The problem with taking anything a RE Agent says is that they have a vested interest in property, and whether they’re talking it up or down, they still make their money one way or another.
When it’s booming and a seller’s market, they make their money pretty easily without having to do too much cause the market is swept away in a frenzy of greed and promises of making fortunes….in a buyers market they may have to work harder to make the sale, but they’re talking up how fantastic the bargains are now – just the other night on Today Tonight (always an honest and reliable source of information….NOT!) they were talking about the bargains where vendors had dropped up to $400K off the asking price of homes……I very much doubt they were bargains, just very overpriced in the first place. But, back to my original point of vested interest…..whether the papers or the re agents are talking the property market up or down, it’s all still good for them……agents still make their commissions, they still advertise in the papers, the papers make their money out of the advertisers, and the buyers still buy the papers to find the bargains. Booms can easily be created if you market something effectively, and no one would be any the wiser.

I still believe as i said in my last post that you can renovate for profit in this market…..you just have to know what houses are selling for at the end price, and then buy really, really well at the beginning. No longer can you just buy and make a profit a week down the track………now you have to make your profits and be a lot smarter about your investments.
I think there are a lot of people out there that are making very foolhardy investment decisions based on one book they may have read and the promises of making a fortune out of CF+ property…..you just have to read some of the posts from newbie investors to realise that..and that is kind of scary.

It may (the drop in renos) have something to do with the fact that people who originally jumped on the renovating bandwagon have either sold or rented out their properties after spending every weekend and nights after work renovating for 6 months on a showstring budget with absolutely no idea of what they were doing threw up their hands in disgust and tiredness and gave up, never to touch another renovation project again.
Or it could be we don’t have the plethora of renovation shows like Location, Location, Hot Property, Auction Squad or The Block that were showing people making gazillions out of renovating. The buying public aren’t stupid, and in the last series last year of Auction Squad, the amount of houses that didn’t sell was embarrassing – the main reason why is because people knew it had been done over by the renovators, knowing that the vendors then had totally unrealistic ideas of what their properties were worth. More often than not most of the people in the crowd were nosy neighbours and other gawkers. It’s the same as basing what you think your house is worth compared to what your neighbour says they got – 9 times out of ten they’ll probably tell you they got more for it than they did to save face. The only real way to gauge what the market value of a home is, is to look at the numbers in reports such as Residex etc. And with The Block (the first series anyway) what a lot of people don’t realise is, the units may have gotten record prices, but the majority weren’t bought by individuals, they were bought by corporations….one was bought by the Daily Telegraph and leased out for a year rent free as a promotion (so how much money do you think they made out of that one, and do you think they were able to write it off??!!), and the one that won, Crazy John bought it and he couldn’t have paid enough in advertising for the publicity he got out of that sale! He’d write it off as a marketing expense and still have an asset to boot.

I still believe that renovations are a way of making money in this market, but only if you buy really really well and bring the house into line with what other houses in the neighbourhood are presenting and fetching in sales price. The home gmh454 is describing sounds like someone who has jumped on the renovating bandwagon without thinking about who the end buyer will be and what they would want, it may have been better for them to have knocked the whole thing over and built new on the block.

The last boom was triggered by a number of things, one predominantly being the introduction of the first home buyers incentive, so that naturally brought an amount of people into the market that you won’t see for a very long time to come, if ever again. People forget that, and base their decisions on boom times, rather than ‘normal’ times of stagnant growth. It didn’t help that it seemed every man and his dog was getting on TV and saying it was easy to make a fortune out of property!! The property boom was just the modern day version of the old gold rush times in my opinion………..will happen again if enough people get on telly or the papers spruiking how to make your fortune in property……. [blink]……it’s all in the marketing IMHO

Hi Jenny,
This is probably a stupid question, but have you had a look at what is under the wood panelling?? I have just bought a house which has wooden panelling (thin plywood with grooves cut into it) and underneath is wallpapered gyprock. So all we’re going to do is pull off the panelling and ascertain whether we strip the wallpaper or just paint over it.
Our first reno have wallpapered masonite covering tounge and groove boards – we ended up ripping out the masonite and painting the boards and it came up a treat. Whoever started that trend ought to be shot!!
Good luck with it all!

Wayne,
Never, ever, ever give a counter offer during the same phone call as a counter offer from the vendor. I always make my offer, and then wait with my heart in my mouth until the agent gets back in contact with me. If they counter offer, I then go up in as little an amount as possible, but not in the same phone call. I’ll wait a couple of days at least, and I always have my walk away price in mind, believe me, deals are like buses, there’s always another one just around the corner. You may be able to afford to pay up to 180K, but is the land worth that amount? In this sort of market, you’ll probably find you’re the only interested buyer, so it’s worth making the vendor sweat a little to get your deal. It can be nerve racking waiting, but seriously, it’s worth it if you get your deal. Do as Foundation suggested, when they ring back tomorrow, tell them you’ve thought about it overnight and you can’t go any higher than $175K and see what they say. The fact that you’ve spoken to them 3 times today says to me that teh real estate agent thinks he’s got a live one on the line, and it’s just a case of steeling the nerves and getting the best deal for yourself.
Go for it!!!

Are you kidding???[blink]
I can’t for the life of me think why anyone would want to pay that sort of rent per week and live in a caravan park….but each to their own and I do hope for your sake the figures are right.
Why would a tenant want to pay that sort of rent to live in the relocatable home, when they could rent a equally as good standard 2 – 3 bedroom house (although depending on where it is you’re looking) or possibly buy the property themselves?? At $55K on a low doc loan of say 7.5% on IO means they would be paying around $79 per week in repayments, plus let’s say they pay the $100 a week in site charges, then they would still only pay around $179 a week and not have to worry about ever being turfed out of their property. Something sounds a little odd, and I think that Leo’s advice could be a little dangerous – I don’t think these sorts of properties are likely to sell quickly if something were to go wrong, or how quickly they can be tenanted if yours moves out…but then I don’t own a relocatable home in a caravan park and have never looked into one to buy so I can’t really comment. You may also find that it’s extremely difficult to get finance for these types of properties. I did notice in this month’s issue of Australian Property Investor magazine that there was an article on caravan parks, if you haven’t read it already it might be useful.
Unfortunately the holy grail of 11 second solution properties isn’t as readily available as they may have been a couple of years ago, and canny investors have to look at other ways of making their properties cashflow positive either through renovation, depreciation, buying well below market value etc etc.
Read Steve’s 2nd book, as the market has now changed greatly and his new book reflects that. I do hope that the media keeps on with it’s negative hoo haa about property prices falling, better buying opportunities are coming and you’re probably better to wait for a while and invest in proper bricks and mortar than in relocatable homes.
But as I said before, each to their own, just make sure you do proper due diligence on your purchase, whatever you do.
Cheers!
Junkers

Hi Leila,
The best thing to do for exteriors is to take a walk around your local neighbourhood, even a neighbourhood which is a ‘step up’ from your own (ie – houses are more expensive there) and take note of all the houses that make you go ‘wow, I’d love to live there!!’ As long as you paint and landscape your house in colours that fit in with the rest of the neighbourhood, and if you can see it done already on a house that is of similar style to yours, you’re not going to have too much of a problem.
There’s a story in Steve’s recent book about 2 of the mappers who painted their home a very bright ‘ginger crunch’ then wondered why nobody was wanting to buy the house – it turned out that it was just a bit too ‘out there’ for prospective buyers.

I have a friend who is a real estate agent who has access to the data. Everytime I come across a property I’m interested in I ask them to print out the data on that street which will give me what price the original owner paid for it and when, and I can also see what houses in that same street have sold for recently, and I can also see what has sold in the whole area over the past 12 months.
It’s a nice contact to have although I do tend to bug him alot!
I’ve never purchased a Residex report, but maybe other investors have an idea of how you can get data on sales prices in your area?? I know the SMH lists in Domain each Saturday the sales prices for Sydney suburbs, so at least that is a start in the right direction.

I agree Marc, I find marketing to be one of the most interesting and fascinating aspects to being in business – I love it.
Believe it or not, 95% of the marketing (small)businesses use is complete rubbish – most business owners wouldn’t even know where most of their business is coming from, or whether their ads are working or not.
I think the RE’s efforts where fine, I’ve copied many ideas out of many books, and tested which ones work and which ones don’t. Whilst Ian from Brisbane may have thought it was a poor effort, Joe Bloggs down the road may have thought ‘Wow, this came at just the right time, I’m thinking of selling my house and I’ll give this person a call because they’ve made the effort to contact me first’. It does happen.
I love to laugh at the Cars Guide ad where it says if you advertise with them 2,000,000 (or something similar) people will see your ad in the Cars Guide – unfortunately they fail to tell you that not all eyes are created equal – it’s very doubtful that of the 2,000,000 people reading the paper it’s in, that they will all be wanting to buy a car, especially YOUR car in particular as it is competeing with 1000’s of other cars listed in the guide – and so in actual fact they really have no idea exactly how many people will be reading the cars guide when it comes out, they just quote the readship numbers and hope that’s impressive enough.
I say good on the RE for trying something a little different – we all have to make money, even real estate agents, as much as you may loathe or love them. They’re not ALL totally bad…….

Hi Daniel,
It’s a bit hard to give specific advice with the post you have written, as you haven’t really outlined your circumstances too much.
How much is a good wage? How much is your girlfriend earning?? How much are you saving each week?? Where do you want to live?? A 2 bedroom unit in Rooty Hill is a lot different to a 2 bedroom unit in Paddington…..
As for how much you can borrow, how much do you feel comfortable borrowing??? Do you like to eat baked beans on toast every night, or do you prefer to go out for dinner? Do you or your girlfriend like to spend money on clothes, cars, socialising etc and if you borrow up to the hilt will this restrict your lifestyle too much?? Money is the root of all evil, and probably breaks up more couples than adultery (don’t quote me on that – I’d have to go ask Dr Phil), but from experience, having no money sucks and causes a lot of fights between couples if you’re used to having spare cash around to spend on whatever you like.
Could you afford repayments if the interest rates went up by say 2%?? It can be a shock going from being a renter to a homeowner if you’re not prepared for it. The last thing you want to do is be the proud owner of your new unit, only to have interest rates rise, or something else happens and suddenly you have to sell quickly. The best advice I suppose is just make sure you can comfortably afford the mortgage repayments on even one wage, just in case something happens and suddenly there are little Daniel’s running around!! [cigar] But good on you for wanting to get into the property market, just make sure you do your homework first.
Hope this helps!
Junkers