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  • Profile photo of ghotibghotib
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    December 13, 2003 - 4:42 pm

    Wrenching this thread back towards property, do you see any way that your residential properties might promote, or at least enable, better nutrition and/or lifestyle? The garden seems like a good place to start: if you’re making and/or maintaining a garden anyway, as many people recommend, it’s no big deal to plant edibles as well as ornamentals. Any other ideas? Is it worth pursuing, in some places if not all? What could you do with units? What about environmentally responsible landlording, seeing as air and water are even more fundamental to good health than good food?

    Ghoti

    Without music, life would be a mistake.

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    December 13, 2003 - 4:19 pm

    Thanks for posting this Jaffasoft. I’m going through the same exercise and doing a lot of playing with my own spreadsheet (bless you My Palm) before looking at any others, because I can’t think of a better way to get all this firmly into my head. I guess I’ll post something for constructive criticism too one day, but not quite yet.

    Three questions:

    1. What is Bor?

    2. I know it’s 5% of rent and I know that’s a common guideline, but is $250 a realistic figure for R&M. Seems to me that could disappear in one good hot water emergency and would make painting the house a 20-year project. I’ve been assuming $500 minimum for R&M and worrying that it might not be high enough. Am I over-conservative?

    3. From years of freelance and contract work, I have an ingrained habit of running all budgets on 45 paying weeks a year. For IPs I treat that as a worst case, and run the numbers on 50 weeks as well (for long-lease IPs I try 52 just in case nothing goes wrong, but I don’t believe it). In such a small town I’d be inclined to treat 48 as a best case unless you know otherwise.

    We were at Echuca for a few days early in October. Hope your houseboat is as much fun as the paddlesteamers [;)]

    Ghoti

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    December 12, 2003 - 2:44 pm

    Sadly, I think the liquidation is real. To the annoyance of the car behind me I slowed down enough on my next trip to see that the sign shows the price for one unit as $199,000 or nearest offer. I can’t remember seeing o.n.o. before outside the classifieds, and never on real estate. Seems even less professional than the “liquidation sale”, and I can’t imagine an agent putting it there except under direct instruction.

    Matt o’Phobia, if that’s a warning thank you. Kay Henry, yes I’ll check out the story. Professional or not, the agent has my attention. Pity I’m not in the target market.

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    December 8, 2003 - 7:47 am

    Montrose,

    Do you mind saying how long you’ve been a client of your Bathurst accountant. Obviously a recommendation based on a few years is stronger than one based on a few weeks[;)]

    Thanks

    Ghoti

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    December 3, 2003 - 1:42 am

    I’ll bet you a million that the RBA won’t raise rates in January.

    But before you accept it, just check the date of their next meeting [;)]

    Cheers,

    Ghoti

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    November 25, 2003 - 4:21 pm

    Azrael,

    You said your colleague “has bought” the IP, but that she’s a fair way from saving up the rest of the 10% deposit. What does “bought” mean in this case? If she backed out of the deal now, what would she be up for? How does that compare with what she’d be up for if she can’t tenant the unit when the time comes?

    I realise that you didn’t say where the unit is, but if it’s around the same part of town as her mother’s house then I’d be *extremely* cautious about buying now. That’s on top of Bill’s general “Don’t”s. I live near there and I’ve just sold a property near there. I sure as heck wouldn’t be buying in the area at the moment. Especially not if there was any possibility of another small dependant in the next 5 years.

    Sorry to be a downer, but on the information you’ve given us at the moment the down side of this purchase looks a lot more likely than the up. So better face it now than later, IMO.

    Ghoti

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    November 25, 2003 - 1:13 am

    We’re looking for an accountant too. Don’t want to depress you, but we’ve been looking for 3 years. Twice we’ve thought we might have found one, and both times they’ve turned out to be so overstretched that their service was very poor – we’d probably have been better off if they’d just told us to keep looking.

    GST was a big issue when we started this search. I think it’s still taking up a lot of their time, and maybe it also brought in a lot of new clients? Don’t give up Scotty; maybe the gummint will leave enough things alone for two consecutive years that everyone has time to catch up.

    Yeah right <sigh>

    Ghoti

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    November 18, 2003 - 12:19 am

    Looks like I’m asking a really, REALLY stupid question this time, but I still don’t know if there’s an answer. Can I try breaking it into two parts:

    1. Would anyone here consider buying property with a leaseback, or do you think they’re inherently unattractive? For instance, I think I’ve seen someone here posting about “my bank”. Was that a leaseback deal on a closing branch? Would you do such a deal again (if there were any bank branches left to close that is)?

    2. In the particular case I was looking at (vendor runs an established business in a regional town), I think the first three years of the lease are solid.. Beyond that, who knows. I think the vendor is genuine about expecting to stay for a further six. I also see a reasonable prospect that the business would sell as a going concern, but if it doesn’t I think I’d have to be actively involved in other uses for the land. I don’t see a prospect of high capital growth. So I think the return in the first three years needs to be higher than average commercial rates to cover the higher than average risk. Is that reasonable? How do I decide how much higher?

    Thanks guys?

    Ghoti

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    November 12, 2003 - 3:21 am

    quote:

    With regard to laptops, I got mine with salary sacrifice. There is no FBT on laptops, so my company can get it GST free, and then we sacrifice our pre tax dollars for the rest. The end result is a laptop costing 47% of the retail price.

    Jim.

    OUCH!! Now that made me woeful [xx(]

    Ghoti (still working on how to spell Flying)

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    November 12, 2003 - 3:12 am

    Thanks for your comments people.

    Chris, I think I misworded my original question a bit by being too specific about the methods parents might have used to help kids. I should say that I’m in Sydney and I’m thinking about the Sydney market, and also that I can’t claim to be familiar with the superb range of information that the ABS provides. I’m working on both those things, but at the moment what I’m wondering is:

    1) Is my impression that a large number of boomer parents are helping their children step onto a property ladder accurate?

    2) If so,

    (a) Is the proportion of parents providing this kind of help greater now than it’s been in earlier property cycles? And…

    (b) Is the number of properties purchased with the intention of helping family members great enough to affect the reaction of residential property markets to changing circumstances, including rising interest rates and yields lower than cash?

    I don’t see a reliable way to identify these cases from the ABS stats (it might be there, but I don’t see it). Here are two examples that might not show up:

    1. Child owns an IP, with or without help to raise the deposit, and lives in the parental home. The property counts as an IP. The family response to a downturn might be to sell the parental home (they would have downsized years ago if the kid had any chance of buying a home), buy two inner city apartments for cash, and form two households.

    2. Parents own a property and the child(ren) live in it and pay them a market rent with the understanding that at some time the property or the rent will assist the children. The property counts as an IP and the children count as renters. But both parties feel that the property is a home rather than an investment and the parents are prepared to support the tenants and hold the property even if financial logic says they should do something different. (I think one might apply in a lot of cases where the child is divorced and has children themselves.)

    I’m not suggesting either of these are smart scenarios, but Melanie’s post shows that demand for mechanisms that enable parents to help kids buy property, especially buy a home, has been great enough to provoke some finance providers to develop products to meet it.

    Is it possible to identify formal family loan and group loan structures such as Melanie describes from the ABS (or other) statistics? That might give some indication of how significant parental assistance has been in this property boom, though it wouldn’t say anything about informal cases such as my examples.

    And again, if family help is more significant this time than it has been before, might that make this downturn take a different shape from earlier ones?

    S_i_S, I think you’d be a bit of an exceptional case. I’m thinking more of families where everyone’s income is mostly salary and parents can afford to help mainly because they started buying their home 20 or more years ago.

    Thanks again everyone

    Ghoti

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    November 11, 2003 - 4:08 pm

    quote:

    Sorry to hear about your woes Ghoti (fish?[;)])
    I’m part owner of our company, so I’m hopefully not going to get kicked out. (unless I keep spending so much time in this forum that is! [:D])
    Jim.

    Thanks Doogs, but not really woes now: just experience <ahem>. The lease wasn’t on a car, but on a high-end laptop, so high that I used it effectively for over 4 years and impatiently for another one. Which was fortunate, because I paid way more for it than I should have and I’d have struggled to update it sooner.

    I’d be reluctant to accept a novated lease as an employee again; but then I’d be reluctant to be an employee again at all – most of my contracting jobs lasted longer than my “permanent” ones and were generally less afflicted by manglement.

    I think I’ve just gone way off topic.

    Ghoti (Flying Fish to you [;)])

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    November 11, 2003 - 2:44 am

    Be sure you take note of the risk: “and if I leave the company, I have to take over the lease.” If you “leave” for another job, you can negotiate for your new employer to take over the lease. But if your current employer chooses the time for your departure and you don’t walk straight into another job, you’ll still have to make the lease payments out of your other income.

    Same sort of risk as not being able to find a tenant for your IP, except that you have no equity and/or no possible capital gain.

    Ghoti (twice retrenched; payer-out of ex-novated lease; immediate ex-owner of unrentable house; current big fan of cash in the bank [:)])

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    November 10, 2003 - 5:22 am


    <Warning>Newbie poster</Warning>

    Just as those shows don’t tell you when the auctions took place, they don’t necessarily tell you everything that goes into the vendor’s decisions. Seems to me the riskiest vendor behaviour I’ve seen is to buy before selling, and that’s dangerous no matter what method you use to sell.

    We’ve just sold a Sydney property at auction, and we were very happy with the firm and the agent who handled the sale. We went to dozens of auctions and saw the auction practices of 5 firms before we signed up, so we were confident about how they’d handle the auction itself. Obviously we don’t know first hand how they compare with the others during the marketing phase, but the number of buyers on the day reflected the numbers of “interested lookers” the agent reported to us. We kept looking at houses for sale in the area during the marketing phase, and the agent’s reports of buyers’ comments made sense. So our experience is that this agent was straightforward with us, and the agency seems to have been straightforward with potential buyers.

    Our auction was in the second week of new rules, which require bidders to be registered and permit one only vendor bid. We had five registered bidders, of whom one (a friend, not an estate agent) was the vendor’s bidder. The other four all made bids. However, only one, the eventual purchaser, bothered with inspections. That had me worried, but the agent said that many buyers aren’t bothering with inspections when they’re looking at a lot of properties. Maybe that’s another sign of a nutty market.

    We sold for less than we’d hoped, but we’re comfortable that the auction was a genuine competition and that the price was fair on the day. Now it looks as though we’ve managed to sell just past a market peak, and we’re feeling quite cocky about it. Auctions around here last weekend were very slow affairs.

    From the vendor’s side, I’d say that the real work of auction sale is during the time the house is open for inspection. From the purchaser’s side, I think auction can be as good way to buy as any other provided you’ve done your homework, know what you’re prepared to pay, and don’t bid more than that. Which all sounds much like sale by private treaty.

    We’ll probably be buying property again, and if the right property happens to be for sale by auction, and the auction price doesn’t go higher than we’re prepared to pay, then we’ll buy at auction. Though we’ll almost certainly make an offer beforehand.

    Ghoti

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