Forum Replies Created
Matt
2 x houses in frankston area …. hold long term3 x houses in country Victoria ….wait and see
2 x retirement units Carrum Downs..hold long term.
Major reno on ppor early next year. Sell for huge profit and who knows?
byeProperty Guru,
Actually, I feel sorry for those people trying to get a foothold into the investment market.
There are contant posts here about people running all over the regional centres looking for cash positive properties.I have invested in rural areas,but stopped buying earlier this year to let the growth run a bit on props I had to see where prices went. Now you see discussions on investors jiggling figures in order to justify buying some run down property 7 hours drive from anywhere where any capital gains has probally already happened.
I am not saying the deals are not out there, but Just because a 60k house deal in whoop whoop calcs out at 20pw cash positive is only a very minor part of the equation.
Who knows where this market is going at the moment, but I will only look at quality (and I don’t mean high price, more location) for a while now.Hi all,
PropertyGuru, your calculations are correct as are SiS, but a reality check is required here. I own 2 ip’s in the south frankston area,1 valued at 190k-210k and the other 220k.
First one rents for 180 pw and second for 185 pw.
that is average for the area for this price range of house.
Now based on the current valuations the return is around 5%.Not good.
But I payed 120k ansd 117k for these props 2 years ago, so right now I could’nt care less about the weekly or yearly returns on rental.In fact I aim to leave the rents where they are for the next year at least, to keep my good tenants.My point is that under the SIS rule i would have to ask around $520 pw for these properties, and that aint gonna happen.Anywhere!
As in most property deals, the profit is in the buying. Chase capital gains/growth, and treat + positive cash flows as a by product of good asset and financial management.
SIS, I must have something wrong here,
$200,000 divide by 769 = 260.7 x 2 = $520.00
$520.00 per week for a $200,000 house!
WHERE DO I SIGN!!Great post here,some interesting thoughts.
Jaffasoft, I went thru the same execises re rural investing as you are now a year ago.
I travelled around a lot with the family mixing holidays with research.I have now 4 properties in rural areas.
What i ended up concentrating on was properties within 15 minutes driving from largish centres. IE: Portland ,Warnanbool,Ararat.I found a small but definate trend of locals moving out of these centres to surrounding areas to recapture the rural living, along with cheaper rents,and commuting into town for work.When looking, if a particular town or property interested us we would stay for a few days,talk to agents every day,eat at the local eateries and pub ,visit the tourist attractions and get a real feel for the place.This helped us buy the right sort of property for the sort of tenant that we could expect in that area.
From an investment point of view all properties have been a succsess. In all cases the local agents are managing our props and the service and help has been fantastic.
If done right I reckon there is still value for the investor in regional centres.Some will be a lot better than others, so keep doing your research.Any investment has to stack up financially, but property has so many other variables that are equally as important but you seem to be on the right track.
Good luck!Celiva / Mortman
Re these retirement units,You mentioned finance being hard to get for them.
Well,I found it to be the opposite.My broker told me her contacts at banks were favourable towards them because of high demand.You have to remember, there are different types of retirement villages with different conditions and financial structures.
I basiclly bought a free standing unit in an over 55’s village.the only outgoings apart from the usuals as with any property is the body corp fees which are $210.00
You are correct in saying capital growth will not be spectacular, but as one in a portfolio of properties it has it’s benefits, IE:very low maintenence due to the type of tenant.Generally long leases. Good security.Reliable rental payments.reasonable purchase price.
I bought off the plan so that also gave stamp duty savings, and being new,good depreciation tax savings.and builders warranties.
I have said it before, and I still believe these a great starting point for first time investors.Bye,
Hi,
I purchased one this year.the development I bought into is a mixture of 70 detached and semi detatched 1 bedroom units with small sitting rooms that can be used for guests. ( grand children?)in carrum downs
They can be purchased by anybody, but can only be inhabited by over 55’s
I bought it off the plan for 132k.It came with remote garage doors,air conditioning,every thing.
All we did was lay some instant turf in the rear court yard.
As it turned out,only two in the whole complex were investments,the rest being owner occupied.
A lease was signed with a lovely single retired lady 2 weeks before settlement on 160pw.
Body corp fees are $210.00 it is covered by builders warranty and it has largely been a set and forget investment.
We dont expect huge growth on it but the returns are not too bad and it has a good depreciation schedule
ByeI remember a post on some forum a few months ago,where the discussion centered around the merits of buying up individual caravan sites in parks and flipping for a profit.That’s when I realised just how this property bubble had attracted “investors” who NEVER consider leaving something on the table for the next person.
ByeWell,well Craigster,
Who’s a sensitive boy then. Nasty nasty.
It’s exactly your sort attitude that makes the whole concept of wrapping so dodgy.I have done very well out of Real Estate, but have never been that desperate for a profit that I had to go trawling among the less fortunate for it.You are full of bad karma fella,I can feel from here.
Bye,
Hi,
I don’t post here often, but feel the need to comment on the issue of wrapping.I think it is repugnent, and believe it represents all that is wrong about this property boom of the last few years.It really is just another way of ramping up the rent.And let’s face it,anybody that considers signing up as a wrappee is not going to be a financial genius. They are people usually on low incomes desperately trying to get a foothold into a market already driven skywards by us investors.
The argument that the wrapper is doing a favour to the wrappee is claptrap, designed to ease guilty (greedy) conciouences.
As an experienced prop investor I am not swayed by the economic arguments put forward.There will be a lot of tears before this sorry trend falls over.
It’s loan sharking pure and simple.Bye
Hi all,
I own properties in melb.suburbs and western rural and have found property managers in the rural areas very good.
For one thing, they usually have less properties on their books to care for compared to the big ger city offices.
They have a good handle on the local demographics and can be invaluable for investing advice.Another thing is they quite often know or know somebody who knows prospective tenants, thus making better informed decisions about who to rent your valuable asset to.
For the small fee they charge,(tax deductable) I reckon it’s the best deal going.
I would think a once a year visit or in between tenants is plenty.Just keep in regular contact with yor managing agent.
Bye,
JoffHi all,
Sheesh! talk about flog a subject to death.
Good reading but.
Anyway my property investing has always been about making money for my retirement, not any preference as an investing strategy over any other type.It just happen to fit the times.To that end it has been very good ( who could have failed in the last five years?.
But I decided earlier this year to hold all but one my existing props ,use the CG from the one i sold to concentrate on share investing.Its been a real learning curve, but with the help of a good broker I believe I am now better placed to manage any flucuations in the economy.
The good thing about shares is the option of investing your money accross a wide range of industries and assett classes, thus smoothing out the bumps along the way.
Property has had an amazing ride for the last few years, but we all know it was unsustainable at it’s rate of growth.Just look at the amount of posts from people looking for +geared IP’s.They are rare now because we the investors have gobbled them all up and helped keep rents low by offering so many more props for rent.
This is not to say that property investing is dead for wealth creation,there are still opportunities out there, but the heyday’s are over for a while.
There are other ways to invest,and while I intend to keep my IP’s for the long term, now another journey begins.
Good luck everybody
joffThanks TP
JoffHi
DHA houses are definately overpriced at the moment.plus they charge around 13% management fee as opposed to 5% normal REA fees.you are also contractually required to keep it up to a certain (high)standard. The thing that attracts investors is the security of tenacy,they pay whether it is occupied or not.They were a very good deal about 5 years ago but not now.
JoffHi everybody,
What a great idea this post is. Just returned from some r@r and found it.So if anybody is interested, here’s me.
Real name is Chris,married to beautiful Michele for 20 years with 3 gorgeuos,georgous children, oldest at vic uni doing sciences.
We live in Seaford (near Frankston) and live a very secure and comfortable lifestyle.we live about 100 metres from the beach so summers here a like holidays.
About five years ago I was made redundant from what i thought was long term secure job. While I had no problem getting reemployed I vowed that day to be come self sufficient and in control of my own destiny.
At the time we looked at starting or buying a buisiness using the considerable equity we had in our house.But then we thought, why would i throw in a 60k job, mortgage my house and then work my butt off to pay it back?
So after many bottles of red wine and lot’s of soul searching, we drew on our equity and begun what has been a very exciting and profitable buisiness.investing.
At present we have six ip’s, having dealt with 13 in that time.we have one very nice house in Sth Frankston,2 units in an over 55’s villiage, and 3 houses in regional towns.all are cash pos.and we have an lvr of 55%
One thing i would say is that when we started (not that long ago)good information and advice was very hard to get and it could be a bit lonely and scarey making decisions, as i don’t think there were forums like this. My family thought we were mad.But not now.
The plan:As soon as our youngest is indipendant in about 3-4 years, we are selling every single thing we own,going to walk around the world,come back, buy a yacht and live on it.
So, thats about it for us, thanks for providing a unique meeting place and being able to share in the fun.
Joff.
PS.When we were researching small buisinesses to buy or start, one that did come up as a real earner was politics.A local state member (upper house if you really wanted to take it easy)only has to survive 2 terms or 8 years and nett earnings were around 2 million with all the add ons.a very cynical approach i know but i actually do know a sitting member who did it for economic reasons.He reckons it is the easiest dollar around
sad is’nt it?Hi
Property Managers fees are in my experience money well spent.
Managing tenants and choosing new tenants takes good people skills and and you only realise this when things go wrong.
In What other business could you rely on somebody to collect money owed on your 200k investment, supply you with a yearly financial statement and do your dirty work if needed and charge 40 pw ( which is tax deductible any way)
Treat them as a business partner and not an unwanted expense and i reckon its heap service.
As far as THEIR banking arrangements go it’s a scam,and dont put up with it.If they refuse to change, arrange for your rent to be paid the day before their banking days.
JoffHi all,
Certain areas or segments of the ip market have driven a disproportinate amount of the upward trends,namely high rise apartments,inner city houses and coastal properties.These are the areas that i think will suffer from any major shake out.That leaves a whole lot of areas left.Of these,not all have had the spectacular gains, and I believe the well researched and educated investor will continue to do well as they identify the next “up and coming areas”.
JoffI agree Leigh, lets not all go funny all of a sudden.Seems to me, reading posts on this forum for the last couple of weeks,that there is an inorndinate amount of introspection going on.Yep,no doubt we are moving into the next phase of an ever changing market. But why should that alarm anybody?.The signs of change have been there for nearly 2 yrears now, so any body that has invested money any where have no excuse for being caught out.The amount of knowledge available in forums such as this and main stream media these days, means the only excuse for failure if you choose to dip your feet in the property market is your own lack of intelligence.
Yes, times are a little uncertain,but the future is no more unpredictable than its ever been.
bugger off.
JoffYoungie/Wildthing
Don’t worry guys, you are both on the right track
just by part of this forum and willing to learn. Don’t rush anything.The next few years will see a bit of a slow down in investment activity and growth ,so any urgency to buy into a rising market will be less.
But, this only highlights how the market is constantly evolving.A good stratergy today might be a loser down the track.
Don’t try and be toooo clever and gamble too much on future trends, but stick to basic fundementals.Plenty of time for speculation when you have grown your portfolio and are more financially secure.
But now that you have asked,I will put forward some thoughts from what i have learnt.1.At this stage stay away from IPs that are marketed as great investments.Somebody else will be making money from it before you and you are paying for it.
2.Think about staying around the rental market that attracts people on the average wage.EG.In Melbourne 150 – 200 pw.This is by far the most stable segment of the market and price of these types of ip’s makes it easier to add more and easier to sell.
3.Buy with your head not your heart.Good rentals attract families who are usually much more stable than singles.The following are on my check list when looking at props.
A.House:3 bedroom /heating / rumpus room/ garage/ front fence and gate / security doors /low maintenence garden/ big the better back yard.( the actual condition of the house goes without saying)Never buy anything out of the ordinary or too different,as this will limit your potential customers.
B. Look for a prop already tenated.This has become almost a must for me these days.The main reason for this(apart from the obvious financial benifits) is that you can check it’s rental history and take some of the guess work out of the decision process.
C.Area:This is the hard one.again research will tell an it will depend on the mix of capital gain /rental return/price ratio you decide on.But look for schools/public transport/parks / shops.
4.When you are looking at a prop go to another agent in the same area and ask for their rental list of available houses in the same immediate area.This helps evaluate rental prices and potential vacancy rates.
5.The numbers in the deal MUST stack up now.Dont accept promises or predictions from interested parties.If you have to think about for too long, it is probally a bad deal.
I am not pretending to know it all and still have a lot to learn, but I hve found that there are some principles that remain constant.
I gotta go to some thing or other now and hope some of this has been of assistance.Hang in there and it will happen
JoffWestan,
I bought a 3 bedroom in Barkly st for 105k returning 155pw already tenated. Fairly average return I know,but this area, in my opinion has great potential.The whole place is really vibrant with plenty of work.There is quite a lot of housing development going on,in fact one agent I spoke at length with said that values have risen as much in the surrounding hamlets as people move out of town for a quieter life!!.
Check out a place called Narrawong, east of Portland.There is an up market housing development happening on the beach there that looks really good.If I lived in the area I would definately buy in to this.
I have just made an offer on a prop in Heywood I looked at when down there and am looking at this one as a bit of a specci on capital growth, hoping some Portlands buzz will filter down.Maybe, maybe not.It has a great return so any thing will be a bonus.
Joff
