Forum Replies Created
- Scott No Mates wrote:There's hope for Frankston & Umina yet fword.
Haha, that's right! Frankston has potential. A workmate used to stay in Bentleigh East. He then bought a place in Frankston, uprooted his whole family there and sold the Bentleigh property. He believes Frankston has plenty of room to move upwards. The guy must either be very sure of his research or completely deluded to actually uproot from an old home near Melbourne CBD and move further away.
I'm not familiar with Umina, but would you be referring to Umina Beach? Some weeks ago my uncle made a broad comment about the almost certain ginormous gains of buying stuff that's near the water. That's an extremely sweeping statement. A newspaper article I remember reading some time ago however, suggested looking for the three Cs when buying property. These might have been 'coast', 'coffee' and 'cake'. That is, buy a place near water and near trendy cafes. But the hidden C is 'cost'. Such property would be pricey indeed.
Scott No Mates wrote:2 schools of thoughta) leave it vacant & lease it when you get possession – you will be up for all costs in leasing the house, you may have a delay between securing a tenant and them occupying the premises, you may need to delay access until make good works have been completed, house will 'smell' of being closed up for 3 months.
b) if the vendor leases it, they will pay for the leasing costs, you have no control over who the tenant is or their quality, the vendor gets the rent up to settlement, you may not be able do as thorough a final inspection as you like, make good works won't be done (if you are to undertake them), you get rent from day 1.
Options: if you agree to the vendor leasing the premises, then you should get a say in vetting the tenant (or agree with the managing agent's recommendation), you may need to pay part of the letting costs for the privelege, alternatively seek early access to find a tenant with lease starting soon after settlement (and any works you need to do).
Thanks. The way you put it, it makes it sound like a better idea to get the house leased before settlement, despite the risks involved. We will definitely vet the tenants and will need to mutually agree on the choice of tenant and the amount of rent they pay. Otherwise I might get someone in on a 12 month lease and paying way below market value. If we do this we could probably get early access to do a couple of small repairs before the lease occurs. Regardless, I suspect the vendor will not bear all the costs associated with leasing the house and the costs may be divided between the vendor and ourselves.
On speaking to my solicitor today he didn't see any need worry if the house is rented out before settlement. I understand there is a clause for vendor to present the house to us in the same condition as it was when it was bought. However from my knowledge, if any damage occurs, I'm only entitled to a $5000 compensation. I cannot choose NOT to settle if say, damages by the tenant amount to $10K and the compensation doesn't cover this.
Indeed there would be landlord insurance in place, however the insurance company is answerable to the vendor, not to me. And once settlement occurs and if any damage is not rectified, I could be left with a substantial repair bill and toxic tenants. This really, is my main worry about leasing before settlement. Otherwise, weighing things up, it makes more sense to just lease the house straightaway.
propertyjockey wrote:Who cares if the suburb ticks all the boxes regarding location, valur add opportunities. If undesirables inhabit the suburb descent rent paying families will not what want to be amongst them. This will kill your investment short and long term.
Sorry if I sound a little harsh, but that is reality right?
PJ
Well, it may not be as simple as that. The suburb may be inhabited by the 'undesirable' sort today and nobody has a crystal ball. But what if the place polishes up?
Essentially, if you can see that houses in the area are undergoing significant development, with demolition or renovation occurring and very nice, newer-style luxury houses springing up, or quaint period homes in excellent state of repair, then you may be on to something.
On the other hand if all you see are one overgrown lawn after another and with an old bomb or wannabe sports car parked on the said lawns, houses are messy in general etc then it might be a better idea to keep an eye on the area first rather than buy into it immediately.
DWolfe wrote:Hi Fword,The vendor would get the rent, the vendor is responsible for landlords insurance. The vendor must still present the property to you in the same condition as you bought it. You would do an inspection the week before settlement to check.
Why did the vendor suggest to you to do it? If the vendor wishes to rent the premises they should be organizing it.
Was the property sold to you with a lease in place or vacant possession?
You'll have to ask your accountant about the repairs before settlement to get the best advice.
I wouldn't want to leave a property empty but that's what insurance is for. If you are looking at renting the property in the new year I'm sure you will be fine to find a tenant. There may be tenants who go the opposite way and will not move during the holiday period.
Let us know how you get on, good luck
D
Good day DWolfe,
Nice to hear from you. Hope things on your end are going well.
Have to agree with what you say regarding landlord insurance and also the clause that states the property is to be presented to the purchaser at settlement in the same condition in which it was bought. This was actually in the contract of sale that we already signed.
The property was sold with vacant possession. I checked with my accountant regarding expenses before settlement and they are not tax deductible, as I also guessed.
Ultimately I'm sure the vendor proposed this because it's advantageous to him. However I can see it's also of potential value to me to spend this time before settlement looking for a tenant, rather than wasting the next three months and then waiting till settlement to start looking for one. Would think that different areas attract different sorts of tenants and therefore play a role in deciding when tenants usually move house, but I could be wrong.
If I could just as well find a tenant in March then I wouldn't worry as much.
Not adding to either side of the argument, but for what it's worth, I personally know of a house that sold at auction just this Saturday past. It was reported as having sold for $517K in the Sunday Age results, despite a number of us KNOWING that it really sold for $537K. Anyway, take this info for what it's worth.
Now I'm not an expert in this field, but in my opinion, past sales information is just a guide, if at that. The price of a house that sold even two weeks ago and in the same street as another house that sold today may not necessarily be similar. My Dad always tells me this, and I've heard it elsewhere many times before: Valuation is not a science. It's an art.
The sale price of a house depends on many factors, tangible or otherwise. The neighbour may make a difference to the sale price, for example. Or sometimes it just boils down to simple supply and demand. In an area that a myriad of well-healed folk are trying to buy into, there will always be a one-up-manship at auctions and houses might presumably sell for 'more than its worth'. But is this really the case?
At the end of the day, things usually sell for what they're worth. The reason for this being that there will always be someone out there who is willing to pay a particular price to secure a property, even if it means overpaying in the short term. People should buy property based on what it's worth to them, not on the sale price of a house in the same area and of similar size that may have sold weeks or months ago. Just my opinion anyway.
Thanks for the info.
I'm still going for an auction this Saturday. Thank goodness I'm not buying in Cairns.
nicolas_b wrote:How long could you survive at your accustomed standard of living if you lost your job? If you could sick? If your partner got sick? You lost your business etc… If you answer less than 6 months, then I think you are poor.Oh, woe is me. All of the time I think that without my parents, I would never be able to survive. On the occasions that I do ponder what would have happened if I were living alone and paying rent, I shudder in fear knowing that the little that I currently have shouldn't even exist.
I wouldn't be surprised if this is the same for many of the Gen Y/ Gen Z folk. Frequently we get told to get off our arses and work. Well, we do. We have modern conveniences, but we also have modern problems.
The proof of a housing bubble is the actual bursting of that bubble. Let's look at facts as and when they become available rather than participate in mindless speculation.
A couple of 'general' things that might have been covered already:
1. Before buying anything, weigh it up by considering if it's a 'need' or a 'want'. If it's a 'need', then stop fretting over it, save your time, shop around for the best price and buy it. If it's a 'want', let it go. The only caveat here is when you 'want' something that would secure your health, wealth and happiness in the future, because in that case it really is more of a 'need' rather than a 'want'. I mean, don't you actually 'need' health, wealth and happiness when you're older? Nobody 'needs' to be miserable when they're in their golden years!
2. Consider your long-term goals, and then do anything possible (so long as morally correct) to reach that goal. Likewise, if anything is holding you back from reaching those goals, ditch it and look for something more productive. It's easy to get comfortable with things in life. For example, it's easier to stick to the same job that you've had for years but pays pittance rather than moving to a job that pays more but has a great unknown hidden in it. But if that pay rise is going to get you closer to your goal, then do it! There's hardly ever a win-win situation in life, but decisions always revolve around weighing up your options and deciding which has a greater overall advantage for your happiness.
These two general things might suggest a person be cold and harsh and to sell their soul, not to follow religion (if you have one) and not to help the poor. On the contrary, I'm suggesting that a person who is in better control of their life is much better poised to help and inspire others to do greater things, because they will look to you as a person who has done the hard yards and succeeded, and now you're helping others to do the same. It simply means doing your best to get what you want, and to get it quicker. Look at it this way, none of us are getting any younger.
Oh, and something else:
If you don't have enough cash stacked up to take a big loan for a house, or just not quite ready yet, read more into the stock market, study individual financial reports from the companies you're interested and buy wisely. Money made in the share market is a nice springboard into real estate. My Dad personally still prefers shares, but I'm going to play a bit of a game with him and go real estate instead!
EPI_Den wrote:There will always be those who say that the crash is around the corner and you can always find a reason NOT to invest. How long are we all gonna wait?
Absolutely. Property always looks cheap when we take a retrospective glance, and people who are willing to take the plunge and ride the wave will probably do better than those looking for a crash and trying to pick up deals at the absolute bottom of the market. I mean, how many of us have looked at past sale prices and gone, 'Geez, wish I could get a deal like that now.' I'm sure lots of us have done that.
There's an older lady at my workplace who lives in Hawthorn VIC. Back in the day when she bought her house, the properties on her street were around the $350K mark. And she says, back then, nearly everyone could afford a $350K house. In fact, some of her neighbours were regretting that they didn't put more money down and buy two such houses! Now, the property is worth in excess of $1.2mil…maybe even $1.6mil.
If only we could still apply the same saying now…'Nearly everyone could afford a $1.2mil house in 2010.' Doesn't sound right isn't it? Ha, I wish I could afford a $600K house in today's money!
I'm going to buy nevertheless, and if the market does crash, so be it. As they say, time mends most wounds. And if it doesn't, you bought in the wrong place anyway.
Property in Australia is OVERVALUED?! Have you seen the RE prices in Singapore? "Average incomes" are lower over there, BTW, just seeing how my same-age relatives are struggling even to earn as much as I do, even though they've been at it for a few years longer than I have. And for the record, my remuneration is actually BELOW the national "average" in Australia.
Property is expensive. That much I agree. However, so is that Audi RS5 that I'm hoping to own in about 20 years time. If the property crash is coming, I say, 'Bring it on'. It isn't possible to 'read' the stock market, let alone the property market. I agree with Thomson. If anybody predicts correctly, they do so only by chance. Of course, we can expect slowdowns and even downwards price trends. But a 'bursting of a bubble' with price drops of more than even 15% on average doesn't sound likely to me.
In your case, buying land, vacancy rates won't be as much of a worry. Did you read anything interesting about Officer?
Although this won't be the most qualified of opinions, just thought to say a few words: I'm a FHB who has been with Homeside for 8 months or so to date. Can't say I've had any experience with the customer service side of things since I don't even call them. The IO loan with 100% offset account seems to have a competitive rate. They made an error with the FHB grant however.
When the broker lodged my application with them they applied for the FHB way too early and as such this sum of money had to be returned to the govt and it wasn't ready for me at settlement date. Thankfully I had the savings to cover the difference, but when they subsequently reissued me the cheque for the FHB grant they charged me $8 for the cheque. And of course on top of that I lost out on 'interest' on that $16K for 2-3 days. It's a small issue but it shows how stupid a mistake it was.
What if I didn't have the savings to cover the shortfall and couldn't settle?
For me as such, this loan is 'no frills' and a competitive rate. That's about it. So long as I can draw and deposit my money without issues, that's about all I can hope for. However with a second property possibly on the horizon I will have to see how flexible they are. I suspect my mortgage broker will end up doing all of this legwork again and I might not have to worry about much.
Back in the days when the market was super duper crazy, private sale might have been a good way to get the highest price. As an example, consider a 3BR/2bath weatherboard house we were looking at in outer-east Melbourne (28km from CBD). It was advertised at 380-420K. Ordinary FHB sort of stuff. Land was a flat and regular 1250sqm with single dwelling covenant.
The offers were astounding. Many around the 430K range (obviously), a good deal more at 440K, still two at 450K and finally, the thing sold to the next guy up who offered 488K.
If this house went to auction I think there would have been a bidding war between the top three parties, but I doubt if you would have seen such a great disparity in what they were really prepared to pay. Private sale is all about buyers taking a shot in the dark. In a hot market there's plenty of desperate people who will pay anything to secure a house if they think its the best one they've ever seen. They'll draw out all their cards and put down a slam-dunk offer.
On the house I eventually ended up buying, the top offer was a full 40K above my own (and we're talking about a house worth less than 500K, and probably should only be worth 380K if not for the growth spurt, but anyway…), but thankfully, their finances fell through and the house literally dropped into my lap.
At first glance I was tempted to say that the biggest problem with the property is the word 'regional'. If it's a substantial distance from the city and still a ghost town, then you won't see big capital gains till neighbouring suburbs start to pick up, or if there's suddenly new development in the area that creates an influx of people. I'd be thinking that if you bought true beachfront property within the metropolitan boundary, you'd be cruising. Having said that, my bet is that if you're prepared to hold out for 10-15 years, population growth will be a big aid and could push the urban envelope. That will cause your area to pick up. Not to forget also the sea-change phenomenon…people and water attract each other. Same with people and trees…to a certain extent anyway.
If I were you, it wouldn't be a worry about tsunamis and the like. In the event of a major natural disaster, I've always thought about it this way: if it's time for you to go, it's time. No point fearing it. Having said that, I wouldn't tempt fate and buy seafront property in low lying areas or reclaimed swampland, even if I don't really believe in the concept of global warming.
Really, there's a limit to the amount of coast that's available. Virtually all seaside property that has access to lovely beaches with low pollution, beautiful and peaceful outlooks, piers for fishing, beach houses, and also cafes and shops etc, basically anywhere that appears particularly picturesque, would be expected to pick up in due time. But of course the further you are from a 'desirable' area, the lesser the chances of a boom in the next decade.
New to renting myself, but my guess is that the number of days notice should be specified in the rental agreement/ contract. If your tenant is renting on a month to month basis, then I think 28 days notice is all that is required.
DWolfe wrote:It is a buyers market for commercial property………the silence about that is deafening…shhh nobody talk about that.
DMaybe it's because retail, and other businesses that would actually use commercial property is the pits at the moment. That medical building at the start of the street where my parents live has been vacant for longer than I remember. And considering my bad memory, that'll still have to be at least a year.
DWolfe wrote:Good points.At least it would give people a reason to contribute to their super voluntarily rather than see it as something that will never bring them any income.
D
And in my case the income from super is actually negative. In all the three years working here and getting super contributions from my employer, the fund has only ever lost me money. Of course to be fair, this spans the terrible period of the GFC.
It would hardly be surprising to see a slowdown or even a slight drop in prices in the near future (ie. the next 6 months). Traditionally (as far as I've read), property makes spurts of growth with lull periods in between where prices can remain flat or even slightly fall over a period of years. The trick it appears, is timing the property market and buying during these lull periods where property is considered better value.
The additional tricky bit is that this graph apparently differs from suburb to suburb, so some suburbs might already be posting plateau in pricing or even falls but other suburbs may still be on their upswing. Based at least on this graph I'm happy to say that, at least for my suburb, I bought at the right time just as it was getting into the upswing (although this was purely by chance, not because I'm a technical chartist), and before that prices were pretty darn flat. If I get the chance I could photograph that and post it here as an example.
I've seen it written over and over again that property is a long-term investment. Sure, if you buy at the absolute right time you'll make a killing, but for the most part you're letting time do your bidding, and letting time give you a chance to reno a place and improve it before revaluation.
Good news for those holding rental properties is that, the relatively higher interest rates compared to that 6 months ago and higher prices will keep vacancies low as people struggle to find a PPOR and have to continue renting, and those who even thought of upgrading will hang on to their current houses for dear life, so you stand to gain as a landlord. But I pity those who have yet to own a house. I worry for my brother who has yet to set foot in the market but does need a house to stay ultimately.
If the DOW drops to under 4000, that will be something to fear indeed.
