Forum Replies Created
Hi Linda, thanks for clarifying that issue for us. I have never heard about the .25% thing. It is very hard to ask the REA the right questions when you don’t know what to ask. Many would not bring this clause to light in the hope that a better offer comes past, and it must always be remembered that the agent works for the seller. You will be a stayer in the industry by the sound of it, good luck in selling many more properties.[biggrin]
kjs
GEEZ!! That is a much better result. Handy to know. Thanks for coming back and updating.[thumbsup2]
kjs
So while the rent in Darwin sounds good against your loan repayments, it is a poor % against the actual current value. Would you expect further capital growth? Can you get something in Brisbane that you could maybe tweak with a reno for better return? Darwin may have just gone up with the rest of the country, there is a lot of talk about Brisbane’s growth, but will it happen? If you sell Darwin and have a capital gain, then your income goes up and it may look favourable with the banks? (don’t know if this is true and willing to stand corrected if not)
What is your feeling about Darwin dropping? Do you feel the sources that say Brisbane will rise are reliable? Do you want to lock in your profit and have the challenge of the next IP? Do you check on the Darwin property now, but will not be able to later?
So many questions only you can decide. Hindsight is always wonderful and is hard to judge with foresight.
Good luck!
kjs
I remember leaving a small deposit as a good faith type thing. Can’t remember, but it was supposed to show you were being serious. That was in 1988 on a house in Wodonga Vic, and also on a block of land in 1998 in Wagga. The house I went ahead with, but the block of land I didn’t, and was worried I may have lost my deposit, but they paid it back real quick as I had signed nothing. It was always part of the total price, not an extra.
In hindsight I must have had sucker on the forehead. It does mean nothing to the real estate agent, as they would sell their grandmother some of them! But on the side of the real estate, it had us worried that if we pulled out we would lose the money. It may be a little real estate agent trick to make you feel like you will have broken a promise, but in fact it has no legal standing at all.
I could be wrong, but if I was ever asked again, I would ask them to show me in writing the legislation that required this, and a guarantee that the good faith meant they would keep to the deal too. They would back peddle real fast I am guessing.
Good on you for asking this question I have learnt a lot fromt the other posts too.[lmao]
kjs
Don’t forget that real estate agents like to “condition” people. If you are looking for 8%, and he conditions you to expect 4%, and then can present a nice little 5%, you will feel warm and fuzzy and stop looking for 8%.
I don’t know much about yeilds in different areas, and the other people answering here are most likely in the ballpark, but don’t believe a person that is trying to sell you something. They may be true and honest, but do more research. They may also be quoting averages, but you may look harder and find a better than average, like mentioned above with doing a reno etc.
With current rental vacancies so low the price of rents is being pushed up, but people only earn so much money, so they can only push up so far in a time period.
Good luck – you are researching, so you will learn, and that is good.
kjs
Beware of regional cities/towns with dependance on one or two industries, unless those industries are stable or have good future prospects. While WA is booming, it may not if mining has a downturn??? (don’t know much about WA). Another example would be where there are military bases, and Govt policy can change, and there is downsizing. There could be some good bargains out there now with the drought and lack of water in some places, but who has the crystal ball to say things will pick up?
Albury / Wodonga has had big capital growth and low vacancies, but how many people working on the bypass will be selling houses or vacating higher rent properties? They had an article about how the pokies turnover had increased last year by 20 something %, and they attributed a lot of that to the Abigroup workers. Maybe, but in times of trouble people gamble in the desperate hope they will change their luck. They usually do, it gets worse unfortunately. So the drought is a big factor in regional Australia, as well as the cities with current water crisises.
I am also of the belief that a lot can be learnt from studying your local area, but has it got the best returns or capital growth? You do need to look further just to be sure. Don’t study for so long you never take action though!!![upsidedown]
Best wishes to you![biggrin]
kjs
Sorry if I seemed a bit blunt [blink]. I do worry that some of us feel like we are failing when really we just don’t have the resources at the given time to do what these huge success stories have done. We are doing the best we can, but while doing something is better than doing nothing, sometimes that something is cashing up or consolidating. You have a limited time frame due to your move to Italy, and I would hate to see you postpone that due to needing to wait for the timing of whatever you have done to be right. You are motivated, and have gone back to work, and you are looking and asking, so they are all good things. Best of luck.
kjs
The richard taylor here has a lot more than 3 posts. Doesn’t sound right to me either.[grrr]
kjs
The thing to remember about the average teacher is that they have never left school. School to university (another word for partying) and then back to school. Many never worked with the public, have ridiculously long holidays (and tell you how they have to work all holidays making up plans for next term/year -right!), they work from about 9 – 3.30, and get “free periods”. Then these people work their way up the ladder and run the system. How would they know what your kid needs to learn to run a business or invest in property?
Disclaimer: there is probably some not in this category, but I did say average!
Good on you for taking a hand in teaching your kids some life skills, not just university entrance subjects.
kjs
In my very limited experience, a builder will rarely give you a good price before he has completed. By coming to him before he is completed you look real keen. That converts into top price. It might be worth talking to him but showing little interest, and then see if he is actually selling. Once the place goes on the market then you would be maybe best served to wait and see if the price is reduced if it doesn’t sell. In this current market, it may not sell for a while. You may get the unit a lot cheaper by waiting 6 months or more. It may be sold by then, but are you really after paying full top price in the current market?
I love that saying and fully agree, the deal of the century does come by every day. Don’t feel like you are missing out. If you do miss out, then feel like you are learning. The next deal will be even better, and you will be glad you waited.
kjs
Yikes! I will be betting that they want some cash up front for fees, insurance, valuations, something, anything. Kiss those fees goodbye! They will most definately want to tickle your bank account as much as possible.
The amazing thing is that these schemes keep going around because they keep finding suckers.
kjs
NO – in my opinion. Relatives and friends are a bad idea when mixed with investment and/or finance. This sounds like a really good way to completely ruin the relationship with your parents down the track. If you need to sell the house, and/or can’t buy another place and you get stuck there, oh dear. A married couple need their space. They will probably pay ok, but what if they don’t? They are having financial troubles already? As a married couple money hassles can be the biggest cause of divorce, and having family involved can make it worse. Also you can’t claim negative gearing if you live in the property? Be very careful about the setup if you do go ahead, and get proper financial advice from an accountant before you start. If you are feeling sorry for your parents, how are you going to increase the rent on them?
Oh no, I just sit here shaking my head on this plan, I am sorry, but it is very dangerous. Good luck with your final decision.
kjs
I like terryw’s explanation. It was good and clear.
The thing with paying off principal is that yes, you can borrow the equity, but either you need to get a second mortgage on the place, or have a new bigger loan. It all costs fees and mixes up the money. If you take the deposit for the new property from the offset account you may even have over 20% and save on mortgage insurance, which can cost a fair bit. Don’t forget mortgage insurance is not for you, you never get a cent, only the banks if you default.
The IO & offset seems so simply the best and most flexible. Sure you eventually have to pay back some principle, but IO allows your money to work better. If you are finding this principle difficult then you just need to take a deep breath, walk away, and come back and read it all again. Or read lots more books, or go to your accountant. Beware of the mortgage broker giving you financial advice, do they have a financial advisor’s certificate and are fully registered, or are you getting the best loan for them to get the most commissions and trailer fees. Why not ask the kid next door. If you want free advice, be prepared that it may be worthless (or cost you money in the long run). Toss a coin, really. If you want P&I then just do it for yourself.
Sorry, but sometimes people ask and then don’t want to hear any other answer but what they wanted to hear.
kjs
Hi, just read your stuff for the first time. Good on you for going back to work.
In a flat market, and 3 years is a short time, you may find the costs of buying and selling may be more than any capital growth. The market is in a flat part of the cycle. You need also to look at what you have to put in to make up loan payment, plus are you going to have the rental through an agency, and the costs of rates are usually around $15 -20 a week, plus insurance, these are a lot of costs. I agree you need to do more number crunching with a proper accountant. The cost may save you heaps in the long run.
There are a few stories about broke people that then turn around and make millions. You will normally find they leave out quite a few of the facts. They are also usually trying to sell you a book or seminar. Would they need that liitle pitiful income if they were really worth millions?
The bank will not lend much to the below average wage earner, as you found when you were not working. There have been some great property stories out there when there was a huge boom, but I previously owned a house for 1989 to 1997, and I can guarantee you I made not one cent capital gain, and I really kept the place nice. Since I sold it (divorce) the property has more than doubled. That is the market, and unless you are sure that your property will grow, why would it be for sale when others are worth more? Because it is smaller, block is smaller, or a bad location. Have a real good look around the area. I know you are frustrated and keen, but please have a really good look at all of the figures.
Best of luck to you, and good luck in you move to Italy.
kjs
Wow, that is one tiny place, what a challenge. Very neat and tidy, but there was not much you could do to rearrange the kitchen. It is nice to get a job completed, and I hope it has added plenty of value. Thanks for sharing.
kjs
Hi Bessie, HOW RUDE! Might I suggest that you ask the agent straight out if he did his homework properly as you find it very rude for him to say the market is now 75k lower? Did he really have no knowledge of the market when you signed the line? Don’t be afraid to be assertive, these people thrive on bullying. Maybe you should ring the principle of the agency? We once had a female agent saying that she has an offer from and asian and she hated dealing with asians. (how rude is that to say? sooo rude!) I could then hear here screeching on the phone while sitting 6 feet away from my husband, insisting we accept the offer made by the other person she did not like dealing with. We pulled that house off the market straight away. We had the same thing as the other poster, where our original agent went on stress leave! No wonder working in an office with screechers!
It is scary dealing with the pressure from these people, and might I also say we have since had another really nice agent sell the house and he was a real gentleman (only young, so young can be talented also). We spotted him when looking at open houses to check out prices in our area before putting the place back on the market. He was so polite to every person, even the ones with boring stories. But at the same time he was confident with all types.
Watch out for the agent at an open house that ignores the people that they deem “not the wealthy looking”. We now take our old car when house hunting. If you have never tried it, go out 2 weekends in a row, once with the good clothes and car, and once in daggy clothes and old car, even if you have to borrow the old car from a friend or relative. You will be surprised at the difference in the way agents treat you. We go no phone calls in the week after going out in the old car! 3 calls during the previous week.
Bessie, you are their boss. You have employed them to sell your house and are paying excessively good money for them to have that privilege! How they treat you before you sign and how they do after you sign is very different, and that is why we like to vet them at open houses when they show how they will treat your buyers! A house can sell itself to a certain extent, but an agent can put off a potential buyer too.
Best of luck with your selling! Hope the price ends up more like you are expecting.[thumbsupanim]
kjs
Shares – mmmmm. I must say that trying to pick growth stocks is a terrible gamble. A small window in my experience – 3 “growth” stocks that were showing a 98% loss in my commsec position statement a few weeks ago. Scary. I would challenge even the worst Sydney property story to show a 98% loss! I am talking about one stock being 10% owned by Gerry Harvey. Tell me he is not a person that would make you think that a company had a good prospect? One of the other stocks is 9.4% owned by Linfox share investment pl I went for growth stocks after seeing the blue chip performance where aristocrat went from $6 to less than $1. It is now over $15.
You can borrow against your good stocks to buy speculative, and you can have some luck, but overall, I think stocks are scary. My opinion only, and I acknowledge that while also acknowledging the stories of others.[worried]
kjs
Auctions! No one is mentioning how emotionally ready a seller is to sell on auction day. I have been a seller and if my husband had not said no, I would have agreed to a price about 25% lower than market. Instead we sat back for a bit (the house I wanted to move to sold a week before auction anyhow), and within a few months we listed with another agent and got full price.
Also, the winning bidder at an auction is just one bid higher than the second highest bidder. This may seem obvious, but sometimes the second bidder bids much less than you would have actually offered straight up. It is a real case for not selling by auction (some of you may have read Jenman too). Like it or not, unless you have two very emotional bidders, auctions often get lower prices. As an investor, you need to be unemotional, and you can just drop off a bidding war with a keen buyer, as ther will be another 100 opportunities next week!
Last tip – the bargain of the decade comes around every week. We often think we are going to be so sorry if we miss this great bargain, but time soon tells you there are plenty more coming – you do need to spend the research time as many before me have said.
kjs
If your property is returning 4.5%, how does that compare to your current costs? If it already has had capital growth then your actual current costs may be less (any depreciation? which can help actual cash flow but is not a physical cost), and you may be positive cash flow even though the return doesn’t make the magical 10% we all dream of.
The costs of buying and selling need to be taken into account, and also why do you think it will not grow? There is a lot of media doom and gloom, but I still hear of properties growing in price in many areas. Sure there are some sad drops on originally overpriced stock, but unlike shares, properties may go stagnant, but on the large percentage they keep going up steadily, as long as you don’t have a desperation sale.
Also, is the property managed by an agent, and have they reviewed rental? Media reports say rents are going up, so your return may be on the up next time the lease is due for renewal. You may need to look at value adding to the property to get better rent if it becomes vacant?
Don’t think sell too quickly.
kjs
Looks like not a bad property, but advertised very badly. Is it 4 bedrooms total? 2 up and 2 down?or 4 up and 2 down? 1 bathroom? if the self contained flat has its own bathroom it must be 2 bathroom? As I said, very badly advertised. Obviously a very busy agent that leaves the listing to the trainee in the office? I would be very upset if this was my property.[glum]
kjs
kjs
