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I replied to this with more detail, but it seems to have disappeared.
Maybe I was dreamin' ???
Well as far as I am concerned they do exist.
Its no myth, just rare and hard to come by.
Having said that, we specifically target such properties and so do my fellow investors, as part of a balanced portfolio, as well as to offset the 'supposed' high CG but negative geared properties in the portfolio.Of course they're not in city areas ( unless you are buying commercial with a 10% yield that is!)
Welcome to the sustainable and under supplied world of regional / mining WA and QLD.
Real example ( I have many btw)
Land price$120,000 purchased 2006
Build price $387,000 completed Feb 2007
Rent $1,500 pw four year leaseVal on completion $700,000 ( for the bank)
Market val $800,000 ( revalued last month to refinance)
Thats not atypical and we have been doing this since 2004 when we got started.
Strategy is to refinance on completion and reinvest the proceeds into more property.
Rent return STILL covers the total loan and property costs.
Now you have no money in the property and it still cashflows itself.
You get the immediate kick start CG at completion ( from $120,000 to as high as $300,000), so who really cares if you don't get ongoing CG ?
Having said that, the historical CG rates have been similar to 'low risk' city property.
Although, at these curent prices we are seeing affordability limits being stretched.Owner is a Sydney investor who lives off the rent and just keeps investing ( jobless by choice)
Is it sustainable?
As long as China doesn't fall over and we don't exhaust the resources ( theres 50 yrs + in the ground without trying to prove up more reserves) then this will go for 20 yrs or more.
Rents can HALVE and you're still doing OK.
Historically to date, rents have never halved.kp
Bugger!
Missed my chance last week during the land ballot in Karratha.Never mind……
It looks like some of the topics you are targetting are a bit sensationalistic, which is unfortunate.
Distressed sellers, negative equity, etc…
Is this what the viewing audience wants to see ?Its a pity that there isn’t a more educational property program on ‘how to’ build a property portfolio, start investing, secure your wealth future, etc.
Now that would be worth watching..
kp
Had the same woes with TCL split system in a rental property.
Bought off Retravision, but they just refer you to the TCL helpline.
Service agent is based in Melbourne, air cond is in WA, and same thing….they refer it to a local service agent who has not called yet.5 yr warranty, but it might expire before they come out !
kp
I can’t comment on whether you should sell and cut your losses…but I swear by mining towns.
Have been investing in Karratha WA as well as Mt Isa Qld for the last couple of yrs now.
Both areas are going through massive expansion and both are major regional centres. Both have extensive govt. services and infrastructure and service the outluing area.
Both are still booming while city centres have stalled.
I target new 4 bed 2 bath homes and tend to buy vacant land and add the house.
There is huge demand for new housing in these areas as most of the existing stock is very old and dated.
The new stuff commands a premium in price as well as rent.Karratha is still showing staggering returns with property prices going through $700k for new houses with market rents rangeing from $1000 pw to $1500pw. Long leases with company tenants.
Mt Isa is more moderate with property prices for new houses ( there currently are none) rangeing from $455k to $500k
I am currently building 16x in Mt Isa with some presold off the plan.
3x to build in Karratha with plans to do up to 20 for the year.
And btw.. no, I’m not some huge developer, just a small time investor with the odd partner and jv investor who are keen to have a go.
kp
Rents projected by local agents are in the region of $600 pw to $700 pw.Loved the story!!
He was an economist not a real estate guy from memory.
They’re ‘smarter’ btw ( always predict thigs correctly right?)Perth is special coz its not Sydney.
The economis of the two states are competely different ( read basket case running annual defecits vs strong export driven running surpluses)His summation that Sydney went into a ‘bust’ end of 2003 therefore Perth will do the same is so basically flawed its has to be taken as a joke.
Granted, that if iron ore prices go off the boil in 2008/2009 things will slow down may be accurate, but to completely overlooks the oil/gas situation, which is still ramping up.The name of the game going into the future is ‘energy’ and not commodities.
Energy demand will continue to grow….The dill need to get out of his office and out of Sydney more…have a look on the ground in the real world…
Anyway, the more scare mongering the better, scares the market into submission, and makes it easier to secure those good property deals.
The feedback I am getting from Perth is that some of the asking prices are more reasonable and small development projects are starting to look viable again based on te numbers.
kp
Hi Gary,
I can vouch for the help and professionalism of APerry who has arranged a lot of finance for us this year.
He is based in Melbourne as posts regularly on this forum.What I appreciated most, when one application turned pear shaped was his calm manner and persistence in sourcing finance from an alternate lender which was on better terms and for a greater amount.
Worth a call and having a chat.
kp
Lease To Own, where you buy a property and lease it to a tenant with an option to buy. You structure the repayments so that the tenant buyer pays rent as well as an ongoing option fee towards the purchase of the property. This totals to a greater amount than the repayments you pay on the underline mortgage hence the cashflow is positive. If the tenenat exercises the option to buy the property, you credit the option payments towards the purchase price ( but not the rent) and if the option lapses then you keep the option fee.
Wrapping is where you sell a property under vendor finance terms by putting in place a wrap around mortgage over the underlining mortgage. The repayments you collect from the buyer (or wrap buyer or wrapee) are greater than the repayments you are making to the original lender ( eg,, bank ) hence pos cashflow once again.kp
If its a villa in a group of 7 then it sound like its a strata titled property.
If this is the case there should be a body corporate that is responsible for the building and has insurance in place to cover it.Check with the body corp first, or else as Terry has suggested, you need to contact the builder.
Sounds prety serious though.
kp
Hey speight ( george!!)
My understanding is that this proposed subdivision is just behind the town as was part of the Ross Estate.
I know one of the developers in Brisbane.
Try this link:
http://www.fijigatedhavens.com
a bit clunky as a site but has a bit of info on it.
kp
It appears that you are taking a passive role in the whole process.
Its important for you to get active and be proactive. After all, its your property.. You need to take charge of whats going on.If you signed a sales agreement with the agent/s it will have a date or timeframe for the listing.
If its open ended, then it will also have a clause detailing how you cancel the listing. It may say that you have to put it in writing to terminate the agreement.
If thats the case, get off your butt and put it in writing and get things moving…a whole year and no result and you’ve also done nothing ????? unbelievable !!You need to make some decisions if you want some action.
Start with the agent or agents. You need to ‘interview’ them. A good agent will be happy to substantiate their performance with results and sales evidence. A poor one will always be defensive if ‘interviewed’ or questioned.
Not saying you need to be aggressive or rude. It can all be done politely, but you have to take charge of the process.As mentioned earlier, there must be a reason its not selling. FInd out that reason. Ask the agent questions. Their reply will be in the form of ‘objections’. Work out if these are genuine or just excuses.
If the agent has been active, then they will also have some feedback from any potential buyers. The reason none of them has bought it is because they had ‘objections’. You need to find out what these are, overcome them, and then it will sell.
So first, start with the listing with the agents, and get that cleaned up. get rid of all the dead wood, and only work with the best one.
Get it appraised or valued and make sure its on the market at a realistic price.
Buyers are negotiable around price or terms but not usually both. So as an alternative, you can consider offering some terms to make it easier for a buyer to sign on the dotted line.Anyway, the location sounds OK. So why not have a bit of practice here??
Provide some details of the property including price, land area, zoning, location, etc. and try convince me why I should buy it.Paint a picture of its virtues, and include any bad points as well.
I’m up that way around the 23 Nov. you never know what can come of it.
kp
Hey Luke,
As a local, what can you tell me about Nausori, and the prospect for rentals for expats such as embassey staff, etc. ?I understad there is a new bridge and roadworks in the area to improve access to the airport.
Interested to get an insiders perspective
Thanks
kpOriginally posted by Batch:Come on in the water’s fine….
Batch
So where the bl00dy hell are you ???
Sorry, couldn’t resist.
I also have a keen interest in Fiji as I am doing some due dill on some land in Nausori, near the airport, for a gated expat community.
Rents are supposedly pretty good at around $3000 to $5000 $F per month.Either way, it makes a great excuse to go over for a look.
kp
I think you would be battling to find cashflow pos properties in urban areas unless you target commercial properties, or really run down resi places that you can buy at close to land value then add value by doing a quick reno.
I specifically target new property in regional areas that are growing, so by default this would be mining areas.
Target the ones which have large global miners in operation, who are spending 100s’ of millions to incease production and have mine and resource lives of 20+ yrs and as far as I am concerned, you can’t go wrong.The places to look ar WA, NT and QLD.
By dealing in only new property, you get maximum depreciation benefits, and all your maintenance worries are non existent.kp
More interesting and informed stuff from both gmh and KB..
Thanks you guys.
I think its already peaked and taking a breather. What happens next is the interesting thing.
Does it stall and correct, or continue up for a bit longer, or just level off and stay sustained.I think it will level off with moderate ( below 5%) growth for a couple more yrs.
I’m reading China Inc. ( haven’t finished it yet)
With regard to labour prices doubling, they theory is that the market will seek out a cheaper labour market once China gets too expensive for labour.
Could be S Africa, or S America, or Bangladesh, or even India.The same way manufacuring went from japanto China, it will eventually move elsewhere and China will just become consumers like the rest of us.
But its going to take a long time for this to filter through. In the meantime, the good times will prevail.
kp
There is an alternative to the brick veneer or even the blueboard with render.
There is a product called a smart brick that is manufacture by Aus Brick .
It is a half brick with a slot along the bottom edge.
It gets fitted to a steel rail that you attach to the timber frame ( after removing the boards) and then you fill the gaps in between with a mastic gun.
FIiish is like a full brick, no bricklayer skills required, ( the bricks slot into the rail) ie DIY. Maybe worth looking into?kp
Awesome result for Singleton !!
I was banking on $495k
I have a valuer ( HTW) doing mine this week, hope he doesn’t knock it down too low because they are not quite completed…
CURSE those slow builders !!!!!kp
Must depend on what circles you mix in then zen,
I know plenty of people who are still buying, but they are not financially challenged by the current interest rate rises.
A far as I am concerned, money is still cheap ( I recall as gmh pointed out, when rates were at 17% and beyond) so I am happy to keep borrowing at current rates.
This continues to be a no brainer market as far as I am concerned, where if you can get hold of t vacant blocks and organise a house to be built, and the as completed market value shows a spread of anything from $70k to $150k, then its pretty simple.
When I can’t do this anymore, then its time to look at other avenues.
kpUmmmm….. just north of Brisbane ??? anywhere along the Sunshine Coast ?
And how much is the asking price.Also, have you had ANY response of feedback from both your own adverts as well as from the listing agents?
ie… feedback is usually in the form of objections. If you can over come these objections then there is no reason why it doesn’t sell.
If you can get to the heart of the reason why it is not selling, and overcome that, then it WILL sell…
A few more clues might help !
kp
Hi marisa,
Have you considered doing it ‘cost plus’ ??I have heard of a few builders in Perth who operate exclusively this way.
Pretty much they seem to be cost plus 15% but that would depend on what you negotiate.We were offered this on some Qld development, and the builder indicated that he felt we would save 15% doing it this way compared to a fixed price contract, ( but the margin he was offering was a bit lower than 15% )
Alternatively, if you visit the Builders Registration Board website for WA, I think they have some info for owner builders.
Hardest thing would be organising your trades in Perth, but if you already have a list of tradies then you’ll probably be OK.
I would imagine you would save at least 20% going owner build.
kp
