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If you have $230K to spend, and want strong capital growth you could consider a 1 bedroom apartment in a middle suburb such as Carnegie or Murumbeena in the south east or some northern suburbs.
Our buyers’ advocacy http://www.buyingmelbourne.com.au has bouht 4 such properties for investors in the last 2 months and I think Jack Henderson who runs that division would argue they were purchased at below market price and with some upside potential through minor refurbishment.
Send me a PM or email me if you like.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auOriginally posted by yack:I agree withMichael.
But i am positive on Frankston. I like Sth Frankston, near beach, near new marina, not far from central frankston.
Frankston high has a good reputation.
If you got $700k go for East Brighton. But if you got that much you may as well go for Brighton proper. Me I would prefer to buy two properties around Sth frankston than East Brighton.
Thanks for agreeing with me Yack…now its my turn to agre with you[blush2]
Only this week I bought another property in East Brighton – good long term growth area, but a little patchy at present
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auI see we are talking about a “MIning Bloom”
Is that anthing like Flower Power?[biggrin]Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auThere is another current thread about Frankston so check out replies there too.
Frankston Nth?
It depends what you are looking for in your investment.
Frankston North is a pretty rough area and unlikley to change. That means poor capital growth, but slightly higher rental returns.
I would not invest there, I think I could find better areas – there is nothing new about getting a higher cash flow by buying in secondary areas.
Its just not a great strategy for long term wealth, even if the property is well priced. Prices are low there for a reason – fewer people want to live or invest there, and this is unlikley to change for a long time.
Since you are overseas, if you do choose to buy here – or anywhere for that matter, make sure you have someone here check things out throughly for you.
You may even consider engaging a buyers’ advocate.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auI agree with Alistair
Frankston will be the big winner becuase of other infrastructure upgrades occurring as well as the freeway, such as the shopping centre , new apartment buildings, marina.
I owuld steer clear of Noble Park and hampton Park.
even in Frankston you must know your areas well as the new city plan has meant that some areas are earmerked for development and there are some areas in which it will be difficult to undertake development.
” Does the buy property on big block, rent out the current property, hold for a few years, subdivide & sell formula still work?”
We have bought 6 properties in Frankston just like this for clients in the last year.
As I said you must understand the new town planning regulations because it does not work throughout Frankston. But choose the right locations and you are likely to do well
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auYes I do [blush2]
But I don’t or rarely sell.
If you do it well, you can refinance at the end of your project, get (some of) your funds out and do it all again.
But as a beginner be careful there are lots of little traps – check other posts on this forum
Michael Yardney
METROPOLE PROPERTIES
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FREE subscription http://www.PropertyUpdate.com.auYes that’s all.
Not very exciting is it?
Michael Yardney
METROPOLE PROPERTIES
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FREE subscription http://www.PropertyUpdate.com.auWelcome
As others have already mentioned, keep your mind open to other possible strategies for your property investment.
Remember that this book was written in a different era – sure it was only a few years ago, but boy were things different then.
In fact Steve clearly states his investment strategies have moved on from the days of looking for positive cash flow properties. Of course this is one of the hallmarks of astute property investors – the ability to adapt as circumstances change.
It is important to remember that you make your profits form your property investments in a combination of 4 ways.
1. Passive appreciation – slow growth I value as the general market increases in value.
2. Active appreciation – faster growth which you influence; e.g. buying below market price, adding value through renovations.
3. Cash flow – your rental returns
4. Tax benefits – what you get to keep after tax.Concentrating on any one aspect to the exclusion of the others can lead to disaster. This happened during the last boom when many investors put too much emphasis on tax benefits. By chasing negative gearing but forgetting some of the other fundamentals, some investors bought investment duds.
The same has happened to others who just chased strong cash flow (positively geared properties) and forgotten about the other fundamentals. I have heard from many investors who bought regional properties in small towns who are suffering from massive vacancy problems and expensive property repairs (in proportion to the cost of their properties.)
This is a long winded way of saying positive cash flow is not the only way to go.
I know I have changed some of my investment strategies over the years and I will be discussing them in detail, what I have bought over the last year (over $2.3 million in properties) and why and what I am not buying in a series of seminars around Australia – my Annual Property Briefings
These 4 hour sessions will be sponsored by the NAB – further details are available here:
http://www.propertyupdate.com.au/pages/Annual-Property-BriefingsMichael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.PropertyUpdate.com.auI will throw in a blatant plug for my book –
How to Grow a Multi Million Dollar Property Portfolio -in your spare timeIt is currently at the printers and will be in book shops in late March but available on line early March.
Get details and read a free chapter at:
http://www.propertyupdate.com.au/pages/BookMichael Yardney
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FREE subscription http://www.PropertyUpdate.com.auSuer anything is possible but why would a builder put his license at risk for you?
How much do you thinka buidler makes out a project? It shouldn’t be more than 10%.
Let him make a living and free up your time to find more deals.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auYou must set up your structures with the end in mind.
What are you long term intentions? What will your property portfolio look like in 10 -15 years time?
How many properties will you own, where will they be situated?
It is difficult (expensive) to change the ownership of your structures later, so even though it may be hard to justify the costs of certain structures such as company/trusts for your first property, think of the big picture.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auIt really depends what you are looking for.
If it is capital grwoth, and that is what creates true wealth, then you will find areas with better histories of strong long term capital growth in the inner south east and bayside Melbourne than in Geelong.
But not every suburb will do well and not every property will do well in the good suburbs.
Do your research, buy below market price and add value – these will all addd to your capital growth
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.PropertyUpdate.com.auYou could look for Ed Chan’s books at bookshops “How to legally reduce your tax”
or for a great description of trusts: Trust Magic by Dale Gatherum Goss- http://www.gatherumgoss.com
Michael Yardney
METROPOLE PROPERTIES
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FREE subscription http://www.PropertyUpdate.com.auOne divison of Metropole is a buyers’ advocacy service – Licensed estate agents who don’t sell property but buy property for clients.
Since my team is dealing with agents all day, we may be able to give you some advice as to who is good or who is not as “hot” in your area.
Please send me a Private Message with the details or an email to [email protected] and I may be able to help
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auMaybe he’s not hiding anything.
Maybe he just wants an unconditional sale, he does want you to pull out in 5 days and the other potential buyer to have disapeared.
Do you checks, get your solicitor to check the contact and when you are in the position make an unconditonal offer – at a lower price.
The vendor wants his ceratinty of sale and you want a bonus for that
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auOriginally posted by bill johnson:I read with interest the number of people looking to complete their own developments. I think it is great and people should be encouraged to do so. However I read with interest the margins people are prepared to accept. I would think that for it to be viable and for people to have a margin of safety you would seek a minimum of 20% margin (not mark up on costs) I wonder if we are not going to see a number of sad and sorry developers in the next few years. I recently read on another forum about a first time developer coming unstuck in a 3 unit development. Interested in others comments
Some astute comments Bill.
Property development is very different form buy and hold investing and you need a higher potential profit to cover the risksSo what are the types of risks involved in property development?
Some of the significant risks I have come across include:-
• A downturn in the property market leading to lower property values or increased holding costs until the development properties are sold
• Increases in interest rates resulting in increased holding expenses;
• Increases in construction costs during the project. This was particularly obvious during the recent boom. Many inexperienced developers think they have entered into a fixed price contract yet are hit with cost variations;
• Changes in the supply and demand ratio for real estate market such as we are currently seeing in the inner city apartment market which depresses property values;
• Unexpected disputes with building or trade contractors or unions which can cause costly delays to a project;
• Changes to the laws relating to property development such as the laws relating to zoning and town planning restrictions on land use, environmental controls, landlord and tenancy controls, user restrictions, stamp duty, land tax, income taxation and capital gains tax. Changes to any of these could adversely affect the profitability and viability of your real estate development project;
• Unexpected delays and increased holding costs may be encountered when town planning (DA) approval is required for a development. Councils are currently very slow in assessing development applications and they reject many development / town planning applications. Not obtaining an approval or obtaining one on unfavourable terms is a growing risk for developers. The cost of obtaining approval or fighting council’s rejection in a court of appeal is continually rising;
• Some inexperienced developers find that some of the improvements they have made to their properties do not result in an increase in value. They learn the hard way that increases in value do not necessarily occur in line with expenditure on improvements;
As you can see many of these risks are outside the control of the developer.
I know, because at Metropole we are property developers for our own projects and act as project managers for many clients (we are currently involved in over 90 development projects in Melbourne.)
We are aware of the risks involved in a development project and this helps us minimise them so that our clients do not get any unpleasant surprises.
Most of our projects are very successful, but I have to be honest and admit that we also run into the same problems in some of our projects and these are not as successful as we initially hoped.
We must learn from all our developments. Learn what went wrong and minimise the risks of this occurring again and learn from what went right and repeat this if possible.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auI don’t think a garage sharing a wall would be a problem like a living room sharing a wall. Neither will strata title hold back values.
What may restrict capital growth is the large amount of development occuring and the limited demand as well as the large number of properties bought in the area by investors that are not attracting tenants and that are standing vacant.
Be careful with what you pay. There are some desparate vendors in POint Cook and you could pick up a bargain. Our buyers’ advocacy bought a home in Point Cook for a client to live in the week before Xmas at a bargain price. Send me an email or private message and I will give you the details.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auYou are correct that Victoria university is near by, but that means students as tenants.
Do you want to confine yourself to one demographic group.While Footscary is near town it hasn’t had the best history for capital growth.
It would not be my first choice of area. We have identified a number of suburbs with potentially high growth over the next 5 years and Footscray is not one of them.
Michael Yardney
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FREE subscription http://www.PropertyUpdate.com.auThere are a number of people who can help.
The council town planning officer can give you some general information and this would be at no cost.
An architect who understands the local council’s policy could assist, so could a town planner.
I would start with the council and then see a private town planner if you are unsure
Michael Yardney
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Interesting that you chose Footscray, if you don’t knowe about the vacancy rates or growth?
What are you looking for in an investment? Capital growth, yield etc?
That may help us give you answers to your needs.
In the meantime check out http://propertydata.reiv.com.au/trendchart/ to find growth rates.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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