Jaffa,

I went to school there for a while, and am very familiar with the surrounding towns and region. Are you interested in anything specific?

kay henry

bennido,

I don’t include a deposit as an assessment for CF+ You could have a 50% deposit, but then you’d have lower expectations of yield. I just think of the purchase price, and the dollar amount rent. So if a place is 100k, then to me, it has to yield $200 a week to be CF+. That’s my lazy way of doing the 10.4 thing that Steve describes. Just double the price and determine rental yield. It’s lazy and imprecise, but it’s close

kay henry

Hector,

If the building is still being constructed, I am wondering if it’s an OTP apartment. And have you been informed by the developers or RE agent, that it would be suitable for student accommodation?

Just remember with OTP’s, that they need points of differentiation from other OTP’s to maintain their “value”.

If you are wondering what students are like as tenants, well, I believe they would be similar to other tenants- but perhaps younger, and perhaps with some inexperience of living out of home. I guess there are different “types” of students- those that live to study… and those that study between partying.

Hector, what are your concerns?

kay henry

hehe- too funny Mel- quitting your job before you have one

Did you buy into that Paddo place, mel?

kay henry

I didn’t realise you were dishonest, Mel

Mel, how much is it gonna cost for me to walk on coals?

kay henry

Fnomna,

I think it’s easier to get the price you want in a rising market. Remember during the boom, people would just create a figure, and the property might go for many thousands more. Now, in a declining market, everything has changed. Remember that, on here, as sellers, we want to get the best the market will pay, and as buyers, you have people lowballing and paying the cheapest price the vendor will accept.

It’s a pity that your first experience was such a bad one. I would read a lot of books about selling property. There are many on the market. I don;t have an expectation that a property will sell itself. If it did, I’d sell it privately. I pay the RE the many thousands of dollars to sell it for me. But I then work hard to develop a good relationship with the agent, and, as with everything, one often has to gently spell out expectations to them. All vendors are different- some are more laissez-faire, some are more hands on.

When I sold a property recently, the only feedback I got was about people who made an offer. If 35 people came to your open houses, the RE can’t force them to make a bid. The fellow will only speak to you about the ones who did.

If your property is sound, then it will sell. But many properties are now taking twice as long to sell. I imagine there will be plenty of people such as yourself, who, in this downturned market, will want their property sold quickly, but sometimes it takes time.

kay henry

gregjen,

It would probably be possible to run a test case through the Banking Ombudsman, or challenge the absence of the written evaluation through the Trad Practices Act, under the Provision of Goods and Services section. I dunno- just a suggestion.

If you have a relationship with your Bank, you can just ask them what the valuation said. Mine tells me that the valuer has written things like “market continuing to rise” or any other comments. I’m really interestede in the $$$ val, rather than anything else.

kay henry

Informal pre-approval takes like a half-hour from your Bank, and you can work out yourself whether you can afford the place. If it’s a 70% LVR, then do you have a 30% deposit (plus legals), either in equity or cash? If you have an existing portfolio, just add up your values (based upon most recent valuations, NOT most recent sales, unless you want to get another reval), and work it out in your head. Of course, one’s head means nothing to a bank manager But it should take only 1 day to get proper pre-approval.

I never sign a contract until I have had all the checks done. I do receive offer and acceptance though, and discuss gazumping with the RE agent. Generally, when I make an offer, I let the agent know I am sincere. The agent and vendor usually prefer a sincere offer over one where buyers are signing multiple contracts. I build a relationship with the agent, and the verbal contract is enough.

The valuer will inspect the property after you’ve made the written application for finance, but before you actually get it (they’re not gonna give you finance if your place isn’t worth the loan). I also do any other checks before I sign the contract. Sure, it’s a bit of a delay for the vendor, but I don’t want to be rushed and have everything to do in 5 days of the cooling off period. Others will differ in their approach to this. My 5-day cooling off period (or 3 in some states) is, for me, a relaxing time that I just wait for it to be over, so I own the property.

I also make sure I don’t formally apply for a loan unless I feel 100% certain about the purchase. Each time you apply for a loan, it goes onto your credit record. You don’t want too many of these, as they can be questioned by the Bank, and cause problems with future loans.

kay henry

YC,

There are many towns you can still find cheap properties in. If you’ve been obsessed with the forum, you would probably have done lots of checks of the different forums and of the archives, where people “name names”. Just remember, Steve’s book is a few years old now, and the deals he was doing prior to the RE boom… well, you can add 50% (probably at minimum) onto the places that he bought. So the prices go higher, and the yields go lower – if you’re buying into those towns/regionals now.

To buy into CF+ now, you’re probably left mostly with small towns- often isolated, and mining places, or factory towns. Is that what you want your portfolio to be? As for me, I’m happier with lower yield, but other fundamentals- increasing population, lifestyle property, and city places. Yield is good, but so is tenancy. If you lose your tenant, and can’t get another one for a while, your yield will turn from 10.4% or whatever, to possibly 2% return. So you’ll be getting negligible return on the cheapest house in an isolated town.

There are many different ways of looking at investments- and it takes many hours, days and weeks to develop what feels comfortable to you. You can buy your first CF+ house or two, and then assess how it’s working, and see if you want to follow that formula, or look for something different.

kay henry

Well done Alister and Team (and Congratulations Steve!)

I have to say I find this Forum highly navigable and user-friendly.

Ya gonna put “award-winner” on the homepage of the Forum, Alister?

kay henry