Forum Replies Created
The media talks doom and gloom, and sure there's an impact, though I'm of the opinion it's being overhyped. As for "Property values plummet" (Front page of ninemsn.com.au) all I can say is the relative overall growth of my property portfolio has increased 13% in the last 12 months. I've also noticed less listed properties in my area and increasingly higher asking prices (I keep track of them month to month).
Personally I believe the top end of town will and has dropped back, the medium end of the market is quite mixed depending on location, and the lower end properties are on the up.
As digger said – bad news sells newspapers. And at last glance at the price of media shares, they need to do something to increase their battered share prices. I guess they're hoping that by running shock articles they'll sell more papers and increase their revenue.
Its time to stop talking things down and try and be possitive, because at the end of the day it's you and me that make up the local economy. If businesses and individuals reduce spending in case of recession, we'll end up in one whether we were going to or not.
Hi Dank.
What Steve is saying is by purchasing in a new estate you are buying one of many new houses that are all in very close proximity to one another. This leads to a large supply, which means you need even greater demand in order for values to go up. If the demand doesn't go up and buyers don't snap up the other blocks of land/packages, the developer will drop the price to sell them. They have the benefit of being able to reduce the price and sacrifice some profit to move the house/land. If the developer drops the price in the estate by say $30K, why would someone pay $30K more for one that has been lived in. You therefore are at the mercy of the developer in them dictating the market and the value of your property.
I'm with Steve in his suggestion you buy an established property that needs work. Buy it cheap. Do it up yourself or over time. In doing so you build equity and the immediate market isn't dictated by 1 or a few sellers/developers. It would take a lot of individuals in the area to want to sell, and no/less buyers before your property heads backwards in value.
In my opinion, the best market at the moment is in established suburbs that appeal to first home buyers, near to infrastructure, transport and entertainment. Buying an ugly duckling at the bottom end of the suburbs price bracket. But avoid those that are cheap because the house is about to fall over and has a train line running through the backyard or is on a main road. You want cheap because it's not aesthetically pleasing, but is in a good location. Once you've added some value for less than it actually costs and built some equity you can either sell to get your profit or look at an investment property to do the same thing again.
Hi Guys. You should read 0 to 260 Properties in 7 Years, which follows on from what you're reading now.
If good cash flow properties were easy to find everyone would have them. I'm still only a beginner but it seems to work that CF+ deals are generally in places where people don't want to buy and live long term themselves, ie smaller regional towns OR you have to do a bit of work and think outside the square to make it CF+ in or near to major cities or infrastructure.
We only have our PPOR and 2 IPs but working on more; but our strategy is –
1) Buy within 20 km of CBD close to transport and businesses that has good a strong rental return, that is generally a middle class suburb.
2) Buy well under the median price, something thats structurally sound but looking ugly and unloved (preferrably a functional and sound kitchen and bathroom) and buy cheap. Something that allows for an extra room to be added is ideal and more easily made cf+.
3) Do a basic reno to make it look less ugly and unloved, doing most things yourself where possible: Repaint the house with modern but unobtrusive colours. Bathroom – Tile paint, new towel rails, taps and shower head, dual flush loo. Kitchen – New benchtops and cupboard doors, tile paint any tiled splashbacks. Converting a double garage to a single with the other becoming a room is great, but is hard to do well. A 4 bedroom will rent for more than a 3 bedroom. Then a good tidy of the yard and lay down mulch in the gardens.We've been able to get 2 properties slightly CF+ with this. The beauty is we're seeing good capital growth as well. Most CF+ deals, particularly in the regional towns, don't see much growth. We're only young and working full time, so the long term plan is to build a low/no cost portfolio, then draw off the equity to buy more and move to bigger projects. Eventually we'll do something with property full time.
All the best.
Hi Andy2009,
I'll answer the questions I can and try and point you in a good direction for those I can't. It sounds to me like you need to talk to a few professionals face-to-face who can get to know your situation and plans.
a) I find the best place for trend and property data is http://www.rpdata.com.au and the free suburb profile. It will give historical median prices, population data etc. I also subscribe to Australian Property Investor which regularly lists median prices, rental returns etc. Something you need to consider is that there are hundreds of different property markets. You can have one suburb doing well and another thats 15km away and doing badly. So there isn't a property chart as such that will tell you when to go out and buy or where to buy.
b) I'd try and find a good mortgage broker to talk to you about various loan options, a good accountant, and a financial advisor (who isn't trying to sell you a fund of some sort).
c)I'm no accountant or financial advisor, though generally if it's an investment you want to avoid putting in any of your own money if possible. I would capitalise the LMI rather than pay for it up front (add it to the total loan).
I always use Action Property Inspections on the southside, but I'm sure they'd do the north side as well. http://www.actioninspections.com.au/index.html (Andrew Mackintosh) He teams up with Brygen Pest Inspections and can arrange to do both at the same time. They aren't the cheapest but are extremely thorough and provide a detailed written report with photos and will go over their findings with you at the end of the inspection. I always attend building and pest inspections and make notes of questions I want to ask. He can also give you estimates on costs for fixing up the issues and an overall "opinion".
Personally I wouldn't use anyone else.
You really should talk to an independent financial advisor and a good accountant.
Something you need to consider is the waiver of Capital Gains Tax due to it being an inheritance. My understanding is you have to sell it within a 2 year window to get the CGT waiver. CGT is a lot of cream you'd have to give away to the tax man which could be used to finance other properties; or pay off your own home then borrow back against the equity as mentioned above.
crashy wrote:if you were so smart and had such prophetic powers you would have sold your properties at the top, instead of holding them to this day watching them fall.Crashy I think the issue is that hbbehrendorff has never owned any property. He spends 10 hours a day reading the media and has no time for fickle things such as going out and finding profitable property opportunities.
hbbehrendorff your points and sentiment is exactly the same as the rest of the "Doom and Gloomers" as you put them. Your points aren't relevant. The media has clearly had an impact.
Firstly. Australia's property market is not in the USA. The US issue was a bomb waiting to go off. 1. a massive oversupply of houses and subsequent over inflated prices, 2. people with no jobs or assets being leant large sums of money for houses that they could never hope to pay back. 3. very low introductory interest rates that spiked after several years which was when the mess started to unravel.
Secondly, there is a shortage of new property being built in Australia. There was a gap of 40,000 properties built in the last year compared to what was required to account for the growth in population. The gap has and will continue to get bigger, as property development declined due to high interest rates and costs. Even if developers begin to build now, we won't see any impact for at least 12 months as it takes that long to build.
LA Aussie makes some good points. Its those people who bought McMansions with their booming Aussie economy pay, that will feel the largest impact. Those who invest in affordable property close to infrastructure, transport and work hubs will weather the storm the best. At the end of the day, people have to live somewhere. They might not own or be repaying their home loan, but they'll be renting and paying for someone elses. Given we already have historically low vacancy rates, it's only going to drive rents higher and bring the investors back to property as the returns improve and keep property prices from plumetting.
Your original post was long ago, but thought I'd reply anyway.
The answer is yes. You are appealing to two totally different markets. The home buyer and the renter both have different requirements and expectations, though they're similar if you're targeting the same category or market. As with any business you need to identify where you're money will come from and how you can get the maximum money back from what you put in. You really need to decide what you're planning on doing first, before you even purchase.
If your goal is to have a high profile rental property for the ex-pat or interstate professional, you do one thing (best of everything), if it's to rent to a small family, you do something else (nice yard, clean and functional interrior, close to schools), or if it's for the young professional it's different again (low maintenance, high quality finishings, close to restaurants etc) or for students you need a completely different strategy (tidy, budget fittings, budget rent, close to uni's and tafe and near to transport).
As for selling, it's another ball game again. You have retirees, empty nesters, families, young families, first home buyers, and other investors.
We have quite a lot of pebblecrete around our PPOR. It does come off quite easily, though would be about 22 years old or so. If yours is newer it may be better stuck down. We plan to have it either sand or water blasted using a petrol driven gurney (gets better pressure than your average electric one), then tiled over (with outdoor tiles).
I tend to agree re the stenciling that it will date, however a plain natural colour/stain for the drive might be a better way to go than getting a stenciled pattern.
Thanks Richard. I was hoping to find someone nearer to Brisbane as we work full time and would find it difficult getting to the Gold Coast during the week.
A couple of other questions – In order to get the equity out of the existing properties would you have to refinance the mortgage and have either a line of credit setup or a redraw facility?
Can you refinance or have a redraw/line of credit established if the mortgage is at a fixed interest rate?
Are you not better off avoiding redrawing on your PPOR and redraw on an IP instead, as the interest on the PPOR isn't deductible. The repayments on the PPOR would go up.
Thanks again for your help.
Thanks for the feedback. I will have to rethink my strategy.
The Investors "Club" is the only club I can think of (other than Amyway perhaps) who has sales reps. They're not a club, but a well conceived marketing business.
They have other related businesses and business partners who all benefit when an individual buys through the "Club". Its not to say they're all bad investments, but perhaps not the best you could find.
I detest "the world owes me something" people. Sounds like your tentant fits that description. What you need to remember is its your money at risk, which you have earnt. If they want the same, they need to do the same and its your right to protect the money you have invested.
Hi Warratah 78,
I’d suggest either Springwood or Rochedale South personally.
We bought our PPOR in Rochedale South in Nov 04 (first home) and have seen about 20% growth since we bought it.
From a living perspective – we’ve found people in the area to be friendlier than other places. Springwood which is a short walk away is becoming quite a little metropolis with big things planned for the area. Rochedale Sth has had a lot of first home buyers who are spending time doing up the houses. 60% of the people in my st are first home buyers and have been improving their houses. We know quite a few people in the st and we regularly have casual get togethers. Everyone looks out for one another.
Logan Village is quite a way out and is relatively rural with limited infrastructure and transport. I personally wouldn’t live there.
Daisy Hill is quite a nice area, but getting a little far out for us.
I was surprised at the number of people that were there. Most of the information wasn’t new. I did find the scenario with the friend who had lots of equity and no income a very creative way of investing, though highly risky. The trust section was extremely interesting.
The sales pitch in the last session could’ve been skipped as people were getting restless so people were heading out in droves. It didn’t finish very well.
Would’ve been good to hear more from George Kafantaris on what he’d found and done in Brisbane.
There are multiple answers to this. Though it depends what your goals are. If its an investment, I’d suggest interest only is generally the best option. If its to live in, it depends. You can either gear yourself higher, pay interest only and use all extra cash to go towards another deposit for another investment property, though none of the interest is tax deductible on your home. Or, you can pay interest and the principle and over time, reduce the size of the loan.
The best answer someone can give is to suggest you talk with a good accountant.
Thanks for the tips. Much appreciated.
They basically said we couldn’t do townhouses on the lot we’ve found as its too small. I didn’t ask if we could do duplexes though
The property has a granny flat on it as well as a 3 bedroom house, but the granny flat has no plumbing and the ceiling is only 2.2m The deal could potentially be cf+ but we would need to do a fair bit of work with the granny flat (it has the potential to be 2 bedroom). The house and GF is full of asbestos too (roof and walls). Then there’s the issue of legally leasing the house and granny flats separately.
