Forum Replies Created
- MRW wrote:may as well keep this discussion going.
I have no idea who this guy is, whether what he says is valid or not. Interesting read though.
Who knows!—
MarkInteresting read, and judging by the comments, there's a lot of people out there waiting for the Australian property market to fail. It very well may, or it may not. One thing is for sure: the ones waiting for the crash have virtually nothing to lose and potentially a lot to gain if the bubble bursts. All they need to do is sit around and talk. It doesn't take guts (nor the smarts) to do that. Talk is nothing without action.
Those with money in the market are the ones who stand the chance of losing a lot. That said, I am betting my future and my entire portfolio that there is no bubble to burst. Sure, prices could fall but that doesn't fuss me. And I'm not anticipating price falls of 30, 40 or 50% either. I'll rather take my chances at a better financial future (at the risk of losing everything) rather than wait around, do nothing, and be screwed anyway, wallowing in self-pity and poverty in my golden years as inflation causes the death of a thousand cuts.
god_of_money wrote:fWord
We (JV with my auntie) bought 1+1 (70m2) apartment near somerset for A$850k few years ago… now it is worth nearly 1.2million+….
so Aussie property is still cheap…Somerset is probably close to what we'd call 'inner-city' in Singapore. Nevertheless, for $1.2mil, I'd rather be buying a nice house on a block of land over here. That's not to say I can afford a $1.2mil house of course…I'm a very small player here.
Wynyard wrote:"prices in Singapore are highway robbery"Why are we in this position?
Indeed, that is all news to me, thank you for lifting the wool from my eyes. In someways I'm glad to know we're not alone, it strengthens my feeling that we are all screwed – and that perhaps there could still be a revolution (several, a la Egypt). Maybe there is a latent communist in me yet.
It all has to do with supply and demand. Singapore is very high density for such a small place. With lots of people looking for a place to live, prices naturally go up. The ones who cannot take the 'pressure' in such a crucible invariably leave and look for better quality of life elsewhere. And this at least, is what I (and possibly many others) find in Australia. Better quality of life.
The people who leave Singapore are sometimes called 'quitters'. That's derogatory. In my opinion, it is the smarter people who decide what they want in life and do something about it, rather than staying put, being miserable and burning pitifully in the said crucible.
Hence, we 'quitters' shall be joyous, while the 'sitters' will continue to 'work with the system' and degenerate into a woeful existence, unhappy with their life but too afraid to do anything about it.
Wynyard wrote:Thornbury, actually they seem pretty happy with the house, just not the location.Well, they could have done a lot worse. Buying at $800K hoists them well out of the first home buyer territory, the sub-$500K houses that many first home buyers are either desperately trying to buy, or hoping to afford. I don't know Thornbury well, but it is near other 'trendy' suburbs and Thornbury will hence become trendy also in no time. Close to parks, public transport (train stations) and expensive suburbs. What's not to like?
Wynyard wrote:I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.From what I've read, negative gearing was once abolished back in 1985, only to be reinstated two years later. The attempt to remove negative gearing actually led to a rise in house prices and rent. When negative gearing was restored in 1987, house prices and rent increased yet again!
Considering what an epic fail it was in the past, I challenge the government to do it again.
Wynyard wrote:My workmates just bought a $800K house and are not even thrilled with what they got – an okay house in an okay area … 'ok' isn't what we should get for $800K.Geez, $800K for an 'ok' house in an 'ok' area? Where did they buy? I'd be very thrilled if I could afford to live in (ie. not buy and rent out as an IP) an $800K house.
Wynyard wrote:Geelong now more expensive than London!The report is a few days old, but in case you missed it
Looking at that comment, I'd have to question if the article is referring to Geelong as a suburb or Geelong as an LGA. If the latter, then there is still much affordable housing around. There are decent, detached houses on land (600sqm or so) going for around $200K. My tax agent once made this comment: 'Geelong is still cheap.' And I'd have to agree.
In Singapore (where I was born), $250K would only buy you a shoebox apartment in the 'suburbs'. This is government subsidised housing and you buy the said apartment on a 99-year lease. Terrace houses in these 'suburbs' in need of work generally go for around the $1.6-1.8mil mark. That's not to mention most working-class people struggle to even put up the $30K for an older second-hand Corolla to drive their family around, plus the ERP costs (similar to Eastlink gantries in Melbourne, except the ERP gantries are EVERYWHERE).
On the flip side, public transport in Singapore is excellent, but how many people really want to shuttle their kids around by accompanying them to school on public transport, and then catching this to their workplace? One of my friends works as a veterinarian in Singapore and is hence on a decent job and on a decent wage. Yet she is nowhere near buying her own place. I do not disagree that Australian property is getting expensive, but to say that Australian property is unaffordable would mean prices in Singapore are highway robbery (which I agree they are).
But going back to the 'Geelong is more expensive than London' comment, I must say that this is truly baffling. Geelong is massive and becoming a CBD in its own right, with similarities to Melbourne if albeit less congested and probably several years behind. If I were cashed up, I'd be buying in Geelong right now!
For capital growth, perhaps buy the house on the bigger block.
For better income and yield, take the renovated house on a smaller block.
Of course, you could also buy the semi-reno'd house on the larger block and extend, build a granny flat to get dual occupancy or even subdivide to increase yield directly or indirectly. All this would be STCA obviously.
There's many ways to skin a cat and there would hence be many ways to invest in an attempt to break free of the 'rat race'. Personally I don't look at books as strict guides on how to invest, but rather they provide readers with options and the pros and cons of each. It is ultimately up to the reader to decide what they intend to achieve by investing and what sort of risks they're prepared to accept.
Robert emphasizes the importance of passive income, the ability to earn money without actually working. This is good, because let's face it: if not for the need to make a living, most people wouldn't want to work as much as they do now. In my mind then, passive income means buying cashflow positive property.
I've taken the negative gearing approach, albeit unintentionally. This is because I wish to buy properties in areas that I would personally live in. To put it bluntly, it's very difficult to find a 'nice' house in a 'nice' area that is positively geared (if someone knows of such an area I'd hope for them to PM me with the name of the suburb), unless you take a very small loan or bought a long time ago. Being young and still living with parents, I've opted to be a bit more aggressive and aim for growth. Eventually I could always clear my portfolio or refinance to buy property with a higher yield to balance things out.
xdrew wrote:I know these statistics arent meant to be perfect, but to include these new luxury apartments in the equation skews the figures badly for maybe a quarter or two.These 'inaccurate' statistics could be a self-fulfilling prophecy however. With luxury housing in the area and cashed-up owner-occupiers or investors buying in, the overall image of the location could change and housing in the surrounding area could experience jumps in price.
karlm63 wrote:Thanks everyone for the replies,
I better start and put some sort of list together and start buying property.
I still have not a clue about this list yet but 1 thing i do know is positive cashflow is the go !!!!!!!
Thanks again karlm
TO BE CONTINUED !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Congratulations. The best part about this is that you're taking action. Progress was never achieved by people who sit on their hands and do nothing. Hope you find a property that works well for your portfolio.
In addition to Jamie's websites and what's been mentioned above, you could look at sqmresearch.com.au to look for vacancy rates and myrp.com.au for other details.
Now the rest of this might be akin to teaching you to how to suck eggs, however I find Google (in particular, GoogleMaps) and the Melways to be extremely useful. It allows me to see exactly where my potential purchase is with respect to everything else (ie. transport, schools, shops, industrial zones, proximity to parks and the water). GoogleMaps is not entirely up to date however so this is where the most recent copy of the Melways comes in. And you could even compare the most recent Melways with the Melways of old to see where things appear to be going, or whether anything has even changed in the area within the last 2-3 years.
If you ask questions here about where the next hotspot is, you're not going to get any answers because nobody is going to want added competition. I think at least in this regard, the Melways and GoogleMaps MAY have helped me shortlist a few potential 'hotspots' (some of which have even been mentioned in the papers of late, and prices shot even before I managed to save to buy something there) which I can specifically target and investigate.
Realestate.com.au also has a little section where local residents rate their own suburb. It might be full of rubbish sometimes, but if you take care to read it carefully, there are sometimes detailed opinions about specific streets that are good or bad, or what amenities are in the area.
A visit to the local council to look at zoning, ask questions about the property itself (eg. any proposed developments in the area, building permits etc as Jenny mentioned) and collect a copy of the local newspaper. What sort of articles do you see in the paper? Does it reflect an area that has a degree of crime which the council is trying to stamp out? What about sports, culture and festivities?
Use the information at forums like this. What's the general sentiment of the market at the moment? Is it a frenzied market (in which case you might decide not to buy at all since things are 'overvalued') or is it a flat, cooling or even a buyer's market (where you could probably look to secure good deals and buy before things get hot again)?
Of course, ultimately you need to do the good 'ol legwork. Drive or walk around the area where your potential purchase is. Is the area full of well-maintained, quaint period housing or is there evidence of brand spanking-new luxury housing being built? Is the area about to welcome a luxury village-style or golf-links residential area, or low-rise luxury apartments (which could cause a rise in property values nearby)? Or perhaps all you're seeing are ill-maintained, disintegrating weatherboard houses, one overgrown lawn after another, and old rusting cars (or a tarted up wannabe sports car) parked on the lawns? Can you hear your neighbours in a fight or having a domestic dispute next door?
One of the common things I've read about investing in property is not to get emotional about your purchases but instead let the numbers do the talking. Is the property positively geared? Is it going to give you passive positive cashflow from the rent even after all the expenses have been paid?
I have wavered significantly from this 'rule' by getting very emotionally attached to what I buy. That's because I'm not looking to own over a dozen properties and be super rich. I'd be happy with just one family house in the suburbs and a beach-side shack for retirement (and with both the loans paid off). However I believe in buying a house that I would personally like to live in. If you buy something like that, you will attract tenants and potential buyers who are like-minded, people who are just like you. Look at it another way: would you prefer to deal with people who are just like you, or people who are radically different?
Because I have done this, the properties are negatively geared. This is NOT what I set out to do, and I did NOT buy these properties just to reduce tax…this is a VERY bad idea. To me, the negative gearing is just icing on the cake. My intention was merely to set foot in the property market and make sure I have a house ready once I move away from my parents' place and ready to start a family.
Everybody's intentions with property investment is different and that determines in some way the kinds of property they buy. What are your intentions?
Due diligence = research
That is, studying your potential purchase to know exactly what you're buying into, or whether you should be buying it or not.
fredo_4305 wrote:I got a property report done off RPData and it had it a little higher than the price it is being sold for. I have also had Residex done on my other properties before and it was fairly accurate.While I can't say much about the accuracy of these price estimates, it is possible that the difference in price between that in the report and the advertised price indicates the current state of the market. In a cooling market, it is more likely for the advertised price (and even the final sale price) to fall within the range stated in the report. In a heated market, the advertised and final sale price could exceed the report's price guide. Hence, the property may appear well-priced based on information you're getting in these reports, but don't forget to consider the condition of the market also.
For example, I know of a house that Residex estimated would be worth $405K. The advertised price was $380-420K. It received an unconditional offer at $436K, another at $450K and the highest offer was $489K. The house ended up selling for $450K because the highest offer failed to obtain finance. Even so, the final sale price was almost 10% greater than Residex's price. This was under the rather frenzied market conditions in 2009.
Compare this to another house that I looked at in December 2010 in a cooling market (and arguably during the pre-Christmas weekend, which is even quieter): Residex estimated the price at $507-557K. It sold at auction at $537K. I don't believe the price guides are a substitute for true valuation by a qualified person, but they are a quick and easy way to get more information about your intended purchase and the records of past sales are also worth studying.
With the strength of the Aussie dollar I would think that the number of students coming here would be much reduced. If this is the case then you may have trouble renting out your property.
Based on the other articles on the same site predicting price falls in property over the same period, it's a wash between the conflicting arguments. Perhaps this is not unexpected in a flat market. Price pressures in either direction balance out, leaving you with a flat period with slow or no growth.
emailtosimon wrote:3. put condition to finance and building inspection and decision within 48hrs. (?can I put all 3?)Hi Simon, have you made the offer yet? If so, how did it go?
All 3 clauses should be ok to include. An offer that is not subject to finance would technically be a stronger offer. Also, you could do a building and pest inspection first, and then if that is sound, then make an offer that is essentially unconditional (if you're confident about getting finance). It would be advisable to tell the building and pest inspectors NOT to discuss the findings of the inspection with the vendor or his agent.
emailtosimon wrote:Any other ways to make my offer more attractive apart from give more $$?
Consider asking the agent if the vendor would prefer a shorter or longer settlement and then offer accordingly.
DWolfe wrote:Seems like gen y may throw a spanner in the works by staying at home and trying to pay off a big hit of the mortgage. Then they can buy where they want to.The new dinks – lahdinks- living at home double income no kids.
D
Nicely said. Gen Y's sometimes get a bad rap not saving enough, not working hard enough and then spending too much. There are some however who will do whatever it takes to ensure a comfortable future. They may look at the struggling pensioners of today and decide it's time to put their foot to the pedal and accelerate their way towards financial independence.
'Lahdink' is a fantastic term, although I feel more like a 'lahsink' at the moment. After all, I don't need a $20K wedding celebration to set me back. On that note, it appears that in delaying their moving out, Gen Ys also delay getting married and starting a family.
Depends, I guess. It is conceivable that a well-heeled investor (or even a couple) may buy the house with the intention to move in eventually (ie. buying a 'dream house' early to 'lock in' at the price they can still afford), but rent it out initially to get the loan repayments down to a manageable level before moving in.
Just my two cents, although I'm no expert and hence may stand corrected in the presence of more well-informed advise, however this would be my personal opinion:
emailtosimon wrote:1. How much should I offer? (duh!)
The agent has stated that there are many interested parties (i guess they always say that) and hence unless I can provide a good enough offer, they wouldn't accept it.
In a cooling market like today, should I try to make an offer in the middle of the range? Although my max is probably $480k for this property, every dollar saved is 7cent interest less in a year!or should I go straight to $475k and if they don't accept it, it's obvious that they are under quoting.
A property is only worth as much as someone is willing to pay for it. Therefore, it would be crucial for you to consider how good the property is in terms of location, whether there are any issues ongoing in the body corporate, any forseeable large expenses that you'll need to fork out for the building etc and then decide how much you think its worth.
Putting in an offer on a property is not about offering within the quoted range. It's about offering how much you think the property should sell for (even minus say 10% if you're hoping to buy under market value), and giving your best offer the first time around. Do NOT offer $480K straight up just because that's your max. The property may NOT be worth $480K in the real world. Do check out the other deals out there to see if better ones exist.
If you offer the maximum of their quoted range and it is not accepted, it matters not whether they are underquoting. It is of no value to you to know this. What purpose would that knowledge serve? Furthermore, when it comes to properties on auction, it is sometimes routine to see properties sell for higher than the maximum figure in the quoted range, but it is not always the case. As my Dad frequently warned me, it is unsafe to simply assume a property should sell for between 0-20% more than the higher end of the quoted range, even if historically this has happened in more popular areas.
Key thing is always to do your own study and analysis and weigh up the pros and cons of this property versus others in approximately the same price range (ie. +/- $50K or so). Of course the other factor depends on how badly you want the property. This emotional reason does not justify overspending on an investment property, however sometimes you simply have no choice. A real life example if when my parents bought the house we currently live in. Our lease was coming to an end in the house which we were renting. The landlord sold the house with vacant possession and badly wanted us out. So my parents decided to quickly buy the nicest house in the best area they could afford, and to do anything in their power to win at auction, WHILE STILL SPENDING WITHIN THEIR MEANS. The result is that they overpaid slightly in a face-off against a similarly persistent bidder, however it got a roof over our heads and saved us a lot of stress, of moving to another rental property and potentially dealing with the same issue again.
emailtosimon wrote:But the real estate agent said I'm not allowed to write any clause because it's advertised for auction.Sounds like ribbish <moderator: delete language> to me. If you're making an offer prior to auction, then you should be able to put clauses such as 'subject to finance' or 'subject to building and pest inspection revealing no major faults'. Even if you're going to auction, there is some room for negotiation (some days or weeks before the auction begins), except the introduction of a cooling-off period (as mentioned before). Personally I've been to an auction where I was allowed a 90 day settlement (if I was successful at auction) instead of the usual 30/60, which was what the vendor originally stipulated.
This varies on a case-by-case basis however. If you're dealing with a particularly cold and non-motivated vendor, then he/ she may have already stipulated to the agent that all offers before auction must be unconditional, otherwise they are not acceptable. And again, some vendors would even completely refuse offers before auction, even without knowing what the figure is.
This is madness, in my opinion. If the property is hotly contested at auction between two bidders, the highest bidder may get your apartment at say, $535K when he/ she was originally prepared to offer up to $550K. In this instance the vendor has 'lost' the potential to make another $15K. Having said that, some vendors refuse such offers on the advice of their agent and hence are guided into doing something that is not necessarily right for them.
emailtosimon wrote:3. Is there anyway to find out whether my loan will definitely be approved?
My broker said the only way to find out is after my offer been accepted, and then the bank would do the evaluation before deciding whether to give me the loan (despite I've pre-approval for more than 480k).
What do people do to help them gauge whether a property will be accepted by the bank or not? This apartment is pretty standard, got one off street car park, 2 bedroom, 1 bathroom with laundry and 60m2 area.Couldn't advise on this unfortunately. Very basic knowledge tells me that your budget would of course depend on the loan amount which the bank would conditionally approve. However, if the bank approves a loan amount of say $480K and you go overboard and splurge all of that on a property that should only be worth $300K, then the bank valuation may be reason for the bank to refuse to loan you that money, even though it was conditionally approved based on your income and ability to service the loan etc.
This is where your research comes in handy again…knowing how much you should be paying for the property is crucial and you'll need to compare this current property with similar past sales in the last few months. I've developed a bad hoarder's habit of keeping the property sales results from each week's newspaper in a folder and have done so for over a year. However if you go on a website like realestate.com.au there should be limited past sale prices available under the 'Sold Prices' section, or if you just type in your suburb of interest in Google, do a search and manually sift out the websites that have free suburb information.
