Sell your IP’s at positive geared prices, guys :o) how much rent are they getting westan, Del? $100 a week? I’ll buy ’em up at 50k [biggrin]

Bill, some prices have fallen, I believe. But why panic? An investor buys at fallen prices, and sells when prices rise- there’s no genius in that, but it also means one should never panic. Buy well (cheap), and sell well (exxy). Really- how could anyone lose? Well, some people do… they buy exxy (top of the market panic buy) and sell cheap (bottom of the market panic sell). That’s pretty sad, but it’s just a misplaced view of the economics of RE.

Bill, I bought 3 places since august last year. One of them rose by 30% within 2 months (new bank val) and another, bought at Xmas rose 20% from a bank val done in may. The one I recently bought is, in my opinion, such good value, that I’ll just have to wait and see about CG for the future. But basically, with the purchase of those IP’s, I made the equivalent of my wages in a couple of months.

Even if the market crashes by 40%, are people going to panic and rush out and sell? Investors *won’t* because they’ll just see it as a part of the bigger cycle.

kay henry

Thanks guys. Yep- and 3 X 2.5 means an extra toilet- gotcha (Since when is a toilet an actual half a bathroom?)

kay henry

Wayne, what does 3X2 mean? I’ve seen 3X1 etc in different states. It’s not a term we use in nsw.

kay henry

wayne :o)

I don’t know if it’s a house or an apartment that you have… but you could probably save yourself that 2k if you made the Body Corporate do some stuff (if an apartment). BC’s can ensure cable TV satellites can be put in, water systems can be made, the outside of units can be painted, gardens planted in common areas etc. It may not be hugely relevant to getting a rent increase for an individual unit, but making the BC do stuff can also assist in making more CG for our IP. Some BC’s can be incredibly proactive (probably in blocks where there are a lot of owner-residents, and some can do nothing at all, and let the block fall into a screaming mess. The other thing, of course, if that BC’s don’t “keep up appearances” on common areas and the outside of the building, then we will not have properties that are so desirable to tenants- there always needs to be that point of differentiation.

kay henry

mondim.

IR’s rise and fall, and CG comes and goes- probably the only two “constants” in the RE game However… if you are heavily in debt, yeah, an IR rise is certainly going to impact upon your repayments. I personally don’t believe that IR rises should be borne purely by the tenant. Sometimes, we just need to cop it on the chin.

In terms of capital losses on the value of IP’s… an IR increase does not really equate with CL (capital loss), but I have read in a few articles that, in the event of a downturn, some of the properties you are referring to, will be more vulnerable to capital loss.

The extra expenses from IR rises should always have other streams of income to cover them- for example, something like a wage.

kay henry

Thanks Del :o) But now you have me in incessant questioning mode OK- question is… they say there is no CGT in NZ, but Jenman was saying the other night on TV that there is CGT for aussies- and if the money made to buy the IP originated in Australia, and not NZ. So for the IP you sold, you made about 23k. Did you have to pay CGT on that money @ 100% rate? (as per aussie rule of selling IP’s in less than a year), and were the exit costs great? Just wondering if you felt it worthwhile to sell the IP (you must have or you wouldn’t have done it [hair2] I’m just thinking that the CG was great (over 100%) but by selling, you would have lost some of that CG to all of the costs involved in selling.

kay henry

Del,

I have to say your strategy is working remarkably well! Are you buying in Australia still, Del? Any plans to dump the aussie market, or are you still finding suitable (obviously CF+) properties here?

kay henry

*sigh*

Jo, I spent much of my life in melbourne. My family lived variously in richmond, brunswick, elwood, glen iris, The Basin… and I have read about social problems in southbank in much of the Melbourne media.

Thwe question to george was to ask him, if he disagreed with the “slums of the future” comment, did he have any personal interest in the area. People “talk up” places that they have a personal/business interest in… I was wondering if he owned an IP perhaps in the area. Sometimes, I have chosen not to make comments about areas that I own in, because, unless I say I have an IP there, then my opinion is not as objective as it might be if I do not have a property there, but am speaking out of research I may have undertaken.

I thought my request for discolure wopuld have been fairly easily understood. Please Jo, don’t try to engage me in the kind of personalised arguments you have with others on here. I was asking george a question- my question to him was not hostile, so I’d ask you to take your derisive comments and argue with someone who cares.

kay henry

NTowler,

I think it’s a valid question. I would prefer to buy in areas that have had little to NO growth, than ones that have had CG or 100 in the last two years. Why would I buy in Ipswich, for example, that has had amazing growth, and pay $200k for a property I could have bought for $100k two years ealier? People want growth for the properties they already own… not necessarily to pay double for a place that has experienced past growth… anyway, past growth is no indicator of future growth. I quote to you a quote from an article on Neil Jenman’s site, for example.. This is an article by a NZ property analyst, whereby Kieran Trass says:

“The areas which will have a significant drop in values as a result of NZ’s property slump will be:

1) Small towns (where many Australians are buying! These Australians have never seen small town NZ in tough economic times…)”

http://jenman.com.au/NewsArticles1.php?id=95

As with all purchases, you want to buy at “good value”. It doesn’t mean veritable stealing from a vendor. It means finding locations that you might consider “under-valued”. Some people find these areas by checking boom suburbs, and then loooking at neighbouring suburbs. Sometimes, the neighbouring suburbs might be dodgy… and that’s why they haven’t achieved CG. Or maybe it’s just your own good luck! A lot of finding places that still represent good value for money is just sniffing around, and doing a lot of research.

I myself like “growth” properties- ie not pozz geared, but ones that have potential to achieve CG at some point… but I won’t pay top dollar (I can’t afford it anyhoo). I like to find properties that have had little CG in the past few years… have a decent rental yield *for me*- of 6%-9%, and that achieve CG *after* I buy them…

kay henry

Howard,

I know you are looking at buying an apartment… but if I had a spare 500k to splash around, I would buy a house in Camberwell or Glen Iris or thereabouts. You’d still be able to buy at the lower end of the market there, but it’s the eastern suburbs, and they will always do well in Melbourne.

I was in Melby for the weekend… the oversupply of apartments in southbank and docklands is nothing short of depressing. Huge apartment blocks with hundreds of units in each of them, no points of differentiation… all you have to do is have a couple of firesales in them, and your own property will be devalued based upon past sales.

Thinking about fitouts… well, what units don’t have euro stainless steel appliances these days… they all do. Some blocks now have furniture packages. There are some units in Hawthorn being advertised right now for $170k- 1-bedders, with a 6.5% rental guarantee (about $225 a week), with furniture packages too… I reckon you’d be better off buying 3 of those with your 500k, than buying one southbank. And really, who is gonna pay $500 a week for an apartment with no differentiation, when there are a million to choose from? Go to Domain.com.au and check out the rental section. You will find what the southbank apartments are *really* renting for… or how many of the same ones in the blocks are being rented.

That area is not looking good, from a driveby point of view. Also, there are lots of social problems (hoons) in the southbank area. Slums of the future is my call on them.

kay henry