Forum Replies Created
- warnett4 wrote:Hello guys, New to the site but very keen to start a portfolio while i am young.
I have been browsing the local papers and internet sites for awhile now and want to invest in my first property. My problem is i cant find a property with A good return that matches weekly rent/house value. Has it got to the point that the market has gotten out of reach of how Steve refers to the 11 second solution in his property scanning and is there another approach i should look at? All help/advice is welcome and will be taken on board.
Thanks.
Have a look at this:
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323727?highlight=positive%2Ccashflow%2Cafter%2Ctax#comment-168663Event Horizon wrote:However my view is this…Steves approach was achievable with relative ease when he was one of the few doing it. Now every monkey wants in on the bandwagon and a free ride to property wealth.You'd be surprised.
Many people talk about doing things, but few ever actually take action. It's also why the diet industry is worth billions – no-one ever does any exercise, but everyone talks about it.
Think about your own circle of friends and relatives (not including this site) – how many of them have actually gone out and bought even ONE IP?
The stats are something like only 30% of all properties are bought by investors, and out of those only 5% has more than 1 IP. Many with one end up selling it and never buy another.
Only 1% has more than 5 IP's
On top of that, buying property is not easy – it involves lots of emotional stress for most, dealing with agents, lots of searching, organising finance and signing forms and contracts, getting inspectiones etc – which adds to the pain barrier that people will simply not go through.
They always have a reason not to take action; kids school fees, high interest rates, media reports, they need a new car and so on.
Scamp wrote:L.A Aussie wrote:Rather than just keep stating the obvious, give the forumites a few strategies that will teach them how to invest successfully in the times ahead.You're right. I think it's obvious now. Hm. Investing successfully in the times ahead :
– Buy alternative energy funds ( solar / wind / geothermal technologies )
– Buy bank shares at the bottom of the crisis
– Buy goldie : stay away from property. The market will stagnate for years and years.
After you stop hearing stories of real estate, and everyone knows someone who lost tens of thousands of dollars on properties, THEN you need to buy. Wait for the negative AND the positive news to stop. When you hear nothing, then you know it's time to buy property again.Banks always recover before the property market does. So if you invest in banks before you invest in property, you should be making enough money to have a head-start on the rest.
Given that this is a PROPERTY INVESTING forum, I'd say that those strategies are pretty worthless for a newbie trying to find ways to make money in property.
SOME markets will stagnate for years and years, but some will still surge ahead; albeit slower than in recent years.
1. Buy alternative energy funds.
I take it this is a managed fund – linked to the stock market? Apart from the total lack of investor control, what are the dividends on something like this? What is the depreciation and tax benefits of these funds? Can you add value through renos and/or subdivisions?2. Buy Bank shares at the bottom of the crisis.
As with all other shares, there is little investor control, there is no guarantee that the Bank you bought shares in today will still be around tomorrow, given the recent credit/finance disaster. What are the dividends, is there depreciation and other tax benefits? Can you add value through renos/subdivs?
I can buy properties at the bottom of the crisis as well, with all the above, and no matter what the state of the market, the house is always there tomorrow, with a tenant, with tax breaks.3. Buy gold.
What is the dividend or rental income from gold? What are the depreciation and tax benefits of gold? Can you add value or subdivide to increase the return? Isn't gold at record highs?If you are predominantly a share investor that's fine, but you can't "bring anything to the table" on this forum, so time for you to bugger off and stop stirring the pot.
Scamp wrote:You see the problem ? It's domino, but not the kind that property investors like to see.It's only a problem for those on the edge, financially.
There are millions of cashed up investors running around in many parts of the globe collecting cheap properties like in an easter-egg hunt.
Think about it; if you are able to buy houses today at 2005 prices, and with upward pressure on rent returns as well, then there is not much downside for these investors.
Even if there is little or no growth over the next few years (as is usually the case after a boom/slide), there is rent increases to make the income pos (with or without the tax breaks) and the cap gain will begin to move again (as always has, and always will) in a year or two.
ItalianDragon wrote:There will be simply a DOMINO effect.
1. If a house in your street sells for $100,000 LESS then ALL houses in that street will lose value and then the next street will lose some value too and so on.
2. Come on, how can you think that Australians will keep buying houses at 6X the average income while in the US and Canada they get it at 3X ?
1. This is all only relevent to anyone having to sell under duress. Not much anyone can do for them, and unfortunately it's not a good time to HAVE to sell. Life is tough. If you don't sell, and aren't looking to access any equity in the near future, then no probs.
2. There are literally millions of houses still cheaper than that stat. Media figures are usually centred around the median price, which can easily be skewed by a spike in sales on one side of the ledger or the other. If the average wage is $60k right now, then, it is quite easy to find a $300k property somewhere in every cap city. The people buying their 2nd or 3rd PPoR will be able to afford more because they have had time in the market, some cap growth, some debt reduction and some pay rises, so OF COURSE they can afford 6 times the average wage. The FHB's on the other hand; can't. But, they were never able to afford the same standard of house historically that the 2nd and 3rd home buyers could afford anyway. Nothingnhas changed on that front.
And let's not foget how picky people are now. Everyone wants their first home to be a 4 x 2 with marble benchtops, double remote garage, spa, built in/walk in robes, 5 mins from work etc. No one want s to buy a basic 3 x 1 out in the outer subs anymore – there are Jones to keep up with.
Mind you, if prices do get too high in general, then they will level off in some pricepoints and some areas, but not all areas, and not all pricepoints.
A cheap house in a cheap suburb may sell really low today because some idiot has over-extended themselves with repayments, but that doesn't mean the next door neighbor has to sell cheaply, and can still get a decent price because there are always people looking to buy cheaper houses – they are more affordable and more in demand. The domino affect is a myth.
This is what annoys me about you types; you're all D&G about EVERY house and EVERY neighborhood, and it simply does not work that way.
Scamp wrote:http://www.news.com.au/story/0,23599,23947854-5007146,00.htmlA good summary of what's to come ( and what I posted 2 months ago ).
What Mark has said in that article is very good advice.
But it's also "commonsense 101".
If people are struggling to repay their loans, and/or are about to convert to a variable rate after a long fixed rate, and see that they are going to struggle, then they have over-committed from day 1.
Your predictions are correct Scamp – there will tears soon enough, but every single one of those people who will be affected only have themselves to blame.
No one put a gun to their head and said "BUY!"
So what's your point? What are we supposed to be doing based on that? There is nothing those people can do except sell for the best price they can get now. As always.
I'm ok, so I'm not going to be selling – I'm going to be buying the shipwrecks.
You are preaching to many of the converted here; we all know what's happening and we take steps to mitigate risks. That's all part of investing safely and successfully.
Rather than just keep stating the obvious, give the forumites a few strategies that will teach them how to invest successfully in the times ahead.
yarpos wrote:Marc……….maybe a move to Red Hill? the new beachside opportunity for 2050…….I hope you are joking about 2050? You can't be serious.
I used to live in Red Hill – for 2.5 years actually, then we moved to Dromana.
Nice area, but the weather is crap up there. You can't believe the difference from Dromana, which is only about 3 miles away and on the beach.
I'll take my chances on being drowned, but our house is on the Arthur's Seat Hill, about half way up.
Given that the last time the water lever was anywhere near the top of Athur's Seat (if it ever was) was a few hundred million years ago, I think we are safe for a while.
I'm more worried about a shark getting me in the Bay than GW – and I think there has been only one fatality from shark attack in Port Phillip Bay in Melb's history?
Don't forget the bike manufacturers.
yarpos wrote:In recent days the Victorian govt came out with this;http://www.theage.com.au/national/beach-house-prices-under-threat-20080627-2y50.html
any thoughts on the impact on values in coastal, marina, key developments? especially if other state govts join the bandwagon
I've been holidaying/visiting on the Mornington Peninsula for the last 40 years, and now live in Dromana.
The tide marks have not moved one millimetre in all that time, and the sea is still as cold in winter and is warm in summer as it ever was.
As was said in the last post; D&G, sky is falling etc – but what is really scary is that the hype is driven by the realisation by many who push the Global Warming barrow is that there is money to be made out of the program, and everyone sits around puts their hands in their pocket for a donation and blindly believes it all.
Scamp wrote:bardon wrote:Back on the charts the one on page one of this report is more descriptive of the price history and I am expecting more of the same in the future.http://www.anz.com/documents/economics/Housing%20Snapshot%20April%202008.pdf
You realize that only 1% in the world actually knows what a Log Scale is right ?
Log scales are a nice way to disguise reality, as spruikers have done for a long time.
In order for the log scale to continue it's upward spiral, you imply houseprices will double in the next 5 years.That will not happen. We have reached a top in the housing prices. Simply put, there are only 2 solutions :
– High inflation ( with double to triple wages within 2-3 years )
– Houseprice deflation.Inflation is the axis of evil. It will be prevented by any government at all costs. This means higher interest rates, which means even more unaffordable houseprices, less buyers even, and thus more pressure on houseprices.
Deflation is the only way to go. It will happen.
God, I hope you're right.
There will be a lot of cheap houses around with really nice rental yields for me to buy.
Rhys_Roberts wrote:The block of units i live in is on the market for 500k odd and returning around 12% i think.Where is it?
Are you going to buy it?
If the holding costs are killing you and life isn't fun, then sell.
If you can hold it comfortably, then hold on.
Land always appreciates long term, and if it's rezoned for more units later on, then even better for you.
Daedalus wrote:I'd like to add that sometimes the labels might not actually be meant as a criticism. Friends/family might jibe you about being a capitalist to your face, but behind your back they might be quite proud of you…"DL is doing really well, they've got 4 investment properties you know!…"
Don't lose sleep over it.
Daedalus
It all comes under the heading of "stick and stones"
I gave up caring what others thought or said of me many years ago.
Be true unto yourself.
And in this case; no-one is going to help you get rich except you (and us here), so go for it.
Yep; they're all great.
A bit "conceptual" and lacking "nuts and bolts", but inspirational.
I'm re-reading "Who Stole My Money?" right now.
Ask the guy if he minds if you get your own independant valuation done on the properties first before you sign anything, and watch his response.
Do your own research on the values in that area – over several weeks and re-assess.
It's probably a two-tiered marketing scam and your the next bunny if not careful.
blogs wrote:L.A Aussie-living in the states Im sure you would be familiar with rent control?????
Yes, they have a few of them in L.A, and they are not really popular with investors due to crap yields, but often they buy the thing anyway and look for ways to force the tenants out. Once they do, they can charge market rent.
Needless to say, rent controlled apartments are like hen's teeth as no-one ever leaves.
One of our good friends – a single mum teacher, has been living in the same single bed apartment for 20 years, and is paying $700 p/m rent. She has no parking space, so she often has to double-park to unload shopping, then drive around the streets until a spot comes up.
If she had to pay market rent, she would have to leave L.A as she couldn't afford to live there.
One block away, the single bedders in our complex were at $2, 200 p/m. Ours was a bit unique; the complex was like a resort with a pool and gym and clubhouse, gated security and under-cover parking, lifts etc.
But the average price for a similar one to hers on the open rent market was around $1700 p/m.
Jon Chown wrote:Almost everyone on this site will eventually be a Buyer and a Seller and no matter how smart you all think you are the simple fact of human nature will prevail. As a Buyer you will think that you are paying too much and as a Seller you will think that you are selling too cheap.Don't blame the Agents for the price of the property as it is almost always set by the Seller. (read above) Similarly Agents have learnt not to believe what the Buyer says as they are invariably trying to nick the property.
Donald is correct, it is a Buyers market at present, however this does not necessarily equate to Sellers accepting ridiculous offers. Do your research and offer a fair price. Remember what goes around comes aroud.
Fair enough.
So why then isn't every property simply valued by a registered and qualified valuer, based on recent comparable sales, and then advertised at the highest price the owner can realistically expect, based on the comparables, and wait for the offers?
All the different price ranges, terms such as "offers above" are basically to entice the buyers who can't afford to buy the house to make an enquiry, the agent then works on them to get the price up, and use the low offers to get the sellers to lower the selling price.
Scamp wrote:LetsRent wrote:Its hard to imagine investment housing demand dropping with rental demand so strong (and increasing) and the yields that are now available on investment property due to increasing rental returns.Increasing rents are the worst kind of inflation. Do you think Rudd is allowing inflation to go up ?
No ofcourse he won't. Be ready for a change in renting laws, where rental prices will be fixed by Rudd's government instead of the property owners.Rudd will *NEVER* let the rents inflate. Remember my words.
The plan :
– councils will make up standard rental prices per region
– government will make a list of aspects of a rental house. These include amount of light ( window size , height from the floor at which windows starts ), number of rooms, number of bathrooms, pool ? garage ? parking availability, location, amount of garden, total space of the house etc.Based on these calculations, you will get a median price, which you can get inflation correction on.
And that, my friends , will be the start of a new type of investor, and the end of the old investors.
Oh yes, banks won't lend you more than 4 times your wages, and 'equity' can't be used in getting new mortgages. Believe me when I say this will all happen.
Yeah; we'll have to buy a Mcmansion about 5 mins from the CBD and charge $200 per week rent if the Govt step in and regulate it. Not likely. Who's gunna go for that investment?
Once the Govt start meddling in the rental levels and the configuration of the property etc, they will wipe out the incentive for people to invest.
This will lead to less rental properties being available, and the Govt don't want that.
Who will provide the population with its much needed quota of rental properties then? The Govt don't want to do it.
The Govt aren't stupid enough to create that sort of nightmare, where people will end up on the streets due to lack of rental housing available after the investors have all deserted the scene.
In the end, rents will only go up through the willingness of the people to pay the amount asked. The better properties will attract higher rents, and so they should, while the crap properties will be left to the ones who can't afford anything better – as is the case now.
All this talk is only being heard right now because of the recent rent increases. What about back in 2002-05 when there were virtually no rent increases for 3 years?
It's all a big cycle and it will swing around again like always.
yawn.
I agree with Scamp.
A good ball-park guide to work on with the expenses incurred in holding a rental property is to allow around 20% of the rent to be eaten up by the holding costs such as rates, insurance, repairs, management fees, vacancies etc. This is not including the loan and/or the loan interest.
On the other side of this situation; if they buy and then immediately re-sell, they will have all the buying and selling costs to be considered, and there will be capital gains tax to pay.
If they sell within 12 months, they will have to pay tax on 100% of the cap gain, at their marginal tax rate.
This could ultimately see most of their profit eaten up in costs and tax.
Not to say that they shouldn't do this deal, but you need to know EVERY cost involved, and over-estimate them as well.
Give us all the figures –
weekly rent, water and council rates, insurance, management fee, body corp fee (if applicable), repairs ($1k per year), loan size and interest rate, bank fees.If the property was built after 1987 there will depreciation as well, so find out the date of construction and cost if possible.
Then we can work out the cashflow more accurately.
units4me wrote:Are Scamp's comments re a potential housing crash any more damaging than those who say property will keep on rising?I would think not. Everyone is entitled to their view.
It crosses the line though, when someone with a sales pitch or service to promote, gives their view to generate business.
I agree. People with rose-colored glasses are just as dangerous as those from the GHPC mentality.
I think we are all quite able to hear both sides and make up our own mind.
Personally, I don't mind if people are trawling for business on the forum as long as they are also adding knowledge and information of value to the debate.
There are several people here who fall into this category.
As for Scamp's big warning; I look it as a signal to get the check book out.
Warren Buffet said; "I buy my straw hats in the winter."
There will be plenty of cheap property on the market in the coming months, so the investor who has done their research and has followed the markets will know where and when to buy.
Having said that, I still believe that a nice, but average home in a nice, but average suburb, well located and in good condition will always keep it's value. Why? Because everyone wants to live in one, and can usually afford to buy one. The demand is always there – regardless of the economic climate.
If you want to go out and seek the more "speculative" types of property which are high end, high rent etc, then yes, you can get your fingers badly burned as there are less people at the top end to rent and/or buy, and a lot of the higher income earners are not that smart with their money – they are good at spending up big with little concern of the future. So when they lose their job, or get sick and can't work etc, or the rates skyrocket as they have done in the last year or so, these people are often the ones who will fall the hardest, and their properties often have the biggest corrections in price.
