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- duckster wrote:If you are in a hurry to get tenants drop the asking price for the rent by $20 a week from what the market price for the area is due to the short lease condition.
26 x 20 = 520 (less by now, ) moving costs = ????, maybe a little more than $20.
Not trying to be funny, but maybe your agents ethics are getting in the way.
I was renting between houses in 1993 and my wife always asked the agent for a 12 mth lease, agent said no problem and when it came time for her to sign the agent produced a 6 mth lease, and told her it was a formality, there was no problem just get another 6 monther when it expires ( very trusting wife).
When we met the owners, a few weeks later they asked to come in a and do some measurements as they wanted to put in a new kitchen straight after their honeymoon, in you guessed, it 6 mths. They could not understand the confusion as they had clearly told the agent, it was only going to be 6 mths. (we bought elsewhere and moved in 5).
Problem is a 6 mth lease is very unattractive, you lose time, looking and time moving and extra moving costs, and change of addresses, kis schools, kids friends etc etc, the number of people looking for a 6 monther is very few compared with the total number looking. Suggest discounting a little more.
Commercial that I have been watching has been kind of immune to the boom. In the same area seems to sell for less psm that residnetial even if renting out 50% higher psm.
Never saw significant growth in price, seems still locked in on return.
Residential returns in many areas halved, not so in commercial or industrial at least from what I have seen
We got quotes on our home around 1990 at 250-270k in 1990,12 mths later could not sell for 200k ,12mths after sold at 215K.
Had clients that bought at Mosman for around 600k sold 1 year later for 500k and had paid 100k interest in the year. Yep 200k to live in the top end for a year. (Oh yeah he had lost his top end job by then.)
My favourite was Carla Zampatti the fashion designer, bought a commercial in Double Bay for around 3.9 and sold around 18mths later for around 2.6m. (exact figure are a little fuzzy but pretty sure she lunched a mill.)
Had a tradie who was renting a factory Unit that had been sold for around 240K, in 1988-1989, he and his partner bought it and three others in the complex for around 140-160K.
So yep, lots of people lost out, some in spectacular ways.
Instead of going the cash back route, you could give me $20,000 grand and I will kick you in the crutch, give you back $5,000, and in time you will be much happier with the deal.
If you want I can arranage to kick you while you are taking in a water view .
Sorry ……. gor carried away…this was an old Henry Kaye technique used to sell overpriced property and make it sound like a bargain.
Do your own homework.. you will do better in the long run.
If this is a real fire sale, check out all the facts and buy off the liquidator /administrator.
Hope this thread does not devolve, but although I think Scamp is a little too sensational, I think his basics are right.
One issue that was not mentioned during the hype of the boom was the role of inflation. From the early 70s to the early 90s inflation pushed up prices. In the good old days I was staggered at my dads salary as CFO of a major listed pub comp, could not beleive people could earn so much…. fast forward a couple of decades and kids at McDonalds earn more.
Prices were driven by many factors, not existing at the moment, don't not eaxactly what the new model is, but the old one is dead and buried.
Right now if your IPs are not going up 5% pa you are going backwards in real terms,
Markets are driven by lemmings not the gurus or the educated. Pretty clear where the lennings are heading now.
If public sentiment was that this was a short term blip (base this on inumerable conversations on people post poning selling until the market comes back next month, next year ) and the market went flat, think now that the sentiment moves slightly down it will head down for a while.
On other news unemployment heading up, and some foerign workers will be going home,
my favourite storey is a couple who wanted to put a mill in super last year, and fund it by selling the home.
Home was taking time to get "what it was worth" and fin planner talked them into only borrowing 1/2 mill while they waited for the sale.
Now 1 year later their 1/2 mill has dropped close to 20%, their house is still unsold depsite several drops in price, ( they are paying non deductible interest at 10%) on the loan used to fund their backwards moving super,and their retirement plans have gone bad, real quick.
Other issue is will rates still move up a notch even if the RBA does nothing , as it seems that things o/s in the banking sector may still not have settled.
Everytime it starts to look okay, another loss from a major US bank throws another shiver through the markets and tightens liquidity.
Skip this is the thing.
If I can now buy a 700-800K house for 600 (not using extremes here), then why would I pay the guy with the 550 house more than 450, or the devloper selling new townhouses for 400 more than 350 or the apartment that sold for 290 for more than 220.
It creeps bracket by bracket and suburb by suburb.
Agree that rates of return are the key to correct investing, something that got left behind with the "emotional" value of a home.
but IMHO no bracket is immune
In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.
Palm Beach $6.25M to $4.5M in under a year, both ends of the market.
Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????
Benhaman wrote:Does this apply for gold coast? One person once told me the prices would go down everywhere except the gold coast cause everyone wants to own there so it might slow down but would never drop,maybe i should just move out bush
In the early 80's the ABC 4 corners show ran a episode on the Gold Coast questioning whether that bubble could burst. Almost all contributors said "NO" as the huge torism boom and flood of retirees made it bullet proof.
Forward two years to an accountant I worked for and I was doing the personal tax for a exec of TNT. Now this guy was the luckiest son of a gun you could ever see. Everytime he bought shares it was days before a rights or bonus issue, (talk about luck !!! and please I am in no way inferring that as a director of public companies he had any inside knowledge, as we all know in Australia that does not happen). he built up a nice fund of 200k (this is early 80 dollars ) and thought he better get in on the GC.
Bought two off the plan for 160 each, and when he had to settle they had dropped to 80K. The 200K he had build up thru lucky investing was flushed away.
So can the GC drop again, don't know, but has it dropped before, sure has.
And Jon if you want his name to confirm please PM me, as I said only facts.
Have a client, quite a smart guy who over 20 years has built a portfolio of industrial units. He was once a tennant so stuck to what he knew. They have only had moderate cap gains but give a gross of 12% in a good year.
He was telling me of a neighbour bragging about 'his" investment strategy which was buy 10 investment properties in western sydney etc, and borrow on his capital each year to make up the short fall in cash and that was his retirement strategy. If he was in neg two years ago on 90% + LVRs, he must be about due to cough up a lung, must ask Des if his is still bragging.
Those guys are not just a myth
All you need is one apartment unsold at a low price and every apartment in the block drops.
At the end of the street where I work (in sunny Parramatta) there exists a brand new luxury tower (yes luxury and Parramatta in the same sentence,) don't blame me it comes from the developers literarture. This I beleive was part of the Fincorp fiasco. They were seliing off the plan for high threes and others (Mirvac towers nearly identical but in a real crappy back street ) were selling for over 400K. Now they start from 299K as the liquidator picks over the leftover s.
Now if the developer is selling new shiny non scratched chrome, fresh carpets and paint for 299K what chance has the off the plan investor got of unloading at cost of say 385K for marginally better view (this is Parramatta) on a higher floor ??
All you need is one unsold unit or house in the street, or street next to yours etc for your asking price to become very high.
Remember an associate in the early – mid 90s living in an apartment in Pyrmont. Used to take a 6 mths lease, and every time it finished he would auction his tenancy to every investor with a vacancy take the lowest, get out the trolley and he and his mates would have a Sat arvo moving party, knock over a slab, and drop his rent every time.
Among my clients I have a string of "I'm holding out for the market to bounce back" and many have knocked back offers years ago that are probably 5-10% over what they can now realise all the while bleeding big time. Makes my job easy, taxable income Nil, tax planning easy.
Oh yeah Jon this is the Newington development as I said I only offer examples of facts.
Bought around 320K (Fin planner probably got 30K commission – they later made the Fin Review front page) about 10 years ago, client wanted 440K in 2005, knocked back 400k in 2006 and may get 375K if lucky.
Jon, what if we move towards a recession and the building industry etc slows (even more) and our many 417 Visa workers go home, will that also drive up rents ?????
Jon Chown wrote:It's funny that when ever you guys go to sell anything you are never lost for reasons as to why it's worth as much as you think it is even if it isn't – Wish we could legislate against that!!!!If everybody was to believe all of the negative statements on this site we would without doubt create a self fulfilling prophecy and sell up everything we own and move to Nigeria. Perhaps someone has to put the other side of the story after all we all understand that there are three sides to any story. Your side – My side and the truth.
Jon are you inferring that I cannot back up what state ?????? I only deal in facts, go over my posts….
If not referring to me please don't take offense,
Thanks for that Alex and welcome to the Board, ….do you have any idea who is holding Dougs benifcial interests….
ASIC is an absolute joke, as HG and Roy would say, will only ever act after the ballong goes up. Thety have become just another income collector of the gumnut.
That said, what you have described it counter the cycle, as public sentiment is all time low, unempolyment moving up, loans figures have slumped and building activity lowest on record (only kept since 2005). …..but these guys never let facts stand in their way before so why now..
What we saw locally, Parramatta 20 storey apartments, was the rental guarantee being a top up.
Say guarantee was 20K pa rent, they got tennants for 3 years at 12.5K-15K. pa then topped up the difference, Cost them worst case scenario $22,500 for a BIG THREE YEAR GUARANTEE !!!!!, and let them sell around 60K to 80K over market, as most investors found out.
My absolute favourite was a crowd that had a phenomonal 12 mth rental guarantee around Gladesville on a development, around 12% return. Came complete with Tarago. Rented them out to tourists, at then end of rental guarantee, the Taragos were on their last legs and return dropped through the floor, so did the resale value.
Scamp, as of Tuesday I think I will be billing them and walking away, new client, has previous bad advisors or themselves to blame and I don’t feel like being the messenger everyone wants to shoot.
But best advice would be to try and do a phoenix with the company and close it down as fast as they can. Cash is nil, (they took it) tax bills are around 120K plus all sorts of problems with neg director loans accounts loan accounts they can be pursued personally, so wages need to be regigged, etc etc. Their persoanl equity will have diasppeared in the last 6 mnths with banks dropping loan to value ratios and the books telling a very worrying storey so can’t see them finding the funds to tip back in, maybe a relative with deep pockets will be found.
The liquidation due to the fudging will be very expensive, and in the end the liquidator may turn and put them personally to the sword (notify the ATO of the phoenix attempt and ASIC may get advice to not them act as directors for a few years.
But as I said that will be someone elses problem.
Scamp as an accountant who does business (not a a tax return factory) my headaches come from clients operating under expectations exceeding reality. Their problems become ours as they seem to need to blame someone for El Dorado disappearing into the distance. If you can fix their expectations then we have happy clients and a pleasant work environment.
Have an emergency meeting with a new client next week. Found out they have a major cash flow problem.
The cause a major neg gearing thrust by the directors in 2006/2007 that has left them bleeding out the comp profit to fund their personal debt with nothing left to pay the tax.
Bad advice, not carefully implemented by people one of which has Macquarie lo doc debt at 10.50% on 1.2M debt with the neg gearing being almost nil as it has landed almost 110% on his residence.
Comp making a profit close to 1/2M facing insolvency – been round a while and this was a whole new scenario for me.
Also some of the major players in the corpoarate world are selling assets in a buyers market, makes no sense unless they are in major trouble or believe that the buyers market is going to be oh so much better in the months to come.
