more than happy with it but need money to move on to a different investment.
Im not buying form the developer or the hotel so those margins dont apply. I also have a 10 year rental history to judge the returns rather than claims from the developer.
Im led to believe by the Westpac Hotels report that any hotel taes 3-5 years to establish reasonable returns. This ones been operating for 10 yrs is an international brand and in absolute prime location. In fact id dare to say it has the absolute best location in the whole capital city.
Having said that i am cautioned by your experience and that of others. Hence the reason for me posting in here.
The numbers stack up. But id prefer to here from others with their ideas and experiences.
Thanks greatly.
Surely youd be entitled to part compensation for the time to check it and the cost of the program. Id add it in and ask them. The worst they can do is say no.
Thanks
Yep i was land focused to originally but then i realised its a continuum form negatively geared 100% land content to houses to villas to units to serviced apartments that have little land content but are generally very posiitively geared.
I understand the importance of land content as i currently own my own house on 1000m2 and a block of ocean view land 1495m2. Both have doubled in value during 2001 to 2003. Based on neiighbouring sales.
At the other end of the spectrum though some serviced apartments do have a percentageof land conntent. And whilst small the land contnet is generally prime real estate in scarce locations with massive land values per m2. Refer to my previous post.
Also the serviced apartment is so positive that it easily allws me to buy multiple properties with ease.
The biggest draw back is the fact that it chews up my equity as it cannot be leveraged against as i cant find a lender that will lend against apartments of 39m2.
The share market is very hot at present and in desperate need of a 10%+ correction to even start finding valu in a lot of the better shares. That being said there are a few bucking the trend and going through minicycles with buying opportunities. Find 10 – 15 stocks. Research them very well. Establish acceptable yields youd be happy to get stuck with them at then use that as your buy in prices Eg i buy CBA at approx $43.50 and sell it at approx $47.50 but that increases over time as its yield grows. ANZ at $24.50 sell at $28, PPT at $69 – $70 sell at $75 to $76 etc.
Then set SMS alerts at the buy prices. Place buy oders then as soon as you own them place sel orders and wait.
This is opinion only. The share market is not only due for a 10%+ short term correction, but any post xmas shocks may be enought to give it a good counter cyclical down trend. At present it seems to be tapering off and really struggling to progress. Many undents suggest this is indicative of managed funds propping the market up while they reduce exposure.
With household debt at 145% of income prior to xmas, 3 intereest rate rises and a slowing economy, now is not the time to be jumping from property to the share market for the first time.
Sure it seems attractive with all the news of equity byouts and quick gains but this is a bubble and bubbles have a tendancy to burst……..
Procede with caution and use good shares with sound fundamentals that you are prepared to get stuck with.
