Forum Replies Created
kp, Most experts suggest that if you don’t seek the cheapest solution you could expect more professional expertise should things become ragged. Personally I make a point of not going for bargain basement in most business dealings I do. Having said that, we did negotaiate a better rate than std, but the value of our home dicated a lot of earnings for the agent. An agent i used before by the way, (although this is the first time things became stressed). Take your point about the purchaser but like i suggested we had been warning everyone concerned that we may seek some flexibility by a few days, no one raised any alarm over this before now.
A true sales professional would have advised me weeks ago that settlement flexibility in the form of an extension would not be likely..(becasue he would have discussed this clearly with the purchaser)that is my beef, not the lack of allowance by the purchaser.
Oh, well, we’ll work it out……onward and upward.
Thanks for your feedback though..[tired]
JES
Thanks AUSPROP, I figured that was the case. 5 days penalty interest may not be so bad, but becasue we are seeking extra 3 working days, as I understand the penalty interest will go right back to the initial settlement date, and that will inclusde 2 weekends which makes it 10 days total.
Ill take it up with settlement agent on Monday, if anything interesting comes of it ill post the outcome.
Bloody anoyed though that these purchasers are being so strict, and more annoyed that our RE Agent (the selling agent who earned the easist $16 odd grand in his life) has not been able to better negotiate an outcome with the purchasers, i have been asking him to prepare the purchasers for weeks now that a delay of a couple of days may be sought, up until now he has said that should not be a problem. Now we have put the request in writing he tells me that they will not budge…needless to say I am probably off his christmas card list given our last converstaion.
[grrr]
JES
I need to be clearer in my thoughts, I am not suggesting that you can buy 4×2 homes in Sydney within cooey of the beach for $350k, just that IMHO the value is getting better in Sydney and prices are falling. You have a wiiiide selection of property that is staying on the market. I have spoken with agents who are using the language “any reasonable offer” or “vendor wants it sold”, all ofers considered). What I am illuding to is that bargains exist. Sure you need to be wary of a falling market Vs a rising market (Perth) and make sure you are really aware of what represents value. Three R’s.
A quick search around Dee Why alone buys you a large 2 bed possibly 2 bathroom ‘large’ top floor apartment with Pool and Gym and LUG for around $400k and thats asking, probably buyable at much less maybe $360-$380k if you find the right vendor. This in my mind represennts substantially better value a suburb 40km north of Perth slightly inland of a rather desolate coast that blows like the clappers in Summer and is a demographically challenged area (streets at night stuff).
Anyway, its all about strategies I guess, we’ll either get this right or wrong, or perhaps somewhere in between. Who really knows….not me thats for sure.
By the way, i love Perth, but again IMHO much more than 10kms inland and 20Kms north or south (except Mandurah which is its own hi quality hub) Perth becomes less ‘nice’ and less of a lifestyle.
Cheers.
JES
Hang on, the statement was 4×2 homes 800m from the beach for $350k. You have nominated property that is 40km from perth and is one suburb in from the coast. Its north of Merriwa for goodness sake (affectionately knownas Balga by the sea)
$350k for this area is crazy, like I have been saying.
Just take a look at Sydney pricing….its simply better value than Perth…but by all means go ahead…buy up large in Perth[biggrin]
I seem to recall a saying ‘go against the herd’. Buy in a buyers market. sell in a sellers market….Perth is an extreme sellers market.
Still, i only wish everyone the best of luck, and I am extremely willing to accept I could be way wrong about this.
Cheers,
JES
Please tell me where I can buy a 4×2 800m from the beach in Perth for $350k? You certainly cannot buy this type of beach front value within 20km of CBD if at all! I havn’t looked at the extreme north coast of Perth but even there I reckon you couldn’t go close to less than $500k. Dianella is now $400k minimum (with average block), Morley is $350-$370k for a knockdown. Balga is all $250k +, and Nollamara is more.
Also, the median price for Perth is already $363k, well above the affordability index.
Tell me, where are all these buyers going to come from who can stand $400k mortgages (unless you want to live in some pretty rough areas).
I am convinced Perth will go the same way as Sydney after the boom ended, prices dropping back by up to 20%.
But, time will tell[exhappy]
JES
And this hot of the press..see ‘in the news’ ..
“This means Australians are now more in debt for houses that are worth less than they were a year ago in Sydney and Melbourne, and for houses that have not increased in value in other capital cities.
But in Perth, the exception, house prices were now more expensive than those in both Melbourne and Brisbane following West Australia’s five-year resources-led property boom, according to research by Australian Property Monitors for the Reserve Bank.
The median price of a Perth house is now $363,000, behind only Sydney ($518,000) and Canberra ($409,500). “
Now tell me you still think Perth can offer much more growth..when its more expensive than Melbourne!
JES
Yup, look I understand all the forecasts of continued growth, and all by people / organisations who have mountains of theories (and evidence) to back the claims. Its just that if we go up much more we will be as dear as Melbourne, and in some cases Sydney will offer better value for money when spending $400-$500k…to me thats just silly and when the penny drops we will be in for a major correction. Just my HO, and I could be really wrong…but right now i would ratrher look for bargains in Sydney and Melbourne —not Perth!
Having said that, well done to anyone who invested in Perth, or even regional WA in the last few years..well done indeed!
Cheers,
JES
Thanks KP, thats excatly the information I was seeking…sounds like you have some experience in this arena, do you belive given the current ‘boom’ property environment over here that there are any ‘profitable’ opportunities to develop?
JES
Ill I could add, is make sure the 7% return is net. If it is a gross figure, unlike commercial property, you will have to factor in strata fees, management fees etc. This will definately make the property negetive geared, and with the tenent locked in for 4 years your options are reduced.
Is there a problem here to solve or are you solving the problem?
JES
Yup, I could be wrong about Perth about to slow, but the point is we can only offer opinions coz we don’t really know what will happen.
Interest rates will go up, not sure when but they will. With so many investors, flippers, FHB, paying to the MAX of their landing capacity (and sometimes more) just to secure property here the slightest rise will place pressure on high debt property owners.
The Sydney market being referred to in 2001 and continuing on for a further 2 years was in the time of lowering interest rates. Therefore the buying market was bouyed with confidence. Interest rates have bottomed out and seem to sure to go up as national debt levels escalate.
All I am saying is that you wouldn’t buy property in Perth right now. Take the $225,000 villa’s I referred to earlier. Say spend $5k to tidy up, buying costs of approx $10k, holding costs for 12 months (assume rented at $180 pw and managed) $5k, incidentals $2k – the property has to appreciate by $22k or 10% just to break even. Now if the market softens within 6-12 months, then no profit to be had, and possibly a long hold to make money, even till the next gropwth cycle which could take 3-5 years…..going on history.
Why wouldn’t you wait until the market softens (relying on interest rates) to buy? Right now the agents are unbelievably arrogant, their is way to much hype..its just mad. If yoy have IP’s in Perth…sell I reckon and make a killing! Then cash will be king for you.
JES
Be very careful in WA. IMHO, the market here is just about to slow. Property is being snapped up instantly, and in my opinion silly prices are being paid. Sure mining Job’s are paying big, the economy is strong etc, but the fact remains that not many people earn more than $100k or families combined income exceeds say $120k. This means on current interest rates property mortgages of $300k are about tops..well, the WA median house price is now well and truly over that figure! WA also pays the highest Stamp Duty in Australia which will really start to hurt. I know WA is still a lot cheaper than Sydney or Melb, but given our remoate location we should not be challenging Brisbane prices! All we need is a little interest rate hike and watch the market slow up. If you didn;t buy property in WA before 12 months ago, you are too late (IMHO).
I even have a real estate agent frind of mine who has been selling RE for 12 years, tell me about the Villa’s he recently bought, paid $225,000 in Tuart Hill and said to me , oh well property will never go down..go figure.
[blink]
JES
I am in Perth, getting trades right now is difficult due to a building boom.
You need a project manager, I belive a project manager should earn around 10% of the renovation cost. What were you hoping to spend on the reno?
JES
Personally, I subscribe to positive cashflow strategies, especially if you are looking at leaving work within say 5 years. Positive cashflow property investments are the most difficult to find and in my experience can only be found in the commercial arena right now (unless you can put say 50% down which it seems you cannot). (your state maybe different). I would not recomend the commercial arena untill you have some reseidential experience under your belt however.
Onother option worth researching is a buy, improve, sell strategy. If you can generate some ‘cash’ through this strategy you have so much more leverage in long term investments (which is what property should mainly be) .
The only other advice I could offer is to make sure your debt on ‘luxuries’ is minimised. You really ned to ensure that all of your debt is ‘good’ debt, that is debt that will ultimately put money in your pocket, not remove it. Make sure that you budget an amount to go into saving (that will be used to acquire real estate) evary week. Grow your investment pool as quickly as you can. Do plenty of research, find a stratregy and stick to it.
Hope this helps a bit.
JES
Thanks very much everyone. Appreciate the low down.
Cheers,
JES
mmm..my concerns are that this adds up to speculation. The development I had looked at is now nearly sold out and only the scraps are left. Much more apartment development is heading to the eastern river sector of perth with 30 story towers planned. Perhaps more opportunities will come from here. However, there seems little way to ‘value’ landmark developments in up and coming areas. Personally I reckon $600-$700k (odd) for a 3×2 apartment with city views (all beit not exactly on the CBD doorstep and in a formerly lower standard area) is somewhat high. (for Perth)
Firstly, assuming the price for the apartment cannot be ‘todays’ value. The developer has to factor in rising building costs in order to make a profit. So we must assume that really we are paying perhaps the equvilent of the value of the apartment in say 12 months time anyway. Then the apartment would have to increase in value by 7% just to cover purchase costs, and 15-20% to make a real profit given the risk of the speculation. Personally I believe Perth could start slowing down in perhaps end of 2006 to mid 2007 based on trends experienced in eastern sttas when property just got too inflated for the market to stand.
This means that our speculated apartment would have to then be worth somewhere around $750k (asume $600k purchase) in order to give us a reasonable return (given the risk).
Perth should experience a glut of apartment developments in the next 18 months also which could apply pressure here.
I think I would prefer to look for a good apartment reno in South Perth, West Perth or Subi (undervalued) and add value to it and turn it around in 12 months. That would appear much more challenging in this market (to find the undervalued property) but not so speculative and perhaps more like solid investing.
My 2c.
JES
