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devo76
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July 20, 2007 - 10:28 am
crashy wrote:
L.A Aussie wrote:
If youj buy and never sell there is no such thing as a downturn.
when did sticking your head in the sand become an investment strategy?
How is that sticking your head in the sand.If you can hold on its the smartest thing you could do.Your not ignoring a downturn your missing it all together.
devo76
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July 18, 2007 - 11:28 am
Good response. Well i knocked back a block of three units in a lesser area that went for $405,000 but they were two bedders as apose to the one im looking at now( 4 by 1 bedders i think).
Im thinking high $400,000 to low $500,000.Guess i need to see rental returns and condition up close before i go any further.I think the best aspects of this property are its position in a desirable area, Large 1600 sqm block and for me its relatively ugly cosmeticaly so they may help lower the price.
devo76
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July 18, 2007 - 8:48 am
Thanks guys. Another problem is i have no idea what they would be worth.I am watching what similar blocks and units are going for but my initial offer has me stumped. How would you guys go about it.
devo76
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July 18, 2007 - 2:45 am
I paid $450 but im in a smaller town so may be cheaper there. .The $2500 was a stabin the dark as each item may be depreciatable over a different lenth of time
devo76
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July 17, 2007 - 8:23 am
blogs wrote:
devo76 wrote:
Yes there might be a down turn but do you plan on selling during that time. If you hold a property for 20 years you may see a couple of downturns but you may also see a couple of booms.Only sell during a boom. Never sell during a slump.
If only it were that simple………
The reason for booms is everyone is making money and buying up, in the slumps Im sure all the people selling are selling because they HAVE to, not becasue they like taking a hit. Of course if you are in a position that alows you to be able to cover double your current repayments due to increases in interest rates then you wont have anything to worry about will you……
Fair point but if you only make moves based on worse case cenario then you are greatly limiting your chances of getting ahead in life.Believ me i can be really bad at being negative, A trait my father gave me.But in the end you have to way up all the pro,s and con,s and go for it.No one ever got rich sitting back playing 100% safe.
devo76
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July 17, 2007 - 5:05 am
Yes there might be a down turn but do you plan on selling during that time. If you hold a property for 20 years you may see a couple of downturns but you may also see a couple of booms.Only sell during a boom. Never sell during a slump.
devo76
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July 16, 2007 - 8:17 am
Take your wage   Lets say $80,000
Add rent                                   $18,200
Your taxible income is now $98,200
Now minus Interest At 7.5% $27,000
Rates                                          $1,500
Property manager fees            $1200
Insurance                                    $500
Maintenance                              $1,500
Now depretiation. Of the $180,000 for the house you would say $20,000 is for depretiatable things like carpet,blinds etc.and the remaining $160,000 on capital works write off at 2.5% per year over 40 years. This equals
                          Depretiation    $2,500
                     Capital write off   $4,000
Total losses            $38,200
Subtract from your wage including rental return= $98,200 minus $38,200 = $60,000
So the tax you currently pay from $60,000 to $80,000 you will get back at tax time ( sorry forget the tax threshholds)
This is rough and dirty but im sure you get the idea.
Please dont nail me on exact details its just a rough guide.
devo76
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July 15, 2007 - 1:24 am
I might be wrong but i believe it means know the market surrounding the property and recognise a property that is asking less than similar properties in surrounding area.They may need to sell or it has a few easy fix problems that are making it sell for less.As far as buying under the medium house price. i believe that to be a good practise more than anything.
devo76
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July 11, 2007 - 8:42 am
My salery goes up with cpi worked out from march to march. I was told today that the last year showed no cpi rise.What the !!!
devo76
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July 11, 2007 - 8:38 am
My IP was built in the 60,s but had a major reno. a quantity surveyor valued the reno at $115,000 for capital works and $15 grand for depretiable things like shutters etc. Well worth doing
devo76
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July 6, 2007 - 4:38 am
crashy wrote:
devo76 wrote:
[Ummm. Nsw flat for some time now. Perth peaked, the same for Darwin.SE QLD doing well but. Low affordability. Rising interest rates.
NSW flat? not according to REIQ or RPData. Most suburbs I looked at in Sydney are up 15% this year. Perth peaked? only if the commodity boom is over, which is a brave call. Rising interest rates? they have been on hold about 8 months. Is that armchair of yours stuck in 2006?
OK. Some areas of sydney have seen 15% but NSW extends far beyond these suburbs.3 years ago the whole state was booming but not now.
To argue that perth hasnt peaked, Im not going to bother with that one.AS for commodities. Few more years yet i hope.
Interest rates have been stable recently but the majority believe they will climb next year.
I hope you are right becouse i bought a IP just two months ago.But i feel there will be nothing spectacular in housing for a while now except for pockets of rising areas here and there.
devo76
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July 5, 2007 - 10:48 am
crashy wrote:
mahahaha "more or less finished" I remember people saying that in 2001. What downturns are you referring to? I wouldnt worry about trying to predict future opportunities until you have a handle on current ones
Ummm. Nsw flat for some time now. Perth peaked, the same for Darwin.SE QLD doing well but. Low affordability. Rising interest rates.
If you think real estate will continue at the same pace it has from 2001 then you go buy as much property as you can.
I look foward to buying them cheap when the bank takes them of you.
devo76
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July 3, 2007 - 3:07 am
Tysonboss1 wrote:
G'day Devo76,
I think blowing money sensly is very over rated, I livd by the rule that I should always spend less than I earn since I was about 17 I have just turned 25 and it's my plan to have Financally freedom by the time I am 30, So i don't waste any money on the doodads that some people treasure so much,
I am of the opinion that it doesn't matter if you a a BMW or a datsun once you have driven it for a month it's just your car, it's no longer anything special, and plasma will become just your tv, You will get used to any luxury item that you build into your life and it will just become just the norm to you, so all you are doing is creating a more "expensive" life style not a "better" life style.
I spent 5 years in the army and watched a 21 year old guys blow money like you wouldn't believe, one guy in particle came back from iraq with $70,000 in the bank and blew it in 3months on car sound systems, home entertainment systems, nights out on the town, you name it, He could have set him self up with that kind of cash, But like you he had the attitude of I only live once.
yes you only live once, so why would you want to spend your life stuck working full time till your 55 paying for all your doodads, I don't plan to retire at 30, but hopefully by thirty I will be in a position where a work on my terms,
So I guess " freedom over my time is the best luxury I could treat myself to"
Hang on hang on you seem to think i am only living for the moment. Not true. While i have blown a lot of money while i was younger i have since changed my ways and im planning for the future. Thats not to say that im not going to enjoy my self in the mean time. Why live with a crappy old car, no tv, no holidays and eat cat food when you can live a better lifestyle and still set yourself up financially.
One example is a guy who worked near me. Absolute tight ass. Always read my paper never buying his own. Bought rotten vegies at the shop for lunch becouse they were a dollar cheaper. So when he retired he was a millionair and bought his dream penthouse on the gold coast at 65. Did he start living it up a bit. HELL NO. He filled it with crap old furniture. Still bought crappy out of date food.And had no friends becouse to him friends meant spending money,oh and his marriage failed due to his lifestyle too.He lived overly cheap his whole life and come retirement he was too set in his ways to change and enjoy life.
That is a extreme example but im sure you get my point. I think a happy life is a balance of the two.
1# save for the future and a happy possibly early retirement
2# Enjoy your life leading up to that as its a big chunk of your life consisting of the bulk of your healthy active years. Cheers.
devo76
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July 2, 2007 - 9:24 am
So most agree a recession is comming in the next few years. Does that mean the areas booming now are going to bite investors the most if they buy just before the impending recession. Or will ther strong growth help prop up values. Im thinking south east qld.
devo76
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June 28, 2007 - 11:53 pm
My prediction 12 months
Property Prices               up a bit more
Debt                                    Up a bit more
Recession                         A little bit closer (2-5 years)
House bargains               A little bit after the recession
devo76
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June 26, 2007 - 8:48 am
Nowra on the south coast is still fairly flat although better properties ignore this trend and have seen some better gains.I checked out a 1680 square block in nowra cbd with rented house at the front. Good potential to develope but i feel the expected sale price of $350,000 is a bit high.Hopefully the new road connecting nowra to canberra via nerriga will bring in people from the act. This is the case with batemans bay and it has done wonders for property down there.
devo76
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June 21, 2007 - 3:05 am
Hi tracdy.
Yes i will kind of invest it . It will be used for extra payments of my PPOR.
The thing is i recieved a $10,000 per year payrise just after setting it up. By my calculations the difference should only be $1,500 extra tax to be paid per year.
My taxible income will rise from the $54,690 to$64,690 . I will owe the 30% of that but currently only paying the 15%..So should allow for extra $1,500 per year or change details. Think thats right. Cheers.
devo76
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June 20, 2007 - 11:25 am
I love my job so early retirement is not important. im a aircraft engineer. I have a great income and travel with the aircraft regularily seeing many new places at no cost to me. My investing goal is to retire comfortably and enjoy life all the way through. Plenty of toys,plenty of fun and retire to my beach shack at around 65. Too easy.
devo76
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June 17, 2007 - 8:02 am
Ok thanks for the reply,s. The general ldea i am getting is a half decent investment property may suffer a period of low or no capital growth not nessisarily go down. I believe my property falls in this catergory ( 200 mtrs to cbd,high rent demand, unique property)My PPOR should be paid of in the near future then allowing me to get the IP loan down and look for other properties.I guess im just worried that my IP would drop from $300,000 purchase price to $200,000 in a ressesion affectivly wiping out the gain i have in my PPOR. Hopefully this does not happen.
devo76
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June 15, 2007 - 7:04 am
L.A Aussie wrote:
1# Does a bust always follow a boom
2#Must housing value drop and can it just stall
3#Will the mining boom postphone a bust or can you bust even with the china fueled mining boom.
4# Can a change in government really bring a bust or is it just a bad time to win.It depends what you call a bust.
In recent years there have been a few media reports of massive drops in house prices in isolated incidents, but the argument could be raised that there were a lot of idiots with a lot of expendable cash, equity or finance who paid too much for their properties during the boom, who got caught financially, had to sell and took a big loss. This happens all the time.
Personally, I think that generally there is a lull happening – not a bust.
A well purchased property in a good area will never bust. People have to live somewhere, and they want to live in good areas and pay a fair price. Find these areas, pay fair market value or less if possible, and you will be fine.
People only do badly in property when they buy under more speculative circumstances; off the plan, highly geared with high LVR, marginal loan servicability, less desirable areas with inflated rent returns, no due diligence, flippers buying at the wrong point in the cycle, financially illiterate, etc. These people are essentially gambling; not investing.
The mining boom is a little harder to predict, but my feeling is that with the continued requirements of the developing countries such as China, India, Indonesia – 3 of the biggest populations on the planet, there will be long-term demand for our resources (unless they run out) so the prices of real estate in those areas will remain steady or continue to grow. of course, apply above rules to speculative purchases.
Govt has tried to interfere with the normal cycles of property with terrible results; the abolition of neg gearing in the '80's was one such event. This caused a massive sell-off of property and caused a huge shortage of rental properties that saw rents rise extremely high.
The F.H.O.G has only added to the continuing problem of low affordability as new home buyers use their free money to buy property when they normally wouldn't have been able to, or possibly weren't able to buy a more expensive home, so the demand for housing kept on going and affordability has only gotten worse. Of course, this is partly due to the ever-increasing consumer debt trend as well; people are going further into debt and have less funds available to service a home loan.
If you are looking for an answer on whether to invest now or wait; the answer is buy now and do a lot of research on the area and property prices, rent returns, expected cap growth etc before you buy. As soon as you are in a financial position to buy then you should.
Whether there is a boom or a lull, there are some areas that do well no matter what the state of the market, and there are always pockets that are booming when the majority of areas aren't.
Ok so does a bust always follow a boom or is that just poor managment from the government and it can be avoided?.
If say a reccesion was going to happen, could it happen while we a riding China, India etc mining boom or would that have to end first?
I guess what your saying with properties is the higher quality,better located ones should hold up but the poorer c grade properties would suffer more.