Forum Replies Created
- Unreal wrote:It appears to me, the 2 biggest problems with investment properties are 1. unscrupulous tenants and 2. empty houses. So, is defence housing the way to go? I've breifly looked into it, and it looks great to me. What are the drawbacks?
The point of investing is to also make a profit. Generally speaking DHA homes are in average areas and they ask for significantly more in management fees. If you are a set and forget type of property investor then yes they have there merits and with time the property will grow in value. But the property market is still a bit unstable in many areas so buying well or improving via renovation etc is what more people are leaning towards. I live in nowra . We have a naval base and therefore we have a lot of defence homes. The vast majority of these are found in a new estate to the west of town. Its our version of a mc mansion city. I would not buy there period let alone a DHA house. That being said there is the odd DHA home that pops up in really good suburbs. These i would consider. Basically look at the quality of the property as a stand alone investment befor you consider the pros or cons of DHA. Hope that helps
And its now December almost January 2010. Are we moving the goal posts back again ?
Michael 888 wrote:devo76 wrote:I doubt rates will hit 8.5% and if they do they will not be there for long. Look at the blood on the streets last time and our debt levels have not improved. Im thinking around 7%Hi ya Devo
They will go well above 7 %. Westpac and its Dragon offspring are giving 6.8 % term deposits for 12 months…….a clue me thinks. I'll guess circa 8 % and maybe slightly higher within the next 18 months or so.
Having said that, I don't think it will be the end of the world. I believe opportunity will be in the more leisurely pickings this coming year and maybe 2011. The frenzy of a very low interest rate environment and the FHO boosts and the "don't want to miss out" mentality will settle down.
I have posted a more balanced piece on my thoughts, however can't find the link now.
Found it…..here's the text:
There are markets within markets and sub-markets within them.
I don't see any further correction. Lower end with FHOG scaling back might soften or track sideways and then there is a case to be put forward that investors may pick up the slack.
The higher end took a hammering with the stock market bear market and has since bounced back…….at least it has around bayside Melbourne where I live.
As for the future, property has never ben afforable, particularly if the prosepctive buyers have over-inflated expectations and must have it all now in exactly the location they wish to be, or they must have brand new McMansion with theatres and outdoor rooms lager than life. Many generations prior, people started out where they could and upgraded. So the instant gratifiers can either keep renting where they would like to live or buy somewhre else to get their foot in the door.
Westill have a 70 % owner occupier rate here in a generic sense. In the UK and other parts of Euope, it is as low as 40-50%…..hence many more tenants. This may occur here also.
Property is not only driven by investors, owner occupiers predominate and as it is a basic human need (and we are told that there is an under supply), I don't see the sky falling in.
I am not suggesting it's blue sky and everything is roses, however fundmentally, we are chugging along fine. If interest rates rise and some over-etended FHO struggle, then there will be some nice IP's to pick up.
I have read the book duckster refers to and the book title (The Great Depression Ahead) is far more bearish than its contents. Harry Dent does clarify that Austrlia is far better poised to emerge relatively scar free from the smoke and mirrors of the sub-pime mess and financial derivative products that were more akin to Ponzi. It is credit here (from that fallout) and ultimate development funds that are harder to source and yet we have a shortage of stock…………augurs well for upside to the suply and demand scenario me thinks
His book is however interesting as far as demographics and cycles specially for share markets (sectors) and also job cycles.
WJH, personally I cannot see a crash here in Australia………..perhaps softening in FHOG driven outer suburb fringes with little or no amenity that might see its purchasers struggle with rate rises whilst settling for a brand new (shiney) box and the obligatory high end Falcodores, and theatre systems whilst notching up plenty of credit card use.
Not posting here as much these days, however I have been sounding like a broken record when I caveat that one needs to keep portfolio LVR's conservative moving forward. Now is not the time te be an uber-bull and max out LVR's and servicibility…….those days will come however not right now.
And here's the link to the thread it pertained to:
https://www.propertyinvesting.com/forums/property-investing/general-property/4329339
Im thinking around 7% including the .7 reduction most banks offer so i stand by my estimate.
Without the reduction 7.75 or either side with a short 6 month or so blip above this. nothing to sweat about.Considering around half my borrowings are locked in at 7.25% for two more years. Im not feeling the rises yet.I doubt rates will hit 8.5% and if they do they will not be there for long. Look at the blood on the streets last time and our debt levels have not improved. Im thinking around 7%
Looks like we all see what we want to see. Yes top end has dropped in many areas. But for every example of a drop. Another example can be found of a rise.Sooooo many variables across the country.
Fact is the big drops many anticipated DID…….. NOT…….. HAPPEN.
No real downside apart from sharing your property with a stranger. But if it is set up properly you may not see much of them anyway.Maybe be careful if you plan to do a dual occ one day,The granny flat will count as a residence and in our council's eyes that would make it a tri occ. But if you can get past that hurdle make sure you build it in such a way that future sub or dual development does not require you to demolish the granny flat. Position it right.
Cheers
Oh yeah forgot to add my initial survey cost $770. As a bonus many builders charge for a site inspection before they quote but most will accept this survey and drop the charge.
CheersI am know expert and do not pretend to be but these days i tend to zone out when i hear a claim . " property will drop ##% in the first quarter of 201? " Sure someone may get it right eventually but most will not. I think you have to think about the area you are investing in yourself more than anything. My area for example is still well below 2004 levels. Dont tell me about a price correction because i am still in the middle of one.
I think the comparison to other propertie markets can be an unfair one. Sure we are highly priced compared to the US and UK but they are in deep s##t.When these areas recover do we expect there house values to stay low or would you expect an upward correction. This may be in bad taste but i bet if you compared the current tourist levels visiting Samoa to that of Fiji it would look like Fiji Is the best bet. It is the best ATM for obviouse reasons but Samoa will recover and return to normal as will Property overseas.
having said that i do agree Aussie property is pricey but lets compare oranges with oranges. Will we have a correction. Probably. Will we have a 40% correction Australia wide. No way. That would put my PPOR and many othere on the east coast at well below replacement cost of the building alone. It aint going to happen across Australia as a whole.
5% 10% 15% years of no growth. These are all possible but property is still my direction for long term wealth.
This is a rough breakdown of what im looking to do. ( sub divide corner block and build on the back)
Council contributions $5200
Sewer $7000
Water $6000
Sewer encasement $11000 ( building over sewer line so have to encase with concrete)
Sewer junction $1000Demolish existing double garage ( asbestos ) and remove concrete driveway. $6000
Town planner and odd bits $10,000
Hope that helps
This may sound a bit selfish but i have faith that rates will not hit highs that will affect me. The % of my wage committed to loan repayments across all my properties is well below 20 %. With this in mind i imagine as they climb many others will feel the pain before i do and this should be enough to slow things/rates down befor they get to a point i feel the pain.15% rates will not sink me but i doubt we will see that with Australias current debt level.
I try not to buy toys that lose money these days. That can be done with cars,bikes,boats etc. Just have to buy the right toy. I sold my car and made a fortune. Actually my profit was more than it cost to build my house in 2001. Crazy. Now i have a very collectible ducati. Had offers on that well above my purchase price. Good to know you can have these toys without feeling that guilt of wasting money.
I have Three properties in Nowra on the NSW south coast.The area averaged just under 10% pa over the last 10 years although its a safe bet that will not be repeated .Having said that it is a growing area and ticks a lot of boxes for growth. Terry Ryder picked it for his NSW hotspotting report so should do ok eventually.
My first property purchased in 2001 is my ppor so cant do a yield on that one. I would guess around 6 %
First IP bought in 07. Getting 5 %. Not happy at all with the return but learning from it and a possible rezoning to comercial will change things drastically.
Second Ip bought a few months ago and now returning just over 8 %. Very happy with that one and im about to build a 4 by 2 on the back of it so very very happy.
One of my workers spent many years there working at the airport. He said it has a lot of social problems but there are nicer areas. Mentioned shops being boarded up at times. He also said to do an inspection of the footings etc due to movement. Most houses crack up that way. Also as far as rent returns go. They will vary with climate. Good rain brings good crops and plenty of workers. Drought means they leave and the population suffers drastically.
I am currently going through the motions on my IP. 1000 sqm corner block with room at the back. My goals lean me towards keeping it after the house is built.Reason being its total rent return after the build is 50% of what i would be happy to retire on.( It has a granny flat also).
So one more property like this and one ordinary one for expenses would have me retired.2 dual oc and 1 normal property paid off and im done.
Anyway thats me and thats why in my situation i would buy and hold.
But also as you touched on it should provide instant equity which would be a good safety blanket or something you could axcess for your next build.
Guess it depends on the numbers in the end.I use to worry about the short term outlook a lot but the old
Buy when you can afford
Buy well
Hold long termrant has really stuck with me know.My latest IP is looking to be cashflow neutral to slightly positve on a full lend on 5 year fixed rates and not including tax deductions.
This with the fact that the earliest im looking at cashing in on my investments is another 20 years. Im no longer worried at all.Neutrally geared on a long term investment is good SANF for me regardless of the short term ups and downs.
shanematt wrote:The main concern I have with living in a PPOR is the large chunk of non-deductable money I will be using.Obviously that large chunk of money could be used to buy one or more great investment properties.Tough decision.Any body else think this way?I have been thinking about this also.The PPOR i am in at the moment is nice but it is not where i want to stay. My plan is to hopefully upgrade in 2 years when/if my contract at work gets extended by ten years. But do i decide to rent and invest the equity i currently have ??? Who knows.I just settled on my second IP and now i am pricing building a new property on the back of the block.The numbers stack up but if i end up borrowing to my limit i may find it harder to borrow the extra cash to upgrade my PPOR down the track.Im at the point now where i will have to make a decesion on which direction as all my choices will now effect things.
to me this is the same old rent vs buy argument. And on a purely cash outcome it can sway both ways. The decider to me is what you do with the cash saved. Let’s say after 5 years you come out $15,000 ahead if you rent. This would show renting wins. But who actually SAVES AND INVESTS this money. Few do. This is why buying wins in my book.
But if you sold the house after ten or so years it would be a no brainer
Did I miss something ? Many here speak like there has been no correction. I live in a regional city in nsw and our values are still below 2004 values. Add inflation and things get worse. I didn’t cry about it . Instead I took acalculated risk and bought at well below 2004 values both in 07 and right now. Yes I understand that some segments of the market and some areas have not corrected much but come on. This is a big country and there are good buys around now as well as in the future. If your not careful you may be waiting for ever. Well that’s my view on things anyway
CheersI personally have an investing window of a minimum 20 years. Thats the earliest i would start to want to cash in on investing. So if you plan long term you should be fine. Like many say. Do you really care if your $300,000 house drops to $275,000 in the short term when in 20 years it is worth $1,000,000.
