Potential crash to bullish? That’s like almost opposite ends of the spectrum. I wouldn’t see the market (depends on which market, but I’ll refer to sydney) as “bullish”… that suggests to me that it is still speculative with great CG. I would say the market is now “stable” (as in, there’s still FH buyers out looking, incentives are there for buyers, there is still interest in the market, and it is not “flat” like pre-boom days. Given that we have had the biggest boom ever, and many people have come into the market, I doubt interest will reduce to pre-boom days.

Again, there’s many markets, and micro-markets within the sydney market. The OTP market is “flatter”… and Triguboff has slowed in his selling of apartments, but even then, you have rising building costs, so newer apartments are likely to be more expensive (with reduced demand) and other apartments may *hold* value (but probably not increase in value over hte next few years).

Inflation is manageable- 2.5%- and I think the sydney market will probably be aligned with inflation.

But bullish? hmmm- perhaps for the private treaty market, but auctions are probably dead for a while (except for the traditional unique top-end properties), and I think if one wanted to exit in sydney, the best time would have been around July 2003 for better CG. Now I think it’s buy and hold.

The exit duty did make (some) people panic a bit, and the effects of it will either be that people don’t sell for a while now. I think the bargains were to be found just before the exit duty came into effect.

kay henry

emcdonald,

Ask your accountant/pay officer at work, to deduct $150/$200 per week from your pay (or whatever you can afford), and put it into a savings account for you.

I also used to make savings by still having HECS deducted, even after I had paid the debt off. Then at tax time, I’d just have a lump sum.

I too am a spender (but I like to think of myself as a “good” spender, rather than a “terrible” one- hehe), and hence I like compulsory savings. It’s one of the reasons I first liked real estate- compulsory savings of paying it off. I still use RE as a form of compulsory savings, but it’s getting the deposit to begin is hard.

I pretty much used tax returns as deposits.

kay henry

They don’t get to own the house while you are vendor financing it to them, until they refinance or pay the debt off. Niki, the house will still be in your name.

kay henry

cute, rogue…

It’s likely that any post that people disagree with, will be discredited by some. So a person saying that pozz gearing hasn’t been all they’d have liked it to be, will be called a fake.

I dunno whether the post is a fake or not- I used to think this place had so many plants saying how great positive gearing was, that pi.com was a nursery.

I think any kind of property investment can be expensive. Sometimes there are expenses that we couldn’t have expected. I’ve certainly had expenses for my IP’s- all the way through, and I find it annoying, but not the end of the world. I do try to buy properties now, though, that don’t have too many obvious expenses coming up, but contingencies always probably need some cash back up- just like a small business might need when a piece of equipment fails.

15 properties – that’s a lot. If I look at the maintenance I require on one IP, and multiply it by 15, I would not feel comfortable. But then, income of the IP’s helps :o) Still, I would rather have less IP’s, and have less worries. I’ll be happy with 8 by the time I retire (long way off).

kay henry

Gurus and their imaginary friends… dear oh dear… I wish they’d just write “this book is a parable” instead of the ruse. Khouri didn’t get away with it- perhaps RE investors don’t care so much.

kay henry

Ko_Starr,

People work out what they’re comfortable with. My first place was a 5-minute drive from where I lived, but it didn’t mean it was any more low maintenance than my place 1000 km’s away. I use property managers, so I have a hands-off approach. I think one reason people balk at buying places at a distance is because they feel that they don’t know the area well enough. There is so much checking of an area that can be done, that you can feel safe to buy far away if you read every piece of information about the place. Google can assist you with this.

Also, if you’ve ever holidayed at a place, or travelled around Australia, you will probably have heard of reputations of the locations. You can ask on here if you’ve found a place and want to know about it. Remember though, that people often “talk up” locations that they’ve bought in, and might not be as objective as you might hope. I find google to be my guide in reading about locations. You can try this… go to google.com.au and type in “blahtown”… if he town is small enough, you might only have to read a few hundred links :o)) But if you want to specify, you cal type in the following words:

*flood *employment *rental yield *median price
*social problems *population growth *population decline *industry *real estate boom *crime * *tourism etc etc…

Each new link will give you idea on what to look up next. If you go to the local council webpage, you can find out what is planned for the town, or services that are declining.

If you buy a cheap house- for say 40k, and the rent is $90 a week, think about expenses- including the cost of the mortgage- and possible repairs.

Also think of contingencies like if there will be a property manager in the area, how many tradies are in the area, and will it cost you a heap to employ them.

Some people enjoy the few extra bucks they might get from a CF+ house per week- some people on here have said they get an extra $10 per week for their house. But you’ll be paying tax from that “profit”, so you might think if the property has any capital gain prospects. Will it be worth it to have the drama of a place that might give you $7 a week profit?

Having said that, my places make no profit- in fact, they’re negatively geared. I invest money into them because I like real estate, and am happy to hold them for the long term. I don;t “earn money while I sleep” hehe- I *lose* money while I sleep :o)) But I’m quite ok with that. Most small businesses don’t make money in their first year, and I see RE as a small business- invest in it, and watch it grow.

If you become a specialist in the area you wish to purchase in, you’ll be ok. I have learned a lot about many areas of Australia by reading about them. Sometimes, the more you read, the more you have reason to decide NOT to purchase in the area. But buying in a distant location can work. Some markets might have “better value” than in the location you live in now, so you might choose to buy elsewhere.

kay henry

bellboy,

You also have to get permission from the BC if you are gonna tear down walls and stuff in a unit :o)

kay henry

Henry,

I bet many of us on this board bought our first IP’s for less than 100k- I know I did, but the property market was very different then. The thing about buying a cheaper property is there is more room for contingencies. If your income changes or you decide to do other things, a 100k property won’t bog you down forever. Having said that, the location of your IP- at 100k, might mean you get cheaper rents… I have this idea that the cheaper locations have cheaper rents, with the exception of mining places, or other isolated towns where there is a bunch of professionals – teachers and nurses- who are in the place for a little while, and never buy a place- this was the case when I was living in the outback.

I work it out on location- that’s my first priority, and then yield. No point paying 100k for a property that will only net you $80 a week- that’s only a 4% yield- you can do much much better than that. Some will work on yield and then location- depends on who you talk to.

kay henry

The lazy person’s rule is: Price of the property, then double it for rental yield…

50k prop = $100 rent a week
100k prop = $200 rent a week. etc etc

That’s my way, and it doesn’t exactly = the 10.4% thing, but it’s close. It also take me 1 second, so I have 10 more seconds to sit and do this: [tired]

There are 10.4% yielding properties around, but not of the same calibre or type as when Steve bought. In Australia, you’re often looking at more rural houses (as opposed to suburban regional houses), or mining towns.

Cheap houses don’t always mean you’ll get 10.4% rent though. You could buya 50k house and only get $75 a week rent… then you have to pay rates,a PM, landlord insurance, any repairs, interest on a loan, costs of a loan etc. That $3750 annual return you get can pretty soon be eaten up with costs. So your cheapy house will still be negatively geared, and may not achieve capital growth. You can only get rental of what the market will pay, and in some places, rents are very low.

kay henry