Forum Replies Created
Nina,
I laughed at your description of life with your 3 year old. Mine are 2 and 4, so I can empathise. There seems no limit to the bad things they can find to do in the minutes you are either in the shower, the loo, answering the phone etc. You've done well to write a few coherent paragraphs here! I actually have found that I really enjoy reading finance/investing books etc (a little bit at a time) as it gives my brain an escape from Mummy land. Don't be too hard on yourself if you are not able to buy something right now. It is easy to feel like you are being left behind but new opportunities will always arise. You are already creating a different path for the future by thinking about what you want and learning ways to get there.
In my view (and plenty of others it seems), we are at a time where property is generally expensive (compared to wages) and interest rates are trending up. If people are struggling to afford entry level houses now, any steep increases in price in the near future seem unlikely. I am not an expert, if such a thing truly exists but I recall my parents sold a house in 1991 for $120k. We bought a similar house 3 blocks away in 2001 for $86k. Now it is worth $300k. Wouldn't be surprised if it is still worth only $300k in 5 years.
Shares have the advantage that you can start investing with a smaller amount and if you want you can get a feel for 'good debt' using a margin loan to increase your holdings. There are some nice big solid companies (blue chips) that pay a good dividend at a rate better than an average rental yeild. When borrowing, interest to buy shares is deductible against your regular income (though always check that kind of thing with the tax office as I am not qualified to say!) so you pay less income tax. The most difficult thing for many people seems to be coping with their fear of the normal volatility, that is the prices bouncing around, because it is so easy to sell shares when you get nervous. And hence lose money.
It won't be too long before your son is school age and maybe then work would fit into life better. If you spend the next 2 years getting a deposit together, making plans and learning all you can it is not time wasted. Though I don't want to offend any financial planners out there, it seems to be largely a sales job where much of the advice offered is restricted to the products they are authorised to promote/sell. There is a place for their services but the more you know before you go the better you will be able to consider their advice and recomendations in the context of your own needs and circumstances.
Good Luck,
Louise
Hi Nina,
Why don't you go for a drive some time and have a look at the block of land? It isn't far from Brisbane by the sounds and then at least you know what you are dealing with. Perhaps too it may be time the solicitor told the neighbours to clean up their mess. Having rubbish dumped on it sure won't improve its value, and therefore wont help you in the long run. Be politely persistent with your family. I am not keen on confrontation but have learned that noone else will look after my interests as well as me, so I have had to learn to be firm and open my mouth, repeatedly if necessary, even if it means some short term feelings of discomfort.
If you stay motivated you will make progress toward your goals. If you want it enough you will find a way. My husband and I have aquired 3 properties and a decent share portfolio in six years, from nothing and on a lower income than yours. We have 2 young children, we work very hard renovating, rarely have a weekend off. My son was imitating power tool noises before he could speak! But we have averaged $2000/week capital growth over that time which is far more than we could have earned at a job let alone saved. I have to add, we were lucky that we went in at the right time for our location and I would not expect things to happen so quickly in the near future.
Just a thought, be careful to consider how much your family tax benefit (if you get it) will be affected by your working more hours. I checked and found that I was losing 70c for every dollar not including childcare so decided it wasn't woth missing out on the time with the babies. Maybe look at sorting out your father's estate as a priority to secure a deposit (combined withthe first homebuyers) and in the meantime start saving a set amount each week into a higher interest account so that when you are ready to buy you have evidence of a savings history. Banks like to see this for a loan. If you do this as an automatic set-up you will probably find that you survive with what is left. And get rid of the overdraft thing asap.
Best of luck with your plans. Let us know how you are getting on.
Louise
Hi Justin,
I often make use of the residential tenancies website to check median rents (quarterly) for different property types and suburbs. This is for Queensland only. Maybe there is a similar thing for other states. The address is http://www.rta.qld.gov.au Go to 'median rents'.
Louise
Hi Devo76,
A thought provoking question! I am admittedly very frugal, stingy according to my friends. I often take my kids to op shops when they ask for a toy, I get them whatever clothes they need and we have a great time shopping, rarely spending over $10. I think of it as recycling! Until recently I drove a very daggy 1983 magna in a luscious metalic brown. It got me from A to B and the a/c worked, so I was happy enough. though After spending $700 on repairs, I discovered a fresh pool of oil in the driveway. I decided enough was enough and bought a 'new' secondhand car (Ford AU Fairmont Ghia) for $6000. I am so happy with the upgrade because it is such a huge improvment on what I had before, a new BMW could not have made me any happier, in fact I would never feel comfortable spending so much on a car. I had to laugh though when later I discovered that the oil was actually from my husband's ute!
Louise.
I would love to get into good commercial property – have looked into going partners with my brother as 'good' properties seem to start around 500k and the lending criteria if far less generous in terms of LVR as compared to residential. At this point, I think the only way in for me is to get a little more equity from residential investments and then go in using existing equity alone to avoid having to meet commercial lending criteria ( we buy with low doc loans as we are self employed). I don't like dealing with niggly tenant dramas so I love the idea of the tenant being responsible for maintainence and outgoings, and obviously the higher returns. I would like to hear form people who are already in commercial propery also.
Louise
Hi Renabelz,
Mackay prices seem to be firming a little, thoughthey are still off their peak by quite a bit. It is a reasonably good buyers market now with some room to negotiate as things are not moving quickly. I know a few agents and all have more listings they they have had in ages and are finding it hard to sell as people are reluctant to drop prices (up tp 50k on what properties would have sold for 12 – 18 months ago). I have been going to open houses and often I am the only one there. Agents are very 'friendly and accommodating'. They haven't been those things around here for some time. I feel the market offers some good opportunities for those prepared to add value through renovation as tradespeople are very expensive and hard to find here due to the mining boom so most people don't want to buy houses that need a lot of work. Also, rents are very high and seem to be holding – check out rta website. There is virtually a zero vacancy rate. That is the main reason we decided not to go for Townsville – Mackay offers higher rent returns with very little gap between house prices now that Townsville has risen so much.
As far as locations, I am 'emotionally attached' to West Mackay, large blocks, queenslander style homes, very close to the city heart, quiet leafy streets, though I guess it depends on what you are looking for. As the council has not kept up with the level of growth in terms of roads/infrastructure, I tend to look for properties in suburbs within 5 k of the city heart, away from bulk units and housing commission on decent sized blocks (over 800m). People get fed up with sitting in traffic coming in form outer suburbs and petrol prices aren't helping either.
Good luck, and if I can be of any more help let me know.
Louise
Hi,
I am just starting out on a very similar project, raising a queenslander to legal height and building in under with internal stairs, laundry, kitchen, bedroom, ensuite and living. We want to keep the existing kitchen upstairs (4y.o.) as we feel it would be desirable adult renters sharing to have separate kitchens/living. As a past renter, I know the conflict that can happen when few people have to share a kitchen. This dwelling would be let on one lease only. What do people think?
We have chosen to do it all by the book (at great cost!) and demolish the existing lower section and rebuild a brand new base and slab, 300mm above ground height with legal height ceilings under. We felt that is worth the expense because there will be nothing 'dodgy' to negatively affect resale prospects in future. We are considering where we can save a little on cost without compromising quality, we have much experience and know we can paint and also lay tiles as well as a professional, possibly install a flatpack kitchen if this makes sense too. A builder will do the bulk of the work because we are short on time and want to get it done quickly – time is money! This approach makes sense for this project as the existing 'base/lower level' needs major work and restumping anyway.
Regarding the dual income stream, I have met with council town planning and we are preparing an application for 'material change of use – dual occupancy'. We will be building a detatched townhouse on the same lot that matches the existing character of the area and the existing house. In an 'urban residential zone' (Mackay) you can not have 2 units/ townhouses attached or not without this approval. There is a multitude of factors to consider with regard to town planning that are seperate to building approval. Contact your council town planning dept or look up the council website for more info.
Let us know what you decide to do.
Louise.
Hi Melsy,
I have been looking at Townsville for about 4 months now and in my view, properties seem to have increased by around a minimum of 10% in that time (for those under $350k). We had trouble with buying as the good deals were gone within hours of listing. I live in Mackay which makes it hard to view properties quickly. I would consider that to be booming. On RP Data you can get a free suburb profile which gives a clear picture of what has happened. As for what will happen in the future, who knows? Townsville has a lot going for it. Since we began looking in Townsville (because Mackay had gone too far too fast) Mackay prices have pulled right back and we are begining to see value here again, especially as rents are much higher here.
Good luck with your property choices. Remember, nothing ventured, nothing gained!
Louise
Hi Francis
That is an interesting question. We have renovated a few properties in the last 5 years and found that although they definitely add value and equity, we could have done almost as well if we had not bothered with anything major as by far the greatest gains were just a matter of time and timing the purchase. I think renos are more significant now that the capital appreciation is not just happening around here (central queensland). Also, it is a bit hard to be hands on if you buy a long way from home. We purchased a negatively geared property in Gladstone ( 4 hous drive) about 1 year ago and specifically chose one already renovated with absolutely nothing to do. The capital gains on that over 12 months have been fantastic.
I guess my thinking is that when things are really moving up, you just enjoy the ride, but when (like now) things are slow, you have to work harder to see any gains at all. We are actually planning to renovate an IP we have owned for years to increase the rent return now that the capital growth has slowed.Louise[biggrin]
Congratulations! You have done really well for yourself financially.
If I were you, I would consider finding a property to live in and renovate, look for minor cosmetic things you can do yourself of for little cost to icrease your equity. Paint and polished floors make a huge diference also kitchens and bathrooms. Major structural problems can be very costly to fix if you don’t have the skills yourself.By living in the house yourself, you have the option of renting out rooms to help witht he mortgage and the huge bonus of not having to pay capital gains tax on the profits if you sell so long as you live there for 12 months or more (I think) and then sell. Even if you rent it out after, the cost base for cgt is the new value after renovation which means less tax in the future.
I don’t see any reason why you should necessarily save a higher deposit before you buy, though there is no need to be hasty either. You have loads of options, be careful, have a plan, do you research but don’t be afraid to have a go. If what you’ve achieved so far is any indication, you’ll go far. Good luck.
Louise
Hi Gina,
Don’t be afraid to put the rent up regardless of incentives if it is in line with increases to the median rents for the area. This information is available from the Residential Tennencies website for Queensland but I am not sure for Sydney.
I am saying this because I made the mistake of not increasing rents regularly in line with the general market to keep a ‘good’ tenent and now find myself with the ‘good’ tenent angry about recieving two small increases in one year after 3 years of no change and myself feeeling very frustrated by a still needlessly low rent return from the property. That said, the tenet may whinge, but they aren’t showing any signs of leaving when there isn’t better deals around. It just isn’t worth the hassle for them. Putting in the fans or some other incentive may keep the tenent happier but make sure it doesn’t eat up all the gain from the rent increase.
I have learned an expensive lesson being too ‘nice’, close to $10k over two years and still the tenent thinks I am greedy anyway. I hear vacancy rates are low in Sydney at the moment, which is all the better for you. An old friend of mine who has managed her own ip’s for around 50 years says, “If they don’t like it, they can pack up and leave.”
Good luck,
Louise
