Forum Replies Created
Hi, my five cents worth.
Has anyone noticed Adelaide prices spiking 10-20% in February 2007 ACROSS ALL SUBURBS?
I work numbers based on current value and NEVER work on the assumption that they increase 7% every year.
Lack of affordability in itself has no power to control the price of housing. Only the production cost can do that. I was young once and POOR. House prices did not obligingly come down so I could afford. Our young friends today cannot afford to buy a house each.
The question is this: do they still need to live in a house? If they built their own, how much would it cost them?
House prices can come down only if someone out there wants to sell below cost.
James, it costs you $15K to hold your investment properties. If your tax bracket is 47% then it costs you nothing basically.
Having said all that, it doesn’t mean that the risk is less. I watch the rental vacancy figures like a hawk. All the breath left me when in Adelaide last month, it was 0.83% and the month before that 0.5%.
James, what is the vacancy rate in your part of the world? Do some forward forecasting & then make your decision.
I told my accountant I’d far rather pay interest than tax & she gave me a strange look!
Good luck to everyone,
Kum YinHi all, I’m in roughly the same position @ about 45-50% LVR, retired with no income other than rent.
My current lender does indeed start with a ‘c’. I told the ‘n’ to jump off a cliff & borrowed from a private lender [10% interest balloon repayment in 2 years] And surpise, surpise, when I already had the funding, ‘c’ offered to refinance me & of course, took all my unencumbered property as collateral.
It doesn’t make sense for me to sell the devt properties [to be completed by June] so I’ll be looking to refinance. Hope I don’t have to tell the ‘c’ to jump off a cliff!
I concur with the investor who said he’s totally indiscriminate, hating all banks equally.
Cheers,
Kum YinHi Julie, thank you for the info. Don’t worry about the length. I love the detailed explanation & I want to express gratitude that you so generously share your knowledge.
I’ve always left it to the design consultant who changed my bedrooms in the North to living room opening onto the yard. Now I understand why!
We really do live & learn, thank you.
Kum YinHi Mcgregor, I think you may be right about Christies Beach. At first I thought $280K a tad high but I looked over the weekend & am amazed at how much Port Noarlunga & Old Noarlunga waterfront properties are going for!!
Aldinga Beach has had more devt but I think Christies Beach has more capital gains potential because it’s had far less press.
However, it’d still be dependent on the specific property, I guess. I’d be inclined to an old but rentable property on a biggish block right on the beach. Problem is whether this type of property is available in today’s climate.
Also, in February, there’s a discernible spike in house prices in metropolitan Adelaide, & more importantly, it’s across the board.
Good luck,
Kum YinHi, I agree with Megan. Nothing compares to just doing it.
I decided that building was the only way to buy a house for under the median price. So I found a block with 2 old shops on it, zoned R. I was sensible enough to pay a surveyor $300 to look at it & talk to council but his report got swallowed up in the post & I never received it. I was in Singapore then.
I only discovered this forum AFTER I started wrestling with the devt process.
It’s the mother of learning curves! I learnt about delays, set-backs, traffic dept regulations, builders underquoting, etc etc
What amazes me is that I went out & bought another one and then a third one.
#2 is primary residence, slated for redevt but I can’t deal with the process any more & I’m putting it up for sale. I’ll walk away with a small profit.
#3 is the prize. The existing house need not be touched. It earns 5.5% yield so the holding cost is contained. The new block is almost FOC.
I’ll not do another one but doing is the best way to learn.
All the best,
Kum YinHi Sean, didn’t mean to doscourage you. My 1st naive foray into devt looks set to deliver some profits. And I don’t have your skills, building, renovating, earthworks etc. However, I have the reverse, financial resources.
A responsible person will tell you that the last is very impt. I have had to pull out cash from other property & borrowed from my Dad.
This post is to alert you to what I subsequently did. I tend to jump in at the deep end albeit not without fear.
I saw the cost of demolition so I said, “OK, look for something with no demolition cost”. AND I FOUND IT. So what was I to do? Buy it of course. I had no money – I asked my godson. He sent $35000.
Look at the score & if you find something like this …
1950s house on 800m2. Purchase price $223000, costs $13000
Rental = $220 pwBuild a new house along the side boundary [take away existing shed] = cost $150 – $160000 [This is a high estimate. The house can be built for $140000]
Once the house reaches lock-up stage, refinance. 80%LVR of $260000 = loan 208000. This leaves a residue of $48000, probably more.
The new house will rent for $260-$270 pw easily
This is the classic bird dog that doesn’t need to be sold, ever.
The heck of it is we have to find it first, and we do need to have some cash resources to complete it.
Sean, this property settled on 1 May 2006.
Hope this gives you some encouragement. Take care & good luck,
Kum YinHi, I bought that book in the airport & read the bulk of it on the plane, on my way to Auckland to arrange refinancing to fund my devt project in Australia. Sounds complicated but just to confirm that this book is almost like gospel to me. It describes my position so accurately.
I found the 1st book last Christmas after dire warnings about the property market. The data about the capital cities was very useful and I used the worksheets to take a position on Adelaide. I’m happy to report that my position was correct.
The latest book (the 2nd part particularly) is most useful for people who already have sizeable property investments. I feel blessed that I saw this book & that I bought it. Incidentally, I also bought Jan Somers’ book.
Thank you, Steve.
Kum YinHi, the one in Wallaroo is already operational. Copper Cove was up & running when I was there 2 years ago.
Here in Adelaide, there’s a marina at Glenelg attached to the Holdfast Bay devt., one at North Haven and I think the Westlakes marina also qualifies.
My property manager used to moor his yacht at Port River, Port Adelaide and he told me about the redevelopment of the sailing club in 2004.
Work began on the new marina in the Swinging Basin, Port River last Sept. I took pictures of it as the work progressed because I bought a block nearby. Right opposite the new marina is Mariner’s Way, a devt. by McGarth RE. It used to be a primary school. When I looked around the area in late 2004, it was only an empty block.
Newport Quays & later projects is about 3km away, towards Port Adelaide. There’s also the Salisbury Highway to be built near where the bridge opens up, I was told.
There’s an old house on Victoria for sale last week for $230 – $240000. Looks very ordinary from the outside.
Enough of long stories.
Cheers,
Kum YinHi again Sharon, I’ve reread your last post & here’s some specific info if you wish to act on it.
Westpac was quite aggressive about SGD loans in 2004. Citibank also offered SGD loans. You can go directly to Westpac in Suntec city. Do you know that they have {they had when I was there} rooms specifically labelled “Sydney”, “Melbourne”, “Adelaide”? I’m sure they have “Perth” as well!
Unfortunately, I’ve thrown out telephone numbers. The person I dealt with is called Danielle Lan. She OKed my loan in 3 days.
Have fun,
Kum YinPS I’m sure you know that the Aussie property market peaked in 03/04? Many feel that it’s past the peak & may correct but then again, they also said that of the stock market. Take care & good luck.
Hi Sharon, hope you’re still reading this thread.
I’ve done some numbers on SGD loans. Works well particularly if you already own a house that has excess equity . I did that when I started out in 1998-99. Alternatively, if you have income/cash, an offset account is the latest smart move.
The reason is that you can also borrow off your Australian income. The -ve gearing + depreciation on the new house will offset the lower cost of SGD loan to give you +ve cashflow & yet keep whatever capital gains accrue on the property.
I’ll be going back to Malaysia in April. I’m not sure whether I can get to Singapore [passport delays]. If you’re interested in meeting me, send me an email. [email protected]
You make the decisions yourself. What I can do is tell you about my experiences & what I’ve learnt along the way plus I can probably let you know the mistakes I made!
Cheers,
Kum YinHi, I’m looking for someone to help me either renovate or redevelop a property at Clapham.
I don’t know a hammer from a nail but I’ve a sub-division out at Taperoo that’s nearing completion, another one at Blair Athol that’s been submitted to council.
The one at Clapham is where I live. The house across the road sold last week for $318000. It requires another $50-100 thousand to renovate. So I’m wondering whether I should renovate, redevelop or sell.
I also own 2 blocks of old shops which could do with renovation or development.
Family & friends think I want my head examined.
If you think you can help, please let me know.
Kum Yin
Hi,
I’ve been meaning to ask Michael whether he does anything outside of Melbourne.Sean, property devt is far harder than a homeowner understands it to be.
I bought an old shophouse sitting on R-zoning to redevelop into 4 courtyard homes. The price was good – $260000. I had initial quotes for building which was at $95000 per house. I was told that infrastructure costs would be $100000. I had written estimates at $103000.
I was told that it’d take 6 months to build. Like the Adelaide man who told his story in API (Set or Oct issue), I budgetted for 18 months of holding costs.
Know what? The actual cost is $50000 more per house. The process will take more than 24 months.
Fortunately for me, I accurately forecast the area to go up in value because of the marina & other projects nearby.
To cut a long story short, I’m interested to ask Michael whether he can help me develop another property that I bought here in Adelaide. It’s an old cottage on 1350m2 of irregular shaped slightly sloping land near a railway track.
Anyone who’s interested can post a reply here or e-mail me.
Thanks for reading this long post,
Kum YinHi, I know this thread is old but I hope you consider this.
My project has almost the same numbers as yours: purchase price = $260000
Demolition cost – $10550 incl GST
Building cost = fixed price quote in 2005 = $420000 approx
Here is the catch. The “variations” [the builder got the engineers to do the footings cost – $42000 above first run estimates]
I threw a fit but it was a bit too late to back out.
The final costs are not in yet but the slabs are done & building will progress to completion.
The final projected cost is around $920000. The bank has valued the 4 houses at 1.08M
Your project is in dire danger if you proceed on only $330000 sale price.
Footings for 2storey structures are much higher than single storey ones. Therefore, don’t count on getting the building cost lower than quoted. $160000 per town house is about right, may even be higher. I have plans drawn for 2 attached double storey ‘small’ houses & I’m budgetting $250000 each.
Material cost, GST & labour costs are about the same no matter where you are in Australia [give or take]
The margin you described is almost -ve & very scary.
Obviously, what I’ve said is based on info that is given & may not be valid if there’re other circumstances.
Incidentally, the median price in my suburb went up 28% in the past year so my targetted sale price has gone up to 1.12M. If I don’t get that price, I keep them for rental.
Good luck & all the best to you,
Kum YinHi, I’m one of the idiots who just did it without knowing what I was doing.
If I had done more due diligence, I wouldn’t have started.
The slabs have been finished for the latest 4 houses I’m building, the costs have soared 25 %. I must have been out of my mind, what the heck do I know about building?
Fortunately in this case, my overall assessment that house prices in the range I was looking at was still underpriced, was correct.
Sometimes fortune favours the foolhardy. A little knowledge is a dangerous thing and too much info stops us from starting, so what are we to do?
Good luck from someone who’s given up trying to understand,
Kum YinHi, I was resident in Australia for 2 years before I upped & left for Singapore. Before I left, I bought 2 houses & left them with a manager. Then I bought a couple more.
What you can do is buy something on an SGD loan & pay it off your SGD income. That will make your investment cashflow +ve. FYI, I was offered 1.8% interest on my own home which was rented at about 4.5% yield.
Would you be interested in a new house [house& land package can be cheaper as there’s less stamp duty etc] on the premises above?
If you are interested, send me an e-mail : [email protected]
Alternatively, I can put you in touch with some Aussie tax experts working out of Singapore & the bankers who work the SGD/AUD home loans.
I do not work as a broker nor take commisions & any comments I make are meant to be helpful but not as professional advice.
Hope this post helps you.
Kum YinHi, I’ve also been considering seminars. However, I’m uncertain as to what I can gain.
The reason I’m looking into it is to boost my confidence. I was going to sign up for Steve’s RESULTS program but I couldn’t make payment because I don’t use a credit card, believe it or not! Then it lapsed.
Like you, I’d have to travel to Melbourne or Sydney & the distance was a damper.
I’ve been fairly successful on my own to date & I feel as though I’ve read all the retirement books ever written!
Jan Somers is very sensible. I first read her books from the library but I decided that paying for the books was a very small sacrifice. Steve’s From 0 to 260 (or is it 270?) properties is very very good. It’s especially good for me because I’ve bought & sold the 1st 4 or 5 houses, bought commercial property & am into sub-divisions.
I still lack confidence & ask myself daily “What the heck are you doing?”
Hope all this helps.
Incidentally, I’m a single woman & everyone around me, man & woman alike, says, “Don’t over-extend”.Good luck to you,
Kum YinHi 618,
I live in Adelaide & had been trying to look for people who invest in property to have informal discussions.I bought a few houses from 1999 & am currently involved in a couple of sub-divisions. If I’d known how hard it’d be, I’d probably not have started.
If you’re interested in talking to me, please send me an e-mail
Good luck,
Kum YinHi, the price sounds really good. I’ve a roof that needs replacing & the quote is 23 thousand. Mine is likely a larger area than yours but still? I’d estimate my roof to be about 200m2.
Asbestos removal costs a few thousand more to remove. I paid 4 thousand above original estimate. Don’t know how it was done. By the time I came back from overseas, the site was just clean dirt. I also made sure that I took the quote that was a fixed price contract. Don’t accept anything that has the word “variable” in it.
Good luck!
Kum YinHi,
I was in the same situation a few years ago but I was not on this forum then. Even my accountant didn’t know about the 7 year rule until I got the info through an accidental free tax seminar. It cost me thousands of dollars wasted through unnecessary tax.You have to establish that the property is indeed your PPOR. I used my driver’s licence with my home address on it prior to it being rented when I went overseas. Obviously, when I was supposed to be living in it here, it was not rented.
I never subsequently lived in it before I sold it 6.5 years later. I got to keep all the capital gains but I missed out on a lot of depreciation claims because I passed the 4 year back claim time frame.
Please speak to your accountant to verify what you can do but I share my experience in the hope that you benefit from my mistakes.
Incidentally, that house that I sold would be worth another $150K now [easily] two years later. I won’t be able to build it for what I got for it even though the capital gains were significant!
Good luck,
Kum YinHi all, happy New Year!
I once asked “Who wants to be a landlord?” Buy IP & get 2.5% yield? Plus all the hassles?Rents in Adelaide (really) are as follows:
4 BR AVJennings home in Reynella in 1999 – 2003 = $175 pw
Currently? I’d guess $230 – $240 pw [maybe $250 if you’re lucky]
That’s $80 increase pw in 7 years. In 1999, there was no land tax, rates were lower, we hadn’t got all the levies etcThis is true. I owned that house which I’ve since sold.
I haven’t put up the rents on my commercial properties in 3.5 years.
Any wingeing from anyone who rents from me, I sell out & they can rent from someone else.
I’m sorry for people who have problems paying rent but sometimes I’m sorrier for myself.
Good luck to all who invest,
Kum Yin
