Forum Replies Created
Brizza,
I doubt it. Reason being, you could smash up that car tomorrow and have no insurance. Loan applications don’t ask if you are insured for your car. Also, cars depreciate to such an extent, that I wonder would it be worth their while. If you have a Rolls Royce, or a car that may maintain/appreciate in value, then it might be a different story… same if you have a Whitely on your wall, I suppose.
As you can see, I have no clue :o) I am thinking though, that banks prefer wages and other real estate as potential collateral. I can’t imagine small business owners saying they have a new fridge in the butcher’s shop and using that as a bargaining tool for a loan. But the value of their business would be a tool.
Don’t smash the RR and give it a try :o)
kay henry
calvin,
If you’ve already negotiated on the price, then think about the inspections and the price you’ve paid. I negotiated on a property, then got inspections done, found a few small problems, but then thought that I’d already negotiated price, so I was happy not to worry about the other small. cosmetic stuff. Depends on how you want to play it.
Re the specifics.. termites in the bushes? Chop them down.
Re the aircon… if it is working well, then why worry? You’ve been told it is in good nick for its age.. so I guess you can’t expect it to work like it did when it was first installed.
I wouldn’t worry about those things. If you like the house and you’ve already negotiated a deal that you feel comfortable with, the bushes and the aircon will be the least of your troubles.
kay henry
Francois,
Here’s some decent info on Kalgoorlie from somersoft. Actually, if you look up Kalgoorlie on somersoft.com.au, you will find a lot of discussion on the place. There’s not much about it if you do a search on this Forum.
http://www.somersoft.com/forums/showthread.php?t=10001&highlight=kalgoorlie
$260 is a great yield on a 132k property. But yield means nothing if you have no tenant. Check out how long the lease is for. If I were you, I’d be wanting to make sure I had at least a 1-year lease. What’s the tenancy base there? Is the unit attractive enough to be competitive to the rental market?
If the Unit is post-1985, you will benefit from having significant depreciation. You might be able to write off the whole price of the unit over it’s lifetime.
As for CG… well, noone seems to think so.. hehe. But it does have good cashflow. I reckon $260 a week is a lot more than a lot of people would be getting in suburban areas of greater population.. but therein lies the risk… you get higher rents and take on other risks- smaller population = less tenant base to rely on… town is reliant on mining (a risky industry).. howver, there is around 30,000 people in the towns of Kalgoorlies/Boulder, so it’s not tiny. (some populaiton decline has been recorded, but you get that with mining towns).
If you can keep stable tenants (no guarantee there) and the unit is of decent quality, it may not be such a bad buy.
Another point on the size of the unit… 100sq metres is not so huge for a 3-bedder. Also, check body corporate fees. For rural/regional, I wouldn’t pay more than $1000-$1200 (although if the complex has a pool etc, they may be higher. Again, re BC fees, check there is no planned special levy coming up- these can be found by checking all past BC papers.
CG- probably not… CF? Seems alright :o)
kay henry
G7,
Actually… check this out instead of the above:
7. Cooling off
Know your rights with regard to “cooling off”. Providing you are not within one of the statutory exceptions (one such exception for example is if you purchased at an auction) you can cancel the contract within three clear business days after signing it without giving any reason for doing so. Some of the other statutory exceptions to a right to “cool off”, that is where you do not have such a right are:
* Where the land is used for industrial or commercial purposes;
* Where the land is more than 20 hectares and used primarily for farming;
* Where the land is sold within 3 clear business days of a publicly advertised auction;
* Where the purchaser has sought and received independent legal advice before signing the contract;
* There are various other exceptions pursuant to the legislation.If you do change your mind you are entitled to a refund of your deposit except for $100 or 0.2 per cent of the purchase price, whichever is the greater. Before 1 February 2004 there was a further requirement that “cooling off” rights only applied to properties under $250,000 but this is no longer the case.
http://www.liv.asn.au/public/rights/rights-Buying.html
OK- so the more up-to-date info is that the CO period DOES apply, post 1 Feb. That’s good news :o))) Seems their solicitor/RE agent is working off an old contract.
kay henry
G7,
Check this out:
Cooling-off period
If you buy a residential property less than $250,000 by private sale, you are entitled to a cooling-off period of three business days. This means that you are legally entitled to withdraw from the contract if you change your mind within the three business days.A cooling-off period does not apply if:
*
the property price is more than $250,000This is old info- please check message below for updated info.
* the property was bought at auction or within three business days before or after a scheduled auction
* the purchaser is an estate agent
* the purchaser has obtained independent advice before signing the contract
* the vendor and purchaser have previously entered into a Contract of Sale for the same property
* the property is used for industrial, commercial or farming purposes.It does seem ludicrous that the CO period is waived for properties over 250k when the median price for properties in Victoria is way higher than that.
What’s your bargaining power in this? Are you able to have a verbal offer and acceptance, and an assurance the RE/vendor won’t gazump you? If you sign this contract, with the period waived, you will be bound to the contract, and bound to the sale.
A contract is an individual matter. It is a statutory document, but can be changed by either of the parties if they so wish. If the vendor wants to sell you the property, then they will be happy to allow you to get legal advice and do your checking before you sign- it seems like it would be against their interests not to allow you this and for a genuine sale to fall through.
I wouldn’t be pressured by a RE agent to sign anything before it’s checked by your solicitor, plus you’ll pobably want to get a BPI and do the usual checking.
Perhaps the REIV can lobby whomever to get the CO period more in line with median property prices. It’s too much pressure on a buyer with this kind of rule in place.
kay henry
Domo,
I’d say a good PM needs to be a skilled negotiator- it isn’t necessarily an easy job, and a PM can cop it from both tenant and owner (owners sometimes treat PM’s as their own little slaves).
I think a good Pm also knows how to treat tenants well. If I had a PM who spoke in a derogatory fashion about tenants, I wouldn’t tolerate it. I have, as a tenant, always known the PM’s of the properties I live in, and expect to be treated decently by them.
Think of your own personal style. Are you hands-on, organised, or even anal? Are you laissez-faire, laid-back, or slack? Let the PM know what you expect from them. If you haven’t told them you want to know immediately if there is some small repair needed, you can’t roar at them if they get it done as a matter of course.
As an owner, I have very little to do with my PM’s. They’re people with a job to do, and I am sure they don’t need me to be calling them up regularly to surveil them.
kay henry
Ronulas- big congratulations to you :o)
I think you’ve surpassed me. From my reading, you now own 4 units from this deal and another investment property- that’s kind of 5!
I’m glad you’re so excited, I love to see people enjoying what they do
))))kay henry
Like a fiction, you mean Gatsby?
I guess what I feel about all of these books is … I imagine they are very enjoyable, and people like to read them, and learn new ways of doing things… but I do get surprised when people start *sounding* like the book. I learned many things by reading so many books (not really investment books) but I can’t imagine walking around sounding like Jonathon Livingstone Seagull, or The Little Prince, or a William Faulkner novel. I reckon it’s a matter of thinking “I enjoyed that book and it made sense”, rather than *becoming* the book.
I think if we are putting others “up” then we are, in a de facto sense, putting ourselves down. I reckon there are financial “secrets” within us all- it’s merely a confidence in one’s self that allows us to develop autonomy.
kay henry
Grega,
Gee, your post is pretty close to an ad… Actually, the more I read of it, the more it really IS an ad, but I’m feeling strangely benevolent today :o)
grega… there’s not an entire rule about buying under 50sq metres, but 34 is a bit tiny. it sounds like a studio you’re selling (I think it must be for the size). You can buy a studio in the middle of sydney in the 120k mark.
It sounds like a nice little place. I think you might have to wait for a vendor. Grega, the question might also be, why are you selling? Perhaps you can keep the little guy, and use him as equity.
Also, you’ve not mentioned rental yield. If the yield is high enough, you might get a buyer interested. whilst a small studio might not achieve much future CG, it may achieve some yield to make a buyer’s purchase worthwhile. If you haven’t got a tenant, why? Are you wanting to be able to sell to both an owner-occupier or an investor? As an investor, I like to get a tenant on settlement. Perhaps get a rental appraisal from the RE you are selling with… of from any RE agent in the area if you are selling privately. Add this to the net ad.
kay henry
It’s Labor, folks- no u in it. I say this because it is a major Australian political party (not that I vote for them- no way!)
kay henry
Mr Recoveryman,
Here’s a way to DIY to find them. Circle all the cheap properties from each state as listed in the API Median Price Guide for states. Then go to the Median Rental Guide in the API mag. Match them up, and voila! If the rents are double the price or thereabouts (50k prop = $100 rent), then you are seeing CF+ properties.
You can pretty much DIY anything in research. Sue is right though- you could always go to the source. I can’t be bothered sourcing primary material. I like finding stuff myself- it gives me a sense of confidence (plus I can’t afford those guides, and they lose currency quickly).
On an API note… oh how nice it is to see they’re listing properties alphabetically now. It was harder to find them by postcode- onya API!
kay henry
HousesOnly,
Voting for a minor party is never a wasted vote- of course not, but chances are, unless that candidate gets in, the vote will be preferenced to one of the major parties. There is always a chance too, that the preference will be directed towards the major party that you least want elected, too. The Greens, for example, were preferencing votes away from a local Labor member in my former area, because they didn’t like the way he operated. So a vote for the Greens was a vote for Liberal. Of course, some parties preference noone. Always good to check who the minor parties are preferencing (if they are) before making your vote, I reckon.
kay henry
Brent,
I don’t know if this might happen for the Perth show… but in sydney, if you buy the Money Magazine, you get a free ticket to the show in the mag. If Money Mag is sponsoring the show, then it might be the same deal there.
kay henry
Here’s the link from the other thread about Today Not Tomorrow Institute:
https://www.propertyinvesting.com/forum/topic/12094.html
kay henry
bennido,
I don’t know what a “serious property investor” is.. but I know people bandy the term about… just as they do about “savvy” and “sophisticated” investors. I think those terms are all a bit [baaa] and are intended to divide. I think all investors can make mistakes, even the “serious” ones.
As to buying on potential… well, yeah, I agree with you. Many of us buy on the thought that property doubles every 7-10 years, so we do buy with that in mind. I am thinking here of regular buy and hold, (potential for) growth deals.
I still work on the “tenant and tax dept and me pay the property off”. It’s an old adage, but it keeps my expectations realistic (for me). Everyone has different expectations, but growth to me has always been a bonus. I’m happy to buy and one day own the property- that will be enough.
I agree with you that we can’t determine growth. We can however, read reports on expected population growth etc. There are many reports on, for example, population and demographic predictions for Sydney. I don’t believe these reports are merely speculative- many of them are done based upon projections on the International student market and are done in consultation with Universities and Councils, for example. These Institutions have Corporate plans that are made for years ahead.
My basic belief is that population and natural features determine growth. But I guess a few more RE cycles will determine if growth for my properties will occur or not.
Re your comment about towns going bust… a town can decline in population and become a “ghost town”- yeah, it’s happened, and people leave some rural areas to get more employment and training opportunities- that’s been a trend for decades. Then again, another trend is sea-change. So young people may leave the area to get a job, whilst older people move to the area. In cities- like capital cities, it is not likely they will “go bust”.
Location location… I still think it’s the key. But I agree that growth is, for the most part, about “potential”. Noone can predict the future.
kay henry
Hey Ted,
Ig CGT was at 50%, then I wouldn’t care- it would simply be taxed the way the rest of earnings is taxed. If negative gearing was abolished, well, it would put property investors on the same level as other workers- no big deal to me. When the exit duty came in, I didn’t have a hissy fit. Check back on my posts at the time, to see if they reflect this- if you can be bothered, which I presume you can’t.
I assume you disagree with my perspective- that’s fine. You’ll vote for the party that protects your property interests, and I’ll vote for the party that works more in line with my other interests in life. It’s ok if you disagree, but I am sincere in my intention of what I said. If a party said they would abolish negative gearing, and spend the extra tax base on public schools and health… well, I would gladly vote for them.
We’re all different, Ted. Just because I am on this Board, doesn’t mean I have to follow some prescribed way of thinking. We have one thing in common- interest in property investing, but it doesn’t determine who I vote for- for me, there’s many more important things to consider in governance.
kay henry
The Reserve Bank raises interest rates, and is predicted to do so before Xmas. IR’s will probably be raised no matter who gets in.
I will vote for the party that suits my political perspectives in many ways- my interest in property will not determine my vote.
kay henry
Yorker- heya,
I checked out some Rosebery homes. Below is one of the more expensive ones (quite pretty too, I think). Why I am putting up the link is because the rent is so cheap ($90 for a 3-bedder). This seems usual for the town- others have the same rent. This puts the property at about 3% yield. I know you are probably buying cheaper properties… but if one of the most expensive places in the town is getting rent of $90 a week, are the rents there extremely low?
As for me, rents at $90 a week would be too low- despite property price. $4680 annually would be eaten up by rates, management fees, mortgage costs, and possible repairs. Then you’re left with a house that may or may not achieve CG, and not much income being derived from it.
kay henry
here’s an example of land which isn’t immensely valuable. Who knows? Maybe it was only $100 per block before the boom… but would this be a good investment because of land appreciation? I doubt it. Some land- scarce land or land with great features- will appreciate, but not all land will.
http://domain.com.au/real_estate/buy/wa/katanning/2004105135.aspx?property=Katanning
kay henry
MJT,
The Bank wants the name of my solicitor, the name of the RE agent, and the front page of the contract, but doesn’t require it to be signed. I am not just going to sign a contract with a RE agent before it is checked by my solicitor. Noone expects me to. I imagine my solicitor would be very surprised if I signed a contract without it thoroughly being checked. He checks, I sign. That seems normal to me.
kay henry
))))
