Forum Replies Created
Definitely yes from my end.
We spent $6K on reports last fin yr to do all our IPs. Got back $12K for that yr.
This yr with our big IIP’s kicking in, that figure shall jump up to $106K and then taper off to 98, then 91 etc…all from the original 6.
Hell of a deal I reckon.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
How refreshing to see yet another spiel about Melbourne and Sydney residential markets dressed up as “house prices in Australia”.
Seriously – with such broad sweeping statements – is any single individual investor actually making any money from reading this dross.
All of these economists and analysts and experts, what are these guys qualifications, other than working for a firm who advertises alot ??
Loanwolf,
Congratulations on your ‘promotion in rank’ – the saluting shall start forthwith. [toff]
I feel that I have stolen Oshen’s thunder here. I’ll bug out at this stage and let more experienced investors come up with suggestions to assist you.
Have fun – what a hoot to be young again. [bike2]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya Ben,
Real rough figures….out of your 70
15 in Tax (I’m not up to speed with latest rates)
13 in PPOR costs (interest plus outgoings)
30 in Domestic “Stuff”I see you are from NSW, so that 30 might be a bit shy.
If you tighten your belt you’ve got ~ 10 or 12 to play with. Mr Costello might be chipping in some for the new addition – you must be part of the crowd that he recommended “go forth”….
Although, I’d be a tad hesitant, ‘cos I know what comes first on the priority scale when funds are needed for both new bubs and IP’s…IP’s take a distant back seat.
You’ve really got yourself a tough – real life question there. Instead of asking the forum, maybe you should sit down with your wife and crunch some numbers on your budget and take it from there.
Congratulations on your newly expected arrival – hope everything goes smoothly with that.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Bruham,
You seem to be swinging a fairly broad brush there…are you sure about most of your assumptions.
“So far S.McK. is far and away in front of anyone on this website“….are you sure ?? How do you know how much Steve has or anyone else for that matter ?? # of props is usually a really poor guide as to net wealth. Is there a truthful, verifiable wealth ranking somewhere here that I’ve missed ?? This isn’t a race…no point comparing yourself with others. Mr Packer probably earns more per day than Steve has ever earned in his entire life…good luck to both gentlemen I say !!
“most of the long term posters have gone…Without the experienced investers posting“…sorry I hadn’t noticed that the 4 stars were the most experienced investors. I remember one particular chap with about 16 posts (ah – that’s no stars), who admitted he didn’t post much, but had over 30 years experience and over 15MM equity…the eldest poster started on Jan 1 2002…that’s a very short time indeed, less than 3-1/2 yrs…a mere pup in the market if post numbers are anything to go by – and that’s the longest !!! How many posts does Packer / Anderson / Bond / Roberts have ?? Probably all none…but you never know…they might all be lurking under the Avatar of “Mrs Quiggles”…who knows ??
Steve is under absolutely no obligation to post anything on here. Actually, I’d be overwhelmed if anyone was posting because they were forced to – perhaps they enjoy the interaction and knowledge sharing base here. This is a public forum after all – are you personally expecting something to be handed to you on a platter at regular intervals that you can turn into cash ??
Sol,
By definition I always purchase at market value…I’m the buyer, and therefore I am the market for each individual property that I successfully negotiate to contract acceptance stage. What other people “think” it’s worth…well that’s down to speculation and hearsay.
What’s my opinion on the Perth ‘market’. I don’t have one. How could anyone reasonably lump so many properties into one huge melting pot and come up with an intelligent “average”…meaningless.
If you narrow your focus down to the Perth residential market…I still don’t have one – way too big and complex for me to capture into a single figure.
As an example, how would you describe the ‘market’ if you had the following data ;
Two Rocks +28%
Hillarys +9%
Sorrento -4%If you said the market was overall doing 11%, you’d be wildly wrong with two of them and sort of close with the third…My question to you is – how would you describe the ‘market’, and more to the point what value do you perceive their is to you after you’ve described it with respect to your individual property selection ?? I personally don’t see any value in the exercise.
I do however, have an opinion on the very specific individual properties that I own and have researched to death. I fully expect between 5% and 8% over the next 2 years for my particular ressy stuff, and between 9% and 11% for my industrial stuff. This knowledge however, is of no use to you or anyone else, as no-one owns my individual properties except me. Situations arise that may affect my property – either negatively or positively – that may not affect the place next door, let alone ‘the market’ which could be 50km away.
Properties are by definition individual and must be analysed as such. We aren’t talking NAB or CML shares here now.
IMHO this ‘market’ talk doesn’t cut it. Fantastic for analysts and journo’s, but not much help for individual property investors.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Sol,
You mean to say that there is actually activity outside of Sydney, Melbourne and Brisbane ?? But how can that be ?? [blink]
All of the journo’s in the SMH, Age and Courier Mail say that the property market in Australia is overheated and has been heading down and likely to go down further ?? Maybe when they say the ‘property market in Australia’ they are actually referring to only a major section of one of the markets…people however get sucked in to their rhetoric and believe what they write.
My experience with the Perth residential market, most vendor’s who are not desparate, will usually accept your offer if between 93 and 95% of asking price. Some tough customers however want 100% of asking price…and some even adjust the price upwards if not taken immediately…that ain’t fun dealing with them if you are a buyer and for some reason you really want that particular property
Maybe if you want 15% discount to asking price, a distressed vendor is what you should be targeting. Unfortunately, they don’t have a banner outside their property, or a sign on their forehead letting you know they are in that situation. Loose lipped REA’s are your best bet here…if you get a savvy REA or a tight lipped private vendor, once again you’re hooped.
Realistically, with only 4 offers at 15% discount, I think you are getting frustrated way too early. Chin up and keep going. To quote a dreadful saying “All of the low fruit has been picked.” Maybe time to either get an extension to your ladder, or put your ladder away altogether !!
As an overall comment, vendors generally speaking aren’t stupid and don’t just give their properties away…remember, they are trying as hard as they can to squeeze as much out of you as possible, with an unconditional contract their aim. All of these mickey mouse ‘walk’ clauses that seminees are taught seldom work in the real world against tough vendors….don’t you just love the concept of a free market. [biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I work with quite a few Americans in my job, most of them coming from either California or Mexico dodging their own IRS. They all say their local markets are going nuts, and have been for a few years.
On the other hand, just read that article about Steve buying 30 houses in the US and reckons there are bargains everywhere.
Perhaps the US real estate market is just a tad too big to draw any meaningful conclusions in a sentence or two.
People asking all of these major trends – IMHO – are way off track. Get down into the weeds and discuss the intricate details of individual IP’s, pertaining specifically to that locality.
One cannot purchase “the US RE market”, or “the Australian property market”. Other than LPT’s and the like, you are actually buying a tiny little specific individual piece of real estate. Concentrating on those details and how that tiny little piece actually generates wealth / income is what you should be looking at.
Let’s get down and dirty with specific property details.
Executive summaries and global trends be gone !!
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Or maybe the residential tenants aren’t paying enough rent to make it fly.
We own our PPOR outright and have it fully hocked to buy IP’s.
We consider this to be the equivalent of having your cake and eating it too.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I’d go along with Duckster but take it down another peg or two. I can’t for the life of me understand why someone just starting out in employment with little to no savings would want to burden themselves with a whopping $ 300K NTDD…seems crazy from where I am sitting.
Why not start out with a crappy 60 or 70K apartment somewhere in some dive reasonably close to your place of work. Or better still, what about a caravan ?? Swallow your pride for a year whilst you pay this off completely and move up the scale from there.
The longer you spin your wheels on this huge debt, the less time you’ll have to really scoot along in the fast lane of wealth accumulation.
I can’t believe banks and mortgage brokers actually encourage younger folk to take out such enormous loans to start off with. Begone the dreadful LMI. If you’re being asked to pay LMI – you’ve got your sights set too high…IMHO. [blush2]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Surely if your pockets are deep enough and your aspirations are low enough you can have your cake and eat it too.
That is, when your deposit for the PPOR is more than significant, greater than say 50%, and your choice of PPOR is not outrageous for your current station in life…you can have both stability and the opportunity to leverage the equity to continue to invest ??
I believe over the past 2 decades however, that young couples aspirations have gone through the roof, but their ability to service the lifestyle has not.
Many couples starting out in the 50’s and 60’s were happy to purchase 2 bedroom fibro tile houses in very average suburbs on normal sized blocks and just take it from there – maybe upgrading their PPOR once or twice, finally reaching the 4 BR 2 BTH brick and tile house stage in their later years…ironically just as their offspring ‘flew the coop’.
However, it’s that younger generation, of which I count myself in, who have been brought up in that relative luxury – who do not want to and frankly, flatly refuse to do the hard yards in those basic accomodation facilities. They cross their arms, stamp their feet and say “If I can’t have the same standards, I don’t want anything.”
Have a look at the average house young couples are buying nowadays…mostly they are way too good and way too expensive, and with 5 or 10% deposit, they’ll go nowhere fast burdened with such crippling NTDD (non-tax deductible debt).
The wife and I rented for the first 3 years of our marriage and managed to purchase 2 investment props. In hindsight I think it was the right thing to do.
The 3rd prop. was our PPOR, of which we had managed to accumulate a 90% deposit. It was a pretty modest house in a very modest area…to the point where older relatives took me aside and said “You know, I believe your wife deserves a better place to live than this.” We both ignored them at the time, gritting our teeth, safe in the knowledge that over the years our situation would change for the better. Nowadays these same relatives cannot believe where we are living and don’t understand how we got there.
Fighting against the tide of mediocrity, and the ingrained belief system it harbours, is one of the hardest things to do.
I think one of the most succinct illustrations of this subject is the cartoon at the very rear of Noel Whittakers “More Money”, which compares two couples. The first couple is renting and living it up on a smooth street, and as time goes by their situation gets worse and worse. The second couple struggle on bikes on a rocky road and eventually get to the smooth road and off they go. That cartoon was the inspiration that pulled us through when the knockers put us down.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I read somewhere that you shouldn’t invest in the same industry as that which you earn your main source of income from…diversification apparently.
I don’t fully subscribe to it myself – I think leveraging off specific industry knowledge can pay handsome dividends. But when the proverbial hits the fan, you don’t want to simultaneously lose your job and have all your assets go down the gurgler as well…if you know what I mean.
Can you tell I’m a little undecided ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Heya resiwealth,
We have a far more modest target of income to live off personally, over and above our investment expenses. With what we are buying currently, we can confidently extract 8% nett from our CIP’s, so the amount we need is nowhere near $ 2 MM over and above the fully paid off PPOR.
Our target date is April 2007. The target was set back in Dec 2003, and as of May ’05 we are 1 month ahead of schedule. We have the option of carrying on at this pace and achieving our goal in March ’07, or we can back off the pace a bit and cruise in to meet the set target date.
I think comparing yourself to others is non-sensical, as posted previously. However, it is a very common human trait. Just walk into any investment forum…the squirrels are constantly asking questions to figure out ‘how big your pile of chestnuts is’.
I’ve noticed people love to blurt out – “I have 27 properties currently” and everyone instantly pays homage…which I think is outrageous until you know more details. They may own 3 run down blocks of 9 bedsitters out in the country somewhere worth a total of $900K – with loans of $500K against it, while the rental income produced is 27 x $ 50 p.w. (i.e. not a lot).
Unsure if the 5% who achieve their goal is right or not…everyone has different goals – most wouldn’t be able to clearly enunciate the specifics of their goals if you pushed them anyway. I was told once that most people don’t usually have goals…millionaires have goals…and billionaires have their goals written down and refer to them every day – and sacrifice many aspects of their life to achieve the written goal.
In terms of the rudderless ships going bump in the night – probably heaps. Whenever we discuss our target date of Apr ’07, many people have this pained expression on their face which says “How can you be so specific ?” We reckon, unless you get rid of the vagaries and all the general summary BS that everyone loves to lap up…see “What do you think the property market in Australia will do in the next 3 years ?” as an example, you’ll continue to skim the top, instead of drill down to the details where all of the devils and prizes are hunted.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Heya Sonia,
I would suggest only a small %age of the best deals are on the internet. I’d suggest you talk and walk and ask heaps…
Properties are usually bought and sold (if you are conducting the correct amount of Due Diligence) based on alot of details.
You’d be surprised how much detailed info simply isn’t online, due to old archives / no one has the time or inclination to put it online / agents not bothered to put all the details online…teasers etc.
Personally, I’d never purchase a property without walking extensively all over it so I can see and feel every nook and cranny.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hmmm…2.8% nett yield for a RIP in a suburb of Perth – sounds about right.
Zen, at 6.8% for the cost of money, your cashflow loss is ~ 4%. Assuming you are on a middle tax bracket, your refund will be ~ 1.5%, therefore you’ll need CG of about 2.5% to go nowhere.
Therefore, the entire business proposition hinges on what you expect the CG to be over the long term.
What has the suburb averaged in terms of CG compounded p.a. for the past 10 yrs ?? Do you have that data to hand ??
This ‘investment’ provides a certain cashflow loss…only you can decide what the future CG may be.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Oshen,
I’ve just re-read your post from a few above and indeed, it looks like I’ve copied your advice word for word…
What can I say – GMTA.
Or as my wife likes to say – “Fools never differ”.
Happy days…[biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Kate,
Excellent post. Revolution indeed. I believe as vendors become more savvy through education and experience, REA’s will not be able to hoodwink people into their overpaid ‘services’.
One point you missed, to be successful in selling, a salesperson has to know their product inside out and back to front. This is where the vendor selling privately really streaks to the front of the pack. Who knows their house and all the intricate details better than the owner ?? No-one of course.
Deals are closed on minute details and the finer specifics of the property. This is where the REA’s very often flounder.
How many people in the past have approached REA’s and asked detailed questions about the property and they simply have no clue. They picked up the listing 2 days before and literally know nothing about what they are selling. I have seen potential buyers get very frustrated and walk when every answer to their question is “I don’t know, but I’ll get back to you”.
With the growth of private sales rapidly eating into the REA’s traditional market, expect to see in the near future alot of agents go the way of the dodo…bring it on I say. [biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Luke,
I believe if you took your “flog at all cost” private business interest blinkers off and actually addressed Redwings post – you’d see just how non-sensical your suggestion is !!
It’s like Redwing asking for healthy tips on running faster in preparation for a big race and your proposal is to take a dodgy clapped out bus ??
Maybe I’m off the mark…please correct me if you think so, but that suggestion from an agent is pretty bog standard…they teach you that at REA school on Day 1. I think alot of the forumites here are a little to savvy to be swayed by that and deserve a far more thought out response.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Wow Zeallous,
Talk about find the jackpot and be absolutely inundated with great links and advice about where to search for data.
I’m surprised out of all the responses no-one has yet suggested the good old fashioned “off-line” way.
I believe you can’t beat going for a drive, or even a ride on your pushy with a pen and paper. Can you tell I don’t buy interstate ??
Good luck.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
