[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 22, 2011 - 7:05 am

Melbourne.

Live in a detached house with a backyard.

Prefer to live in a detached house with a backyard.

Age 29.

Good question, and if you get a wide enough selection of respondents, it'd be a good reflection of the type of accomodation people might prefer.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 22, 2011 - 6:14 am

Marie123 wrote:

No worries. It was a while ago we were talking about JL anyway.

I am looking to get a report off him in the near future regarding a few suburbs. Hopefully it all stacks up.

Other then the 'final buyers market' I think he encourages the 'family home market' – but don't know what he calls it. The banks are more likely to lend to someone who is buying their second home, than those that are just coming on the scene – and of course a much larger amount.

On a side note. I had one of my properties valued by the banks roughly $8k more than I thought the market would pay for it, recently. I thought they usually undervalued a property?? Strange.

Well, John's opinion is one amongst many. But if you get a few other opinions that point you in roughly the same direction, then it probably will 'stack up' in the end. In other words, if you've done a lot of research and are well-read, then you'll be in a very good position to make an informed decision.

When JL discusses the 'family home market', is he referring to couples starting a family, moving out of first home buyer areas and looking into houses in more established suburbs?

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 22, 2011 - 5:34 am

Marie123 wrote:

fWord

Pardon me, I thought you and I spoke about John Lindermans' book in this thread – or was it someone else? Whoops.

Sorry Marie, I didn't recognise the abbreviation. John's book is a good one, contains a good amount of logical information and doesn't take a rocket scientist to absorb it. Indeed he makes a mention of when to buy into certain segments of the property market. Obviously he doesn't lay down concrete dates and nothing is ever fool proof, but there are some key indicators to look out for.

It will be a number of years before the boomers finally sell out of their investment properties. The share market is shabby at best and we're far from a solid recovery to hit a new peak. As John says, the time to buy into 'final buyer markets', or as I understand, lovely posh houses or tree/ sea change properties would be now, or at least soon, before the stock market starts heading towards its old peak, prior to the proverbial hitting the fan.

That will also be the time when the boomers will also sell their investment properties, sit back and enjoy. If this is the case, they will be selling their properties when market sentiment is good and prices will be high with very high clearance rates. We won't be expecting to pick up a bargain in this sort of market, quite unlike what some are led to believe. In the aftermath, prices might become unattractive or an excessive amount of old investment properties hitting the market may cause interest to wane. Prices drop or stabilise and then eventually become attractive to buyers again, hence the property cycle.

This is looking pretty far into the future of course. Who knows what will truly be in store for us? Regardless, if you invest in solid properties that are well located and priced close to the median price of that particular area, I'll be very surprised if you didn't get an equally solid return over the long term.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 21, 2011 - 9:50 am

Marie123 wrote:

//When the sharemarket does recover and levels start heading towards the peak again, the boomers would retire en masse. And that's when they'll be selling their investment properties. The boomers have literally watched their nest eggs vaporise in a matter of months and they're in a bit of a pickle…too few working years left and facing too big a loss if they decide to sell up now.//

That is what JL said at a recent seminar.

Pardon the ignorance, but who's JL?

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 16, 2011 - 10:06 am

Marie123 wrote:

"Step 8. Baby boomers have to sell their properties now that the value of their super has halved and they need something to live off. This adds further downward pressure to the viscious spiral"

Isnt this already happening? For those that have lost big money in shares (via their super) they have already been selling up, no?

The question is not so much whether the baby boomer have to sell but whether they can afford to sell. No doubt the retirement nest eggs of the boomers have been slammed hard by the GFC, losing much of its value and forcing the boomers to stay working for longer. I reckon the boomers would rather get some income from their jobs when they can while waiting for the value of their nest eggs to recover. Likewise they'll hang on to their investment properties.

When the sharemarket does recover and levels start heading towards the peak again, the boomers would retire en masse. And that's when they'll be selling their investment properties. The boomers have literally watched their nest eggs vaporise in a matter of months and they're in a bit of a pickle…too few working years left and facing too big a loss if they decide to sell up now.

On the flipside however, when boomers well and truly retire, they will either have to stay put in their current houses, or otherwise go for the frequently mentioned tree-change or sea-change. If you've already invested in one of the locations that is likely to be popular with the boomers, you're already well-poised for the movement of the 'gray wave' that's about to occur.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 15, 2011 - 10:20 am

ummester wrote:

And no, I don't have property, or much gold or shares. Just a healthy deposit and a reasonably secure job. I plan to use my deposit on the best thing it can afford me when the banks start asking for a minimum 20% down again.

Personally I don't see any real reason to wait till the bank requires a minimum of 20% deposit before buying. It's been said that the best time to buy property is when you can afford to do so. Hence, if you're in a secure job and have a deposit handy (and in the right frame of mind to buy), put the 20-down and start looking (leaving 6% for other purchasing costs such as stamp duty, conveyancing and inspection fees). 20-down was also the limit I set for myself, even when the banks were prepared to go for 95% LVR with mortgage insurance.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 10, 2011 - 2:17 am

Although I'm not an expert in the area of Belmont, I did speak to one of my clients less than a month ago who was planning on moving over there. I had an interesting discussion with her about the area because I'm personally a big fan of some parts of the Geelong region.

She said something interesting which made me feel that I'm not alone in my assessment of Geelong: 'If you superimpose the map of Melbourne over the map of Geelong, Belmont is essentially within the 'CBD'!'

Geelong offers good value for money. Some people say that affordability has been eroding with the rise in prices over there, saying that the prices in some areas are now approaching that of prices in some of Melbourne's outer suburbs. I'd like to challenge the old way of thinking however and ask people to start considering Geelong as a CBD in itself, a smaller 'mini-Melbourne' if you like.

If you look at is this way, it'd be easy to see that things located within easy reach of the city center of Geelong and the coast are actually very good value for money. So instead of just thinking that Belmont is a hour's drive from Melbourne, start considering that Belmont is also within a few kms of Geelong city center. Some people laugh when I mention investing (and eventually retiring) in Geelong. They'd say, 'Why live so far from all your friends?'

Personally, I think Geelong will be super-hip within the next decade. All my friends will be there. People who have bought as near to the city center and the water as possible are well-poised for superb capital gains. Just look at what's happened to similar properties near Melbourne in recent times. Less than 10 years ago I remember visiting Geelong for the first time. It was a quiet little hamlet, not a soul in sight at Cunningham pier. The only other things I remember seeing were a bunch of bollards by the beach and a couple of yachts on the water. Today, the waterfront is crawling with people.

I am a vet by profession and was speaking to a drug/ pet food representative recently who went to Geelong to visit the vet clinics there. There's plenty of clinics in Geelong city (excluding outlying areas), and she tells me that all the clinics are very nicely done up. Intuitively, 'nicely done up' clinics only exist in places where there is demand for services. That tells me the people in Geelong also have money.

People don't necessarily live in Geelong just because it's a cheaper, poorer cousin to Melbourne. They live there for a change in lifestyle. People are getting intelligent, realising they need not buy a $350K house in a [rough] industrial area far from Melbourne CBD. They could spend the same amount and get a house in Geelong within 5-10 minutes drive from the city center and the water's edge.

Belmont prices range widely but it appears you can buy a comfortable house on a full sized block for about $350K that would comfortably rent for around $310-330pw and upwards. That's a yield approaching 5% and vacancy rates sit at 2.2% based on SQM's figures today. It's not one of the cool positively-geared properties that lots of people are chasing these days, but just consider the figures and location and do what's comfortable and right for you.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 8, 2011 - 8:10 am

In some of the older established suburbs where subdivisions are happening, I keep seeing listings that tout 'compact block' or 'low maintenance block' as if it's a major plus. Well, maybe it is, but it depends on who you're talking to. I'd rather buy a house on a full-sized block of land, thank you very much.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 3, 2011 - 12:33 am

Thanks for the info. This is good news for homeowners. However it remains to be seen if lenders will pass on this rate cut in full to their customers.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 2, 2011 - 5:14 am

rusty05 wrote:

This one got me thinking….
 Small business owners regularly run their cars (amongst other things) through their business. They're paid for using business funds from their business account, as opposed to simply claiming for a percentage of use. Yet as an investor I'm told that we can only claim a percentage of expenses (ie. travel to the property a few times a year etc). If you run your investing operation as a business (trust?/corporate trustee etc) is it possible to run a novated lease through it so the payments come from the business and not our own funds? – Maybe I'm making this more complicated than it needs to be… Put simply if you have a positive portfolio can you pay for a car out of it and let the business take a hit like all my rich tradie mates???

Rusty

It makes sense and could be possible, but will have to let the experts comment here. My guess is that the vast majority of people own negatively geared property and hence wouldn't benefit from a trust or company system. But for positively geared property, yeah, a company structure is a good way to go.

Anyway, speaking of tradies, I should have ditched my expensive course, saved the money and become a tradie myself…as if that amount of education actually got me a high paying job.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 2, 2011 - 5:11 am

rusty05 wrote:

I've previously packaged a car with a novated lease over a 3 year period. Loved the feeling of getting 'free fuel'  – obviously you pay for it but not having to worry about how much a weekend cost was fantastic!

Pretty sure you can do between 1 and 5 years and I think the weekly cost doesn't change regardless of how long the lease is but the balloon (payout)  figure at the end does significantly! Happy to be corrected on this one tho

Haha, yeah I know where you're coming from in terms of the 'free fuel'. Could have more a lead foot if I went for a car lease in this manner!

When you speak about 'balloon' figures, are you referring to the amount you pay if choosing to buy the car out at the end of the lease?

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 2, 2011 - 5:09 am

bjsaust wrote:

The lease has nothing to do with the use of the car. Its just a salary perk. The only tax-effect I'm aware of is that you can't claim travel with a lease car when you could with your own. Because technically the car is owned by your company, not you.

Yes, a novated lease should cost you nothing. Petrol, insurance, servicing, road-side assistance, new tires, everything.

Basically at the end of the lease term, everything you've spent is added up. If you've spent more than was allowed, you'll be billed for it. If you've spent less,  you'll get a refund (well, technically your employer will, but it gets passed back to you).

http://www.fleetpartners.com.au/

I go through these guys. I notice they have some calculators on the front page and plenty of info links.

Thanks for that. This is great info. Just plugging some figures into the calculator as we speak. I assume that at the end of the lease we can actually negotiate to buy the car as there will still be residual value in it. But for the car I want, there's no way I'm going to make this work and would rather save my money for another investment. I can see why it's attractive however, and if I were actually in the market and needed a new car, I would be looking at this more closely.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 1, 2011 - 9:56 pm

bjsaust wrote:

Its not really that complicated. Most people will go with a Novated lease, which includes maintenance costs as well as the lease costs. The payments are deducted from your salary pre-tax, so you save money. On the other hand, its a loan, you're paying interest. That costs money.

So say your lease costs you $10k per annum. At 30% tax rate, thats only $7k out of your take home pay, but if say $4k of that was your lease payments, then you have to compare that to cost of just owning your own car and paying your own maintenance.

If you were on 40% tax rate, it would only cost you $6k in take home pay, which could make the difference between it being good or bad.

Leases will normally be between 1-5 years. I have a mate who leases a new car every year, haven't asked him why but I presume its because he wants a new car every year. I do a 3 year lease…I think I did some sums and comparisons when I did it the first time, but now I just do the same period each time.

Thanks for the info. Sounds like negative gearing with property, except this is with a car instead. Does the novated lease include costs of petrol, even if only used for travel to and from work?

Just curious, what are the interest rates for car loans sitting at currently? Are they around 4%? And my understanding is that the interest rates for cars doesn't work the same way as a home loan. The effective interest rates for car loans is apparently higher than the figure stated, or so I've been told. If you could point me to a calculator I could easily work out all the sums to see how much the loan is going to cost, and maintenance to it.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 1, 2011 - 3:57 am

bjsaust wrote:

A lease is essentially a loan, it will count towards serviceability.

Thanks. Seems logical that this would be so. How long are 'lease hires' usually? I'm guessing they might last from 3-5 years depending on the loan?

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 1, 2011 - 3:56 am

Dan42 wrote:

In relation to the tax benefits, travel to and from work is generally classified as private, and therefore not deductible. Do you have a home office, or do you have to transport tools / work equipment etc from home to work?

If you are in the 30% bracket, it probably wouldn't be worth it, uinless you are doing a large percentage of work kilometres.

Hi Dan, thanks for the response. My boss has agreed to packaging my salary such that a portion of it is car allowance, but not sure if this changes anything in terms of getting a car on lease hire.

This is what I understood as well, that travel to and from work is not deductible. Although to a certain extent this is strange…for the purposes of work, we need to be able to get into our workplace from home (whether that might be by train, car, bicycle or via parachute), hence the trip to work should be deductible, but that's just my musing.

The 'home office' part is not clear cut, because for the purposes of my work I do have to continually educate myself in the profession, hence any additional reading or revision occurs in my 'home office' which is essentially also my bedroom. So arguably I do have a home office which I also use for the purposes of research for investing.

I also have some 'tools' in my boot that are always there: an insulated bag for some materials (in case of an emergency) and also a body bag. I am a veterinarian by profession and hence do carry some work-related materials in my car in case of an emergency (even if I'm not at work per se).

In the past I heard someone else mention before also that the benefits are only worth it once we start getting to over $80K salary, which is a higher tax bracket. Maybe I should wait till that happens and I'll need to review this again. So far, I have spoken to a number of people who have bought a car on 'lease hire' or something similar. They don't appear to understand much of it either and can only tell me 'it's cheap'. Naturally, I want to dig a bit deeper before getting involved in it.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

November 1, 2011 - 1:33 am

Depends on how big the land this, IMO. What condition is the fibro house in? Does the land have subdivision potential if you buy the bigger block with the fibro house on it? I've read of some people buying a fibro house on a sizable plot of land, shifting the position of the house and then subdividing.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

October 26, 2011 - 10:47 am

QM wrote:

Thanks again all for your valuable comments! BTW, already have done suggestions made concerning expressing interets etc with RE agents but through several experiences we've had, the dealings have been negative and almost arrogant where they think they're doing you a favour.. They're not selling as much as they's like. That's a fact. Thanks again!

As with any industry, there's good and bad ones I suppose. A while ago I went to an OFI to check out a house my parents might be interested in moving into for retirement. I was pretty tired then with listed prices being far below eventual selling prices. So I asked this agent something along the lines of, 'How much do you reckon this house is worth' or 'How much do you believe this house would sell for' or 'What are some of the figures from interested parties at the moment'?

I got a terrible response. The agent pulled out a pen from his pocket and said 'How much do you think I have in my pocket, and how much do you think I'm willing to pay for this pen?' What a crock. He must have looked at my face and thought I were an 18 year old kid pulling his leg. I was very insulted and have decided never to talk to him again. He still has my email address so I do get market updates from time to time, but that's pretty much where it's gonna stop. I wish him all the best with his career.

On the other hand, there are nice ones out there, like the one I bought my first home from. And there's others who maybe were not so nice before but are having to be very nice now because the market is quiet. I've had long phone calls with a couple of agents, just having a nice chat about the market in general and some suburbs here and there. One of them thanked me for spending the time on the phone. Agents are human after all, despite their flashy cars and all.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

October 24, 2011 - 11:27 am

QM wrote:

One thing I have learned along this windy path is that I absolutely loathe real estate agents. They're must think that we as purchasers, are fools.

Woh…wait up there. Not saying you should treat RE agents as your friends, because they are after all, working for the vendor and looking after their own hip pocket. However you'd do well to find yourself at the top of their 'interested parties' list by being forefront with them in expressing interest in buying properties with specific characteristics. That way, if they do see one, they can notify you before it actually hits the market. At that stage, you can still do your research as to whether it's a good buy, but the point is to get a chance to buy a property (if the numbers stack up) before it starts to attract huge attention after being advertised.

I've never personally bought a property before it hit the market, but have definitely in the past registered such interest with various agents. Key thing is to be a serious buyer with the knowledge of exactly what you want to buy (and let the agent know this), keep your price range secret, and be ready to launch on the deal when it presents itself.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

October 23, 2011 - 12:18 pm

Well, the concerns you have are all fair. Times are becoming increasingly unpredictable. Today's knowledge could be tomorrow's foolishness. I think there's a lot of people out there who are willing to tell you, with a degree of certainty, what THEY believe is going to happen in the future. However, some will be wrong, and some will actually be half right. Ultimately you need to make your decision based on the information you have, be comfortable with your decision, and never to beat yourself up if the decision turns out to be the 'wrong' decision.

With property, I have read this countless times: Time in the market, not timing. So if you were asking for my opinion, I'd be telling you that now is a favourable time to buy, but expect competition still if you're looking to buy into quality property. Clearance rates are definitely down from a year ago. But if you look carefully, it's not surprising. Current sentiment and economic conditions play a role in reducing confidence and causing people to hold off buying. But also consider the relative lack of quality stock at reasonable asking prices and you can easily see why certain properties are just not selling.

When news is bad, that's usually a good time to buy. Didn't Warren Buffet blow a huge amount of money on a railway line at the time the GFC was in full swing? Most would have thought you would be insane to buy something like that in the middle of a recession. These guys succeed not only because they are gutsy, but also smart, investing against the mentality of the general herd.

[fWordParticipant@fwordJoin Date: 2009Post Count: 471]

October 23, 2011 - 10:15 am

Catalyst wrote:

I'll stick to the risks of property investment. At worst I'll end up on the pension, At best I'll be travelling the world (doing that now but still working some).

Never thought of it that way, but it's a very good point. Besides, nobody in their right mind should believe that the government is going to look after them in their golden years. Even if they do, it'd be at their children's and working relative's expense, and I don't think it's right that other people should be paying for MY failure in life. I see plenty of people on a pension in my line of work, and oh boy, do they struggle from day to day with the ever increasing living expenses.