Hi BM,

Try not to get too dejected. We all make mistakes and the most important thing is that we learn from them. Having a strategy in place and working to that certainly helps matters instead of going in almost blindly. In saying that though, looks like both of your current IP’s were PPOR’s at one stage so that does make things a little different.

It looks like you bought the Edge Hill property right at the peak close to ’07. The GFC hit Cairns hard and only in the past 12 months or so have prices started to recover from the very low base of ~2009. Infact, according to Residex the growth in the last 12 months for Edge Hill has been 14%. If I can figure out how to attach a photo I’ll attach a snapshot of the past 10 years.

Cairns council seemed to have recognised the error in their ways with having an economy almost solely dependent on tourism and are now starting to diversify into other segments. There is a lot hinging on Aquis but I don’t think it is the be all and end all for Cairns. Particularly for a property that isn’t located on the northern beaches. I said in another thread re the Aquis announcement “I was talking to a client today before I heard the news that Aquis has been put on the back burner and my comments were if Aquis goes ahead there will be a mini boom and if it doesn’t then there will be a mini glut as I’ve heard quite a bit of anecdotal evidence that people wanting to sell having been holding off until there’s an announcement thinking it will go ahead and taking advantage of the renewed interest…Now that it’s been put on hold I think there may be a very slight softening in the market with the announcement but I don’t think it will be all that big as there are other fundamentals there which is making Cairns a market in recovery. Medium term I think the prices will still go up, perhaps just not as quickly if Aquis was a definite goer.” I think this is more applicable for the Northern Beaches though.

The Cairns market seems to have treated you badly but I think there are now and will be some good fundamentals in place to make it half decent market to play in. In saying that though, are there better markets than Cairns? Yes. Are there worse markets than Cairns? Yes. If you do sell will there then be a realised loss? Or is capital being tied up which could be put to better use at the moment ie is there an opportunity cost to holding the Cairns property? Or can you ride out the storm a little longer to see what the next 12 months brings? Past performance isn’t always indicative of future.

As far as the Mt Gravatt property goes, looks like there’s some good fundamentals there. It’s hard to say whether a, b, or c would be better as have a bit of a narrow view of your current situation. If you don’t move back in to the property can you / would you want to rent or buy another place? Does it really need the major renovations or are they more of a ‘want’ item? If you do the renos would you be over capitalising? If you subdivide do you have the capital to do it? What are your long term goals and how do these 2 current properties fit into it?

Hopefully the above has given you some food for thought.

I can’t take credit for this link as it was posted on another forum but I found it good as it gives you a holistic view on how the economy works and then as a result how money and finance works.

http://www.economicprinciples.org/

Good to have an understanding from all levels.

Hi Nanny,

Previously all of Cairns’ eggs were in the tourism basket but the council has come to recognise this and the economy is slowly being diversified which will help stabilise the prices. The GFC also hit the area hard and now prices are just starting to recover where they’re coming off a very low base but certain suburbs are showing good performance where growth over the past 12 months have been in the double digits.

Also with Aquis being put on the back burner for the time being I think there will be a slight flood of new stock on the market on the Northern Beaches in the new year which were the people hedging the bets and waiting till what they were hoping was going to be a positive announcement.

You’ll find though with the rental return some of that extra cash is taken up by things that are of a higher cost than what it would be down south with insurance as an example. In saying that though, there are some good buys here at the moment with decent returns even with the higher costs.

Brisbane is more of a stable market with an already diversified economy which, as a whole, is sitting a bit further ahead on the ‘property clock’ than what Cairns is. There’s a lot more markets within Brisbane and it would depend on your entry point $, strategy, risk profile and long term goals as to what would be more suitable.

Sorry, I was being lazy when I was typing – ‘LL Insurance’ is Landlord Insurance so that covers the rental aspect such as rent default and any financial loss connected with it being a rental property. Some cover ‘contents’ but that is generally carpet, blinds, fittings and fixtures, that kind of thing and not the tenant’s property such as their TV or fridge.

Building is for the actual structure so should the place burn down (depending on how the fire started….) the building policy would cover that.

EBM are specialist insurers for landlords which a lot of people I know go with.

As boring as it sounds – read the PDS of the different insurance companies and compare. Know what you are and are not covered for.

Some points to consider:
– Accidental vs malicious damage.
– Loss of rent – how many weeks will be covered and how long till payment kicks in?
– Excess for multiple claims – one excess or excess for each claim?
– Cover for flooding – needed or not needed and what type of flooding is covered. If not needed are you paying extra to get the flooding cover?
– Contents – what is including as contents with your building or LL insurance policy?
– Self managing? – Make sure insurance policy still covers you.
– Fixed term vs month by month lease – understand how the insurer views these
– What expenses are covered should you go to tribunal

These are the points that spring to mind at the moment. I’m sure there are more though but should provide a good starting point.

There are a few variables in this – ie if you already bank with a bank you have a better chance of getting approved for more than if you are a new to bank customer, what loan term you want, sometimes longer isn’t always better, your ability to repay so if you have savings built up already etc

The main issue I see is the purpose. There are a few lenders out there who lend for ‘family emergency’ but as a general rule nab is not one of them. They don’t like to lend funds if there is no direct (usually tangible) benefit to yourself.

What happens if Mantra don’t take up the 5 year options?

Hi Wayne, yes, it was based on you having 2 dependents. Maintenance was not factored in as that is an unknown at the moment as custody of the children has not been arranged. But, in any eventuality your children will always remain as dependents.

If I can second any of the above comments it’s to keep your repayment history clean. Some may suggest during a divorce that you should stop paying your commitments. If you want to give yourself the best chance possible at a loan, keep paying everything on time. Also, get in contact with one of the brokers and have an in depth discussion as it’s very difficult to say ‘yes’ or ‘no’ with the limited information given as there’s a lot of variables that come in to play.

I’ve used this website with varying degrees of success –> http://www.propertykeyword.com/aus.html

“PropertyKeyword is a search engine for Australian real estate, allowing you to search for specific property types or features across the biggest Australian real estate sites”

Hi Phil,

If something appears too good to be true it usually is.

You can get some CF+ properties in that price bracket but that would usually restrict you to regional towns which can have their own issues (but aren’t always a bad investment) or studio/student apartments the size of a shoe box which is a can of worms in itself.

What are the factors making you look in that price range?