Forum Replies Created
Hey Dazzling;
Please let them come – I send them nasty private messages. It’s great fun!!
You can tell I need to get a life!Cheers,
Marc.
[email protected]Sorry to inform you that while I have been here I haven’t done any active research – just a bit of look now and then on the MSN property site to keep myself occupied. The whole country has been through a boom similar to Aus, and now the ‘crash’ is in full-blown mode in a lot of areas. Of course there are plenty of areas that are still good; I just don’t know where.
I have a deal going on back in Aus that settles next August that I need to keep some equity for, so I don’t plan to buy anything here and risk a problem with that deal.I did do a bit of research on Buffalo and Arizona when I first arrived though as I had heard about them, but I couldn’t do some quiet net surfing without getting hooked into by the realtor’s. The web sites are often geared in such a way here that it is very difficult to bypass the agents when you start looking. sheesh!! [grrr] In order to access a lot of the sites you need to fill in your details. I was inundated with literally 2 dozen attempts to contact me every single day for months.
I can tell you that some parts of Texas are still going up, but for how long? Arizona has probably levelled off and Buffalo is beyond saving I think.
A lot of New York State was cfp when I arrived, but I think the Buffalo factor is prevalent in those areas – like Pittsburgh and parts of Pennsylvania. You would be buying cfp but no cg.
Cheers,
Marc.
[email protected]Why would anyone sell a property returning 24%?
There must be some problems there somewhere.
It could be like Buffalo – good returns and cheap properties, but the town is dying, the unemployment and crime are on the rise and it is hard to find a tenant and a good tenant at that.And finally, there is always property tax here in the U.S. Ring/email the agent and ask what the property tax on the property will be.
Do some very, very comprehensive research on the area first.
Cheers,
Marc.
[email protected]Buying a brand new anything off the plan rarely results in you buying the property cheaper than the market.
The reason is that almost all developers will add a premium to their product to cover things like agent commissions, advertising and rental guarantees if they are offering them and other holding costs.
The other danger with ‘off the plan’ is the contract quite often will have a clause in it saying the builder/developer will supply a certain fitting, or something ‘equivalent’. What can happen is at settlement you take possession of a property with inferior fittings.
Developers word contracts very carefully and totally in favour of themselves. I have heard of people having the contract cancelled by the developer before settlement during a boom time as they think they can sell it for more, and the opposite will happen where the market drops and you are left with a property at settlement worth far less than you paid for it.
Before you go ahead, check out the resale price of EXISTING similar properties, preferrably quite recently built. Then you will know the true value of the ‘off the plan’ version.
Also, get any contract with a developer looked at by a suitably qualified real estate lawyer before signing, or, if you want to ‘secure’ the property without obligation, make the offer ‘subject to approval by your legal advisor within xx days of the Vendor (developer) signing the contract’. You can build into the contract a penalty for taking longer than an agreed length of time as well. In fact, you can add or subtract anything in the contract that you like. Of course, getting agreement from the developer to any changes may be more difficult.
As far as depreciation, any I.P built after 1987 will give you a special building write-off, as well as the normal depreciation of the fixtures and fittings. So something built in the last few years will still be good value for that purpose.
Do not rush in – the deal of the century comes along every day.
Cheers,
Marc.
[email protected]No doubt just another developer masquerading as a wealth creating company.
They will sell you an overpriced property that they own.
This type of product is for the people who want to invest but don’t want to do the work behind making a good investment decision. They pay a premium for their laziness and/or their lack of knowledge unfortunately.
If you have the time or the get up and go, do your own research and buy your own investment.Cheers,
Marc.
[email protected]We converted a smaller bedroom into a bathroom in a house we owned a few years ago. We wanted a separate bathroom for each bedroom so we could run a B&B, so we needed to add an extra bathroom.
My brother-in-law is a plumber, so he did all the plumbing work with my help and I did all the rest. All the plumbing work was 1st class.
There were no inner walls or outer structures altered and we didn’t go to the council. The end result was awesome (the bathroom should have been in Vogue but I am biased!). We tried to do the most professional job we could so there would be no question that it was done right.
We sold the house a few years later and had a building inspection carried out by the purchaser. There were no problems, and no-one asked for a building permit.
By the way, I asked a builder I know before hand if we needed a permit, and he said the same as Bridgebuff – don’t ask and you won’t be told no.
Cheers,
Marc.
[email protected]All the authors I mentioned in the earlier post are great. Between them there are about 20 books so that wiil keep you going for a while. I have read every one and they are great, as are the ones below;
Add to that list ;
Robert Kiyosaki, Peter Spann, “Think and Grow Rich” by Napoleon Hill,
“Millionaire Next Door” by Stanley and Danko, “The Richest Man in Babylon” by George Clason.Cheers,
Marc.
[email protected]Good work, Josh.
careful on the spa pool. From experience they are expensive to run and a fair bit of work to maintain. It may not be worth the cost.I’d go for the large screen plasma with cable and a Wii if you want to get some more pesos outta the boys.
The flatmates will love it and it’s a depreciable expense.By the way; I just had a thought; have you got public liability insurance? Treat this like a business.
Cheers,
Marc.
[email protected]One thing no-one ever does which will help is offer double the amount of bond and 2 months rent in advance. This will show you are serious, although is expensive up front. Maybe your parents can help out here.
Of course, the usual things like employment references and proof of employment will help.
Also, ask a few agents what you can do to improve your chances.
Being a single appyling for a double may rais an eyebrow or two – they may suspect you are thinking of sub-letting, but it shouldn’t matter.Cheers,
Marc.
[email protected]Welcome to our forum!
I’ll have a go at answering the questions –1. Generally, with the exception of Perth and maybe Darwin, now is a good time to buy as in most parts of Aus the boom has ended and the cycle is nearing the bottom, or maybe slightly either side. You will need to research each micro-market (neighbourhood or suburb) to know for sure.
If you are a ‘buy and hold’ investor there is no bad time, just bad properties.2. You need to research your chosen investment area to find out what is the best property for the demand. For example, you may buy a 2 bed unit and find out from the council that there are plans for 1,000 of them to be built in the next 2 years. That will create a lot of competition for your property, or you may find that it is a family orientated area and they need yards and extra beds, which you don’t have.
If there are lots of 1 bedders for sale it may mean they can’t get rid of them because no-one will rent them. Do some deeper research.
TIP: whatever a r/e agent says, divide it by 5 and add lots of salt. Find out your own anwers and truths.3. There are numerous rates of return you can look at. If you are talking about rent return, divide the yearly rent by the purchase price and then multiply by 100.
eg: weekly rent = $200. ($10,400 yearly)
purchase price= $200k.
$10,400/ $200,000= 0.052
x 100 = 5.2%
A positive return means the rent covers ALL the costs – loan, insurance, rates, management, repairs etc. This is very hard to find in Aus at the moment unless you can add value somehow.4. I am not sure whether it’s 6 or 12 months you need to live in it to be eligible for the FHOG. Check the Aus Govt website.
I’m fairly sure you can rent the rooms out after you move in if you want. But again; check with the Govt; you could google FHOG as well.In closing, do lots of reading now – Margaret Lomas, Jan Somers, Neil Whittaker, Steve McNight, Property Investor Magazine, Monique Wakelin, Neil Jenman, Terry Ryder, to name a few.
Cheers,
Marc.
[email protected]Here’s a better idea;
Keep your existing home and access the available equity for more I.P’s. Sure, you can’t access ALL the equity, but if you sell you will incure selling costs, and lose any future cap growth on the property. The advantages of not selling will out-weigh the advantages of selling.
Then move out of your existing home, rent somewhere else as you have planned and turn your existing home into an I.P as well.
Very few people have the courage to move out of their own home for future financial gain as they are too emotionally attached to it.
Cheers,
Marc.
[email protected]Good on you Dr. Spock. I hope you do it!! I cured myself of the ‘income cancer’ as I like to call it many years ago. I think I must be the tightest guy in the world now. Once you get the hang of it you will do it easily ALL the time.
What will also happen is you will soon be going around looking at the “keeping up with the Jones” types and laugh your head off at them, and won’t be sucked into the consumerism that plagues our society.
I saw a guy on tv here in L.A the other night who referred to this ‘income cancer’ as “THE LATTE FACTOR”. Do a google search on the term.
He is a finance guru called David Bach, and he had a one hour show about exactly this sort of stuff. He was excellent and spoke in easy to understand language. He has a few books (can’t remember the names) so as well as Steve’s book read David’s also.
Cheers,
Marc.
[email protected]Do you absolutely HAVE to sell your house to move overseas?
Assuming you don’t owe too much on the house, have you thought of moving overseas and using your house as an I.P, and rent a place for a while in your new country?
We are currently doing this and it has been a great financial move.
You can rent for a while until you get settled and if you want, take your time and sell at your leisure, hopefully get a better price and then buy in your new country.
Buying stuff to set up a place to live costs absolutely bugger-all if you look around in your new place. We set up our whole apartment and a car for $6k, and we didn’t even try hard to save money. Now that we have been here a while and had a look around we reckon we could have paid half that for the same amount of stuff.
You don’t want to rush this process if you don’t need to.
Cheers,
Marc.
[email protected]Thanks Wayne,
it’s interesting that you don’t use them. Is it because of the reasons I mentioned previously, or is/are there other reason/s?Cheers,
Marc.
[email protected]We are in exactly this situation right now. We bought the block of land across the road from us. It was owned by the couple who live in the house next door to the block (who are also our friends). Both their block and the block we bought have totally unrestricted 180 degree bay views. Our plan is to build and move in there on our return to Aus, and keep our existing residence across the road as another I.P.
Our friends were concerned that a house built well ‘down’ the block would restrict their view to the east, so they drafted up a covenant to be attached to the title which placed restrictions on where a house could be built on the block, so their view would not be built out on our side of them.
We agreed with the terms and the deal was struck, with them offering a considerable discount to compensate for the restrictions.
As far as I know, the covenant remains in place forever, unless the person who originally drafted the covenant allows it to be lifted.
We haven’t checked on this as have no intention of onselling the block, so you will need to get the advice of a good real estate lawyer for your situation.
Cheers,
Marc.
[email protected]Before taking any of the statements made by the agent or developer as the gospel truth (which it most likely is not), do your own research to find the truth.
Check out the prices of similar EXISTING properties which are for sale in the area – the newer the better, but they must be ones that have been bought and are for sale, or sold, already. This is the only way to establish true consumer demand, not developer profit.
Once you have done this then go back to the developer with your findings and negotiate as hard as you can. They have to sell their product so they can move on to the next project.
If they won’t budge on price, just wait a month or two ( I waited 4 months once and saved $50k on a townhouse), then go back again. Odds are there will be a couple of properties still left for sale in the project.You might miss out, but the deal of the century comes along every day.
By the way, another developer trick is to offer you a rental guarantee for a set period. You can ‘guarantee’ that the cost of that rent is built into the purchase price.
Cheers,
Marc.
[email protected]In the present climate it will be all but impossible to find both things in one property.
By that I mean you won’t find a ‘valuable’ property with a good rent return.
But what is a ‘valuable’ property? Everyone has a different version of this.
I could show you 100 valuable properties right now on r/e.com.au in the Inner Bayside suburbs of Melb, but you would have trouble affording to buy one and then holding it with the rent returns they offer.You need to establish your criteria for what you think represents a ‘valuable’ property then start looking for the areas that might have them. After a week or so on the internet you will recognise a potential area very quickly.
For example; I start by looking at the average price of a 3 x 2 house and then look at the average rent return for that type of property in that area. I know within a minute or so whether there is any point continuing to look at the area. It’s a bit like Steve McNight’s 11 second rule (which is unworkable in this r/e climate I believe). It gives me a very quick thumbnail sketch. If the rent return is o.k I will look deeper, etc, etc.
I don’t necessarily buy a 3 x 2 house, but it is a starting point to my system I use for my research.
F.Y.I, my idea of a valuable property is one which is close to all amenities, in an area that has potential for future growth, is below the median house price for that suburb, has good rental demand for that area, is built after 1987, has land content and has a rent return higher than the existing variable rate of interest. As you can guess, this is harder to find right now, but that’s my system.
If it doesn’t have all these criteria I move on.
Cheers,
Marc.
[email protected]You didn’t say where you are living?
In regards to investing from afar, the internet is the best way to go. There are many places that are/will be good for cap growth in the near future – you just have to find them.
One thing you can also do is buy reports from Residex on the different stats around the country. I bought one a couple of years ago that gave the 5 year predictions for every suburb on the whole Eastern Seabord for cap growth and rent return. There are several other reports available.
I then picked the ones that were of interest and researched the hell out of each one to find out what was going on in those areas. A lot were duds, but a few were diamonds.
Lots of phone calls to agents and councils etc to get a feel for each area I picked to assess whether the area was viable.
It was a lot of work, but if it was easy then everyone would be doing it.
By the way – don’t discount the Centrelink pedestrians – they are quite often very good tenants as they still have to live somewhere. You might just be able to pick up a couple of good cashflow prospects near you, but you may not get a lot of cap growth. Check out the rent returns and rental demand. You may be able to turn the area to your advantage.Cheers,
Marc.
[email protected]Most local councils should be able to tell you, or try the titles office.
Cheers,
Marc.
[email protected]Generally it is believed that Perth is coming off the boil, but as always there will be areas that out-perform the norm; such as the one you pointed out.
In general, a good guide is to look at the affordability factor in the area. Once the affordability for first home-buyers and average income earners drops away, the market will slow down until the balance is restored. The other thing that will affect it is the rent returns – as the affordability decreases with rapid price rises, the rent return can’t keep pace and this also drops away, so the investors also stop buying. Lastly, if you add a few little interest rate rises like we have just experienced around Aus, then this also keeps buyers, and hence growth, away.
The growth of an area also depends on such things as local amenities and proximity to employment, transport, good schools, shopping centres, good access roads etc.
It sounds as though your area could do well due to the plans you mentioned, but no-one has a crystal ball.
Cheers,
Marc.
[email protected]
