Forum Replies Created
Hi chriscarman.
I am a new member and I have seen people who contribute frequently with real estate related businesses named as part of their details on the end of their comments. Most of them seem to have fairly sensible advice to offer. My opinion as a family investor is that these people are as knowledgeable (if not more so) as anyone else, and I'd like to think most take part in the forum because they love talking to other like-minded people about a topic they are passionate about. As far as proving their credentials, etc. I don't know where you'd start or stop with that.
It doesn't take most people long to realize that there are different approaches to real estate investing, pro-cash flow, or development, or capital gain etc. and basically it is up to the reader to filter the information and come up with their own approach/views/method. So unless the people in question are really being ridiculously self-promoting or misleading (which I agree would jeopardize the standing of the forum) I am happy for them to give their business details. Its up to us to assess whether we want to use their professional services.
Regards,
G
Hi Again Kerrie.
Everything Ryan mentions is good advice. However, I believe you can borrow to leverage into shares. While they may pay some dividends but won't have the stability of the rental return. Also, you hear a lot about margin calls! As with property, it would pay to do some research into shares, rather than following the crowd.
Regards,
G
Hi thecrest and sonya.
Yes I have all Margaret Lomas's stuff, and think its great.
Unfortunately I didn't read that book until AFTER the property manager problem!Re Sonya's ideal landlord/property manager scenario, I think the agent had both in this situation, but still managed to be inefficient. There are just people out there who are not all that conscientious, as previous comments reveal. I am pretty sure we DID NOT order her from the cosmos!!!
Hi Gords.
Is there any possibility she may be able/willing to buy you out?
G
Oh, forgot to say,
The reason we like that area is that the housing trust stock is around the same price as in Port Lincoln, Wallaroo and Mount Gambier and at the moment the housing trust are selling some of them off at reasonable prices. As D.Park and Elizabeth are in/near Adelaide with a greater pool of tenants, I think these areas are good value and likely to experience some growth. As with Mitchell Park, Kilburn, Seacombe Gardens etc. these housing trust areas eventually get beautified as surrounding housing becomes nicer and more expensive. They will remain bottom of the market type properties however.
In Elizabeth and D.Park these semis/houses are selling at land value too, as small courtyard blocks i.e. 300 squ.m. are over $100,000 and these places are on 5-600 squ.m. blocks usually.
G
Hi everyone,
It seems we've all had the same painful experiences!! A few years ago I inspected a house being quoted at X, and KNEW by then, from lots of disappointing experiences, it would go for Y. (At one previous auction an agent watching even told me almost exactly what the house in question would fetch, which was an eye opener at the time.) Anyway, all these poor first home buyers were looking, including my son, all getting excited and arranging building inspections and days off work.. I was so sick of the tactics by then, that I rang the senior agent at this well known agency, and told him that personally I'd be remembering how they were treating people, that I'd be mentioning it to others and that I'd not be dealing with them when the boom times end and they are courting business. Bluster I know, but I felt better.
G
Hi a1159890,
Everything said before is sound advice. I am looking at that area myself. I assume you'd get some first home owner grant? I don't think its totally removed, just reduced to $7,000, but you probably know more about that than me. If so, it might cover purchasing costs, and is your first purchase stamp duty exempt? (this assumes you live there)
Another possibility to get you $20,000 or so could be to renovate one of the semis out there on non-subdividable blocks. They are going around $150,000 it seems, but with $10,000 and some scrounging and hard work they could be worth upper $1's. If you lived there for a year, as a first home for one of you, you wouldn't have to pay capital gains tax. This equity/money might get you onto your next project. As with all things there are risks (i.e. prices don't move) but I don't think you'd lose money. I know there is a lot of future growth and employment projected for that area, but from my discussions with local property managers, as part of my research, I think you might be well advised to use one as historically it has been a rougher area. That is a generalization I realize but a quick drive around reveals that things vary a lot street to street.
Regarding the house with a subdividable rear, these seem to be around the $200,000. Check with council re. the amount of space to allow for a driveway to the new block (3.5 m?) and the required distance remaining from the new boundary to the original house. Also check you have space for off-street parking for 2 cars, I believe. Factor in the costs of subdividing and the demand for hammer-head blocks (less than for regular courtyard, but fine if you want to keep and rent) as well as the reduced value of your now smaller blocked property. (Probably now about $170,000 but just an estimate). Sometimes it hardly seems worth it for all the time and effort unless the housing market is in a growth phase e.g prices rising. Hence my suggestion of the do-er-upper.
Good luck,
G
Hello gmnicho,
How ab out a clause in the long term lease saying you reserve the right to adjust rent in line with the market, each half year? You don't have to do it each time, but I think they would see that as reasonable.
G
Hi Kerri.
We are just behind you in the age situation but the way I look at it you could easily have two real estate 'cycles' before you retire, over the next twenty years, bringing you to the new retirement age! (older than now).
Teenagers are expensive, as I can sympathize having 4 also, but at the same time the ones at Uni can pay their own HEX debts and can live at home perhaps, while working part-time? (That's what my two uni ones have done/are doing) I am sure if they know your goals they will be supportive, and don't forget you are teaching them fantastic financial management skills for their future.
Your income seems quite good to me and it sounds as if the shed investment is paying its way?? I'd go for some more if it was me, depending on whether your skills are in budgeting, renovating, subdividing, building or whatever. Perhaps set a long term goal of what you want to retire on then work backwards! I think smaller families and plentiful retirees makes putting two properties on one block a good option.
Regards,
G
Hi.
I am also a new member, and have experienced a similar situation. As we had a lot of equity in the property and didn't plan to sell we did let the rent fall behind somewhat, but at the same time the tenant is great and lets us do things when and if we can, etc. and at the moment we are too busy elsewhere to put a lot of time and effort into that property. We just keep putting up the rent annually gradually.
In your case you could be faced with a period of vacancy if you wanted to do a full upgrade which might be ok if there are plently of tenants available at the higher rental. Otherwise how about doing things to a budget, gradually? I think if the tenants see you improving the properties on an ongoing basis they will not be surprised at gradual rent increases. Personally I like to keep good tenants as it helps me sleep at night.
Regards,
GHi Richard.
That's interesting re. borrowing. Both banker and mortgage broker told us this. I guess its only their preference.
Regards,
G
Hi Ryan.
We've done it in SA a couple of times, and I have been told that the process is quicker if a house is going on the land. I think the land titles office put those applications to the front of the list.
From purchase to fully built houses on subdivided block has taken just over 12 months (of holding costs) but obviously the building costs only start to gather momentum right towards the end of the process. Here in SA in Onkaparinga Council subdivision costs were around $20,000 all up, but I think it is up to $5,000 less elsewhere.
Using a cheaper project builder who does this type of development for people all the time was the most cost effective for us, and we had used them previously. Basically they used their preferred surveying company to run the possible plans through our council before we signed up on a specific plan. This was helpful as they came up with a few alternatives we wouldn't have thought of. By doing this we have built nice courtyard houses with two bathrooms and living areas for around $250,000 that rent for $300 pw and have about $70,000 equity straight away. It isn't brilliant, but the best I could think of at the time. If you want any more info you are welcome to contact us (though not sure how you do this).
Regards,
GHi suburbia.
I've been looking into this too. Basically, banks don't like to loan on things that are under 50 squ. of floorspace, I assume as they feel it is more like a model room and more likely to be purpose specific, hence not easy to sell and limiting re. growth.
Also, if the property is 'managed' e.g. by the Breakaway group or another business, banks see it as a commercial property and will lend a lower proportion than for other real estate. This means you must put in more of your own equity which affects your borrowing capacity.
I also discovered that a lot of these properties have been hit by hard times lately so their occupancy rates are much lower. Unless you are confident that this will change soon or you can afford the shortfall, they will not be paying for themselves as they usually have very high management fees. Lastly, you have no control over what goes on with them, so you can't do much to change any problems.
I hope this helps.
G
Oh sorry, forgot to say:
I believe what happens with Centrelink is that they view the rental from an investment as income, but at tax time when
you are able to show expenses/losses etc. they refund you. So you get a huge payment later in the year usually.G
Hi again.
PPOR is principle place of residence. (Your own home)
G
Hi Ben.
I have a son who has been in a very similar situation and considered the same options as you. His solution was to rent a room in his townhouse to various friends (1 at a time!) for a few years. Obviously there were a few hiccups, but overall he enjoyed the company and never had trouble with anyone paying. You could put this money into your $15,000 savings and it could boost it up an extra $6,000 a year? My son has now paid down his loan by about 50% over a 6-7 year period, and is now involved in building a courtyard home on a block we bought together, but subdivided into two single blocks, creating about $70-$80,000 equity. He now proudly says he will owe $300,000 which is the same as someone starting out to buy just the townhouse. I think you are headed in the same direction, and time will do some of the work for you.
Good luck,
G
Hi oo3c.
I have been in the position of single parent, so can relate. I built my own home at 22 and it was a wonderful empowering experience that created a firm foundation for me and my son, not to mention the poor farmer I later married!!
I live in Adelaide myself, and as it was one option you considered, I can tell you there are nice coastal, southern and northern suburbs where you could purchase for under $300,000. Some as low as $200,000. My advice would be to put the money into a home for yourself, giving yourself a fresh start away from where you were. Target corner block properties that can be subdivided, which many can, just check each property with the council area concerned. For about $20,000 you can fully subdivide the rear block giving yourself a few great options. You could sell the block and reduce your mortgage, or invest the profits in another investment property. (From experience I have found these smaller blocks do not drastically reduce the value of the home, especially if you can beautify them yourself and tenants don't seem to mind them either.) You could also build on the back block, have a new home and sell the original house, or if you can, keep both as in effect your land was almost free, making it a great investment property as a new house obviously rents well and has lots of tax benefits.
Good luck with your new life.
GThanks for all the comments on this topic! I love this forum as its so fascinating to hear others experiences.
Reading them fired me up to contact one agency, bypassing the 'new' property manager and going to the director, to say we were expecting better service from them, as the previous p.manager had not returned our calls or the tenants, basically leaving us to liaise with them and manage the property by default. (It was OK as husband was doing pergolas, etc.)
We only had one inspection in a year, and on occasion when I rang, the p.manager would tell me in an aggrieved voice that she'd been sick/in hospital etc. which tends to stop one's queries out of sympathy – but I never thought to ask who was doing her job while she was out of commission (no-one).
I told the director that I'd contacted her new p.manager, ringing 3 times with no responses, until I got through to her, to be told she had 100 properties to catch up on. She hasn't got back to us yet…….and I believe ours is one of their highest renting homes. Another p.manager in a different area is great, so you know it can be done!! Very frustrating, but I guess the lesson is to let your actions speak and change companies. Meanwhile we've just rented 2 homes privately ourselves, conducting after hours inspections, checking references etc. and it wasn't that hard. We would do the same with the house mentioned, but it is in a coastal town with a separate rental market.
G.
Hi all.
I would like to say that despite the new legislation governing auctions (registering bidders and eliminating dummy bidders, etc) I see agents using them in the hope of creating bidding wars, rather than as a means of selling something to meet the market. It took me lots of wasted days and disappointments to wake up to this. It can be very frustrating to find that the owner/agent had a very definite selling price in mind, often higher than that mentioned, if a price was mentioned at all. I am sure there are the occasional good buys from genuine sales, but as the previous person said, it is not a time-effective method for most investors.
G
Hi kjegates.
I thought I'd add this though it isn't directly related to advertising a private sale. It deals with the difficulty of being truly dispassionate and objective when selling your own property, and the tendency for potential buyers to be a bit nervous when
dealing directly with the owner.I think selling successfully yourself may hinge on how you handle the open inspections, just as much as on the advertising.
I have been to a few private opens where the owner/seller has been very off-putting (though hilarious) in their efforts to sell
their beloved home. I remember my own father proudly telling prospective purchasers that the wallpaper was hung by my mother, as the buyers examined it more closely with suspicion (cringe!)We recently inspected a property where the old man who owner it showed it to us personally.
He did everything from a) demonstrating all the home-made cupboards he'd made with a great deal of pride and flourish, b) discussed his first wife at length, to the annoyance of the second wife who was within earshot, and c) ended by giving us a demonstration of his dance moves complete with music in the lounge/dance studio!! I know you aren't contemplating doing this, but maybe an objective friend/relative could do the opens for you? I have known others to do this. Just a thought.Regards, G.
