Hi there,

Have you taken a look at what the demand is like in those areas for small units versus decent sized houses?  And what the rental yield would be?  These things are factors that will come into play also. 

Other thing to remember, you don't have to "pay off" an investment property.  Just cover the holding costs (interest only mortgage interest, council rates, water rates, insurance).  Ideally the rent should cover these costs so the IP would not cost you anything to hold.  Each year you put the rent up and bit by bit, if you were that way inclined, this surplus rent could "pay off" the mortgage.  Alternatively if after the term of the 30 year loan is up your surplus rents haven't "paid off" the mortgage, you could simply refinance.  ie get another bank to pay out the old loan and start a brand new one with a fresh new 30 year stint

It's like any other suburb.  There are streets that are more desirable than others.  There are a lot of houses in commission areas and it takes a long time before all the owners of them get around to prettying up their houses.  You can only control how nice your house looks… not the rest of the street owned by other houses.  This is not to say that purchasing a commission home is a bad investment, I am simply trying to point out to you why there will always be a price difference between some streets.

Yes I presumed there was a bit more too it than met the eye.  Heritage listing hurdles.  Tiggar I have responded to your PM – I'll give you a call tomorrow and give you a hand with how to navigate your way through to the light at the end of the tunnel

Hi Tiggar

Feel free to drop me a Private Message by clicking on the "Send PM" link on the left inside this post box.  Happy to have a quick chat to you on the phone to understand the issue and point you in the right direction.  Remember to include a contact phone number in the PM if you would like to do that.

The title says who owns the place, regardless of whether there is a mortgage on it.  It lists the name(s) and address(es) of the owner.  The title document will also mention the name of any bank that has a mortgage over it.    This means you cannot suddenly sell the property and go on a spending spree with the proceeds without first repaying the bank what you owe them.  The bank's listing on your title document is called a Caveat and it means that bank has to be notified when a sale event triggers.  From that moment on they are well and truly involved with all the solicitors that are acting on behalf of the sale.  Anyone else that considers to be owed money by you is entitled to have their solicitor slap a caveat on your property as well.  Once again, so they get what you owe them out of the property in the event that you sold the property.  Of course, they would remove the caveat if you repaid whatever you owed them.

The mortgage documents indicate who owes which bank money for the loan on the place… and it of course they lists all the relevant terms and conditions of the loan as well.

Your legal representative should be able to make it nice and clear for you.

Yes JP your point about the centrelink payments is true. And it is a disappointing and upsetting fact. 

Think about internal migration.  In other words, circumstances that cause people already residing here in Australia to relocate to another part of Australia. Perhaps just half an hour down the road.

Some of the reasons people might do this are:

– They are retiring and want to move to somewhere "nice" (segment 1)

– Their family unit is starting or indeed expanding.  The family home needs to be bigger and cost less, because there are more mouths to feed on either the same household income or a lesser household income, because mum has taken time off to look after the kids (segment 2)

– To move for employment purposes (segment 3)

So.  Let's ignore the retiree market for now, because I don't know much about that market segment.

Segment 2: the expanding family.  They are going to need a bigger house than they currently have and a patch of grass out back, but they cannot afford the inner city suburbs.  So they move further out.  But daddy still needs to be able to commute somewhere that offers lots of jobs.  So let's say somewhere within a 1 hour commute radius of a major employment centre.  So if we're talking Melbourne you could go as far as Geelong or Ballarat.  If we're talking Sydney I think you can go as far as Penrith, which is one perfectly reasonable explanation as to why the St Marys, Mt Druitt etc district went nuts.

Segment 3.  To get these people you follow the infrastructure.  Mining towns if your heart can stand the risk, or normal infrastructure if you have a lower risk profile.  So you might prop your investment dollars near a forthcoming airport, desalination plant, or new major shopping centre perhaps.

The easiest segment to hit is segment 2.  Get out your google maps, figure out what is within a reasonable commute of major centres, and also happens to be on a train line.  Easy   Now imagine if you could hit 2 segments at once.  Segments 2 and 3.  Let's say you are within an hour of a major centre that has a major infrastructure project coming its way.  That's some good hedging.  This is why I like Geelong.  It's within a reasonable commute of Melbourne, the prices are lower than Melbourne, Avalon Airport is going from little Jetstar airport to International Airport (enter the jobs), and you've got the lovely surfcoast too for lifestyle.  Noice.  Not hard to see why all suburbs of Geelong have been enjoying great growth.  You could almost throw a dart at a map of Geelong and buy in whatever location it hits and not mess it up.

I remember looking at Rockbank VIC on the map about 18mths ago and thinking that was a logical place to establish a township, because an existing trainline passes straight through the guts of it, as does a major freeway.  But no of course local council was going on about how Rockbank was special and they wanted to keep the blocks large and exclusive.  Whatever.  That lasted about as long as it took their accountant to get back from his lunchbreak and ponder how many council rates dollars they could charge if they carved the big pieces up into little pieces.  Sure enough, it seems Rockbank will be carved up into bits.  Not where I would choose to park my dollars, but if people already had landholdings there they would be rubbing their hands in glee.

Agreed DWolfe, $200k in 5 years from now will not buy what it can buy today.  Let's say that today a chocolate bar costs one dollar.  You can buy two hundred thousand of them today.  Five years from now that chocolate bar will cost $1.50.  As such your $200k will only buy 133,333 chocolate bars.  And so on and so forth.  You CANNOT save your way to glory.  Saving is an important discipline to be able to adhere to, but more from the perspective of spending less than you earn, and to use the excess to acquire assets that both grow in value and earn income while they are doing so.

To clarify, your SMSF cannot borrow to renovate…. from anywhere.  A SMSF can renovate if it has enough spare money in the SMSF bank account to do the renovation without borrowing.  Alternatively you could donate your own money into the SMSF to do the reno but then you cannot take it back out because that would be a loan, and a SMSF is not permitted to do a reno with borrowed monies.

The value of things is quite often related to "perception" or "confidence".  This is why you can put shiny new taps in a place and nobody notices they are not the expensive brand, yet it improves the value of the place.  It's also why the value of the British Pound crashed the day one very foolish then-Prime-Minister Gordon Brown got in the media and said of the GFC "It's bad.  It's really really bad."  There were no accompanying comments indicating how he planned to lead his nation to glory through the badness.  Just a scary comment about that it was really really bad.  The value of the pound plummetted that day and has not since recovered.

DWolfe makes a very valid point that markets can move around election time, because the leadership of the country will either remain the same or change.  This will dictate who gets to talk to the people via the media and model their perceptions.