Forum Replies Created
http://www.smh.com.au/articles/2003/08/25/1061663735507.html
cheers Leigh for this link
>Also re the diversify philosophy, I’m not so sure.
I totally agree, Robert Kiyosaki calls it ‘de-worsify’.!!!
it reminds me of those people who go to the casino and spread 20 chips all over the roulette table, when only one number can come up….i so don’t get that>Ever read any Warren Buffet books? He calls the Wall Street >mantra of ‘risk reduction through diversify’ lazy and plain >crazy. He’s more along the ‘pick your investment strengths >and work it work it work it’
Yep – i think so too.
I think I’m going to stick to my strategy of only buying income-producing assets that themselves go up in value, and that are tangible with an intrinsic value (rather than ledger entries on a computer somewhere.) Assets that can be improved in many creative ways. Assets that will always be in demand, due to an every growing user-base…as far as monique goes,
“perceived benefits
associated with an immediate income,”oh duh, doesn’t she realise that a dollar now is worth more than a dollar in the future? Especially if you put it to work straight away at X percent? The power of compounding interest, etc….
“Immediate positive cashflow may
deliver a short-term income benefit, but as the years go by,….”she doesn’t take into account that rents are indexed for inflation, the return gets better –
“substantial
after-tax capital injections are required to maintain rental appeal, making
such a property more and more of a liability,”well if you bought a dog of a property without a builder’s report you could get some nasty expensive surprises down the track, yeh…but there is such a thing as a ‘low maintenance unit’ made of stuff that lasts for donkey’s years – and a coat of paint doesn’t cost that much every 3 years or so
“By contrast, properties in prime locations with higher capital growth do not require as much money spent on them.”
I disagree
What I did to my IPs would have cost twice the price if I’d done it on my inner city Sydney house. For the identical same thing.
Make that four times the price in real terms, because it’s a different market with higher expectations as to quality of decor, fittings, etci.e. it wouldn’t be a good idea to put chinese hat lampshades in a Sydney house if you wanted to get good rent for it
>This is because rental values and
>demand are underpinned by the property’s inherent scarcity >and ongoing
>capital growth, which stems from the high land value, not >investor-driven expenditure.”disagree, renters don’t care about the land value as such – yeah, they want to be in paddington, but not in a scummy house
oh and PS, monique wakelin of wakelin property consultants would be happy to advise you (using the above arguments) as to what *would* be a ‘good investment’, while getting a nice kick-back from developers in the process of signing you up into an (probably) off the plan deal
>but I read, I think in API, that 30%+ of new borrowings on >property is for investment not PPOR.
brianhc,
this is interesting, I just got the latest API but haven’t read it yet. It certainly might make sense if amongst the 8 percent investors are the odd Bradleys and McKnights. Also makes sense if 30 percent of the population rent. (see below)
and now something random off the net…
source –
http://www.shelterwa.org.au/housing_news.htm“New Options for Affordable Housing?Ê (added 24 April 2003)
The amount of affordable housing in Western Australia is falling. Over the last four years:* The median house price in Perth has increased from $142,500 to over $200,000. As a result, the income required to affordably purchase a median priced home in Perth increased from $52,168 to $71,299 between 1998 and 2002.Ê
* A shortage of low rent private rental housing stock has developed at the bottom (affordable) end of the market, while supply is more than adequate at the top end. Affordability is therefore likely to get worse for people on low incomes, whereas people on higher incomes are likely to pay less rent in the future.
* Due to falling funding and the policy of targeting, social housing (Homeswest and community housing) is now an option for a significantly smaller proportion of West Australian households. Between 1997 and 2002, social housing in WA fell from around 6.5% to around 4.7% of total housing stock.ÊÊ”“In June 2003, a Perth family required an income of $80,643 to affordably purchase a median priced home. This compares to $68,388 in June 2002 and $49,357 in June 1998.Ê
* While family incomes have risen, the increase has not kept pace with house price rises. In June 1998 a median income family would need to increase its income by 8.8% in order to affordably purchase a median priced house in Perth. By June 2003 this ‘affordability gap’ was nearly six times greater at 52.3%.Ê
* The group most severely affected by the fall in housing affordability was low to middle income families. In June 2001 there were 49 suburbs where a family earning at the top of the second income quintile (currently around $45,795) could afford to buy a median priced house. By June 2003 the same family could only afford to purchase a median priced house in 24 Perth suburbs.Ê
* A 1% rise in interest rates would put 5 of these 24 suburbs out of the reach of low to middle income families. A combined 1% interest rate rise and 10% house price rise would leave only 8 suburbs affordable to these families.Ê”I wouldn’t think that Perth would be any different than anywhere in Aus. House affordability going down, gov’t housing going down, tells me, renters and investors going up.
Can’t see any bust for investors in sight….especially if interest rates rise.More quotes to back this up –
“Q: What if the demand for rental properties decreases?
A: The facts are that 95% of Australians have rented at some time. Approximately 30% of Australians still rent and the percentage is increasing. We live in an ageing population with more and more Dinks (Double income no kids) appearing in society. As property prices outstrip the inflation rate then they also outstrip rises in wages and salaries. The affect is that increased demand is put on the market for rental properties.Ê And the prices of properties go up as they become less affordable. The result is that the winner in the long term is the owner of the property and not the person paying rent.
source-
http://www.martinayles.com/Text%20Pages/faqs.htmbyeee-
Mini
‘the richest man in babylon’
is fantastic!!get a builder’s report and then you’ll really know what you’re up for.
does that mean you got a zillion emails too containing pif and scr attachments? It’s so annoying, I don’t have a virus and Macs are immune to this sort anyway but I still had my email ‘hacked’ somehow so people were getting emails from me with virusses, which I never sent…!!
I think I have sorted it out now
cheers-
MiniPS Yeah trout fishing sounds great, never done it, only the sea sort of fishing, hey are you into pighunting? many of the locals where my houses are seem to be into it..???!! Not that I want to go, just wondering if you are into it – !!
alf
please someone correct me if I am wrong here but i think that cashflow positive properties are in general not found in the cities. A lot of people are saying they are not available in Australia, but they most certainly are and people right here on this forum are not only finding them but buying them.
However…about that capital city rule – I saw a studio apt in darlinghurst yesterday (a really nice cute clean one) for $189K. lets say you got really creative and worked it so that you rented it furnished and short term, kind like an executive rental, you just MIGHT be able to make it CF+ve
Also a 5 bedroom house renovated and converted to individual rooms and then individually let might be CF+ve even in a city
I think carparks could be CF+ve too, a single space rents for about $15K per year in the CBD of Sydney, apparently, so if you bought one for say 60K that shows a 25 percent yield….
I am just brainstorming here but there are always things you can do with properties to help them along
Unlike shares (y’hear that crashy????!!)cheers-
MiniMuppet
I will so!!!!!!!!!
December Jan, but maybe even sooner!!!!I will definitely think about this gig idea….hmmm……!!!!!!!
hey drop me your email address again???cheers-
Mini-MONGRELit’s not a rule. It’s just a quick way of calculating if your property is going to be cashflow positive at 10.4 percent (meaning rent should cover the mortgage plus costs.)
You are welcome to calculate it the slow painful way i.e. 50K property, rents for 100 per week, 100 times 52 weeks is 5200,
divided by purchase price of 50K equals 10.4 percent yield…..see the eleven second solution means you could have done that at a glance without the calculator….
however do it with the calculator a few times and it’ll become intuitive!
it’s not a rule. It’s just a quick way of calculating if your property is going to be cashflow positive at 10.4 percent (meaning rent should cover the mortgage plus costs.)
You are welcome to calculate it the slow painful way i.e. 50K property, rents for 100 per week, 100 times 52 weeks is 5200,
divided by purchase price of 50K equals 10.4 percent yield…..see the eleven second solution means you could have done that at a glance without the calculator….
however do it with the calculator a few times and it’ll become intuitive!
it’s not a rule. It’s just a quick way of calculating if your property is going to be cashflow positive at 10.4 percent (I use it as a minimum yield where the rent should cover the mortgage plus costs. You could be CF+ve with a lesser yield with depreciation etc but it’s not a given – yields over 10 percent should be well and truly CF+ve)
You are welcome to calculate it the slow painful way i.e. 50K property, rents for 100 per week, 100 times 52 weeks is 5200,
divided by purchase price of 50K equals 10.4 percent yield…..see the eleven second solution means you could have done that at a glance without the calculator….
however do it with the calculator a few times and it’ll become intuitive!
Dear Alf and others out there
Like I said before “The deals are out there.”
I’m trying to be helpful here but really guys, c’mon
>Mini how did you come across the one you mentioned in n.z.
I looked for it!! Simple as that. And, it’s been on the internet for months for all to see.
>Did you know the area
not really, I mean I’ve been there twice in my life for one day, kinda thingI look everywhere.
>had you researched it
not until I saw the deal>Id like to know where to start looking
>I’ve looked at the papers
>internetgood – keep looking!!!!
>Where does one go to research a town or place where the >property is situated.
1) go there and/or 2) make lots of calls 3) ask lots of questions
4) research –
here are some tips
not to do with property, but the principles are right onhttp://www.cs.indiana.edu/mit.research.how.to/mit.research.how.to.html
http://www.sofweb.vic.edu.au/internet/research.htm
>some say get a feel of the place go there if you are buying >interstate or places you have never been makes it hard to >just make decision.
It’s whatever you feel comfortable with.>Hows the best way to start?
1) find deals (look at over 100)/do the numbers
2) research and due diligence
3) make offersdid I leave anything out? Oh yeah if you need finance, you need to organise that first, or else know you can get it after the offer
cheers-
Miniyeah for example here’s one I found a while back,
Ê$ 35,000
RENTAL INVESTMENT CENTRAL TOWN
For location you wouldn’t find better. Two minutes to Polytech, two minutes to Town. Spacious five bedroom villa. Newly painted both inside and out. Private rear section and elevated for views. Leasehold Land (Lease $670.00 pa). Rates ($1200.00). Rateable Value $ 53,000This has been rented for $240 per week to house-sharing students.
The land lease is in year 7 of a 15 year lease.
The deals are out there. Anyone in the world could have found it.A 30 percent + return *after* rates and land rental. And that’s just going off the *list* price.
cheers-
Minicrashy,
“At a yield of 2.7%, Sydney buyers WILL look for better returns elsewhere.”
yeah, it’s called ‘capital gains’ – while negative gearing like mad all the way. The way I’m working this particular market as a Sydney-sider is by renting someone else’s negatively geared nightmare at a calculated 1/3 of the price of an interest-only loan to buy the house we live in – even at today’s relatively low interest rates!!! So I’m buying elsewhere for +ve casflow where the yields are higher and prices are low.
If by this ” Sydney buyers WILL look for better returns elsewhere” you mean regional areas, then they’re not strictly speaking Sydney buyers any more are they???
Also remember that the residential real estate market is 92-94 percent owner-occupier-driven.
Miss Sooshie –
“waiting and watching generally won’t hurt you (and in the mean time prepare for Serendipity”
-not that I’m advocating rushing in unless you’re confident about what you’re doing (Gahd knows it took me a seminar, many tapes and CDs, countless books, and running the numbers past some very tough nay-sayers to feel good about it- whatever happens – which took me quite a few months-) at the same time, it’s like buying a computer. At the time you buy you get something great and then a few months later it’s obsolete already, but you stick with your new computer for a while, or, as long as it takes you to afford to upgrade again, and then you’re back on the spiral in a different spot….
i think property is the same. Anyone that’s ever sold in Sydney in the last ten years has probably wished they hadn’t at some point…crashy,
“On average, Aussie property prices are at the top right here.”
wouldn’t that statement be true at most moments in the last 50, 100 years?hi diamond,
>MINI: That`s awful! How much damage was done to the floor >surroundings?
no clue as have never been to that house!!!!!!!!!!!! Property manager said firebrigade dismantled chimney and declared it ‘unsafe’ – so there is a big hole and house is unliveable. Says that brickwork people will do the rebuilding including floorboards.
>I suppose everyone who has read your post & isn`t insured >just rang their insurance brokers!! Did you also take out >insurance against damage by the rentors??
No Landlord insurance as such. I trust the battleaxe (i.e. brilliant) property manager who seems super-onto it to keep only good tenants in there. I guess you can never be sure of that however….I am happy with the 300 a year insurance I have now, for the time being.I was actually extremely lucky, because i didn’t look at the policy before I signed up – I used an insurance broker, and he said do you want replacement insurance or dollar value insurance? He explained that replacement insurance is so that if the whole house burns down for example you get it rebuilt (which is more expensive than the existing house cost.)
Dollar value is up to a value you specify. The difference was 300 per year versus 1200. I went for the cheaper option and insured it for 40K (bought it for 27.3). The first time we looked at the policy was when this happened!!! My dad found the clauses that said I was covered for what I’ve already mentioned, up to 6K ‘per event’ and obviously to a maximum of 40K all up. For 300 per year approx. It was with NZI.>Also did you get my message last night??
yep i did!!!!
>I will ring tonight if that`s OK with you.
cool!>likely that there will still be skiable snow in the north island >around 30th Sept through to 8 Oct.
My boyfriend says yes!!
Although the NI skiing is a lot more changeable than the SI due to conditions on Ruapehu.>Muppett , all seems to be organised for our get together.
I’m so jealous!!!love Mini
Yeah Muppet
I actually thought ‘was that my fault? Should I have had the chimney swept?’
Probably!Anyway luckily nothing happened to the *people*.
cheers-
Minii know we are just about ren-ed out but I would still say that a budget reno to clean a place up and make it bright and fresh can make the difference to rent a place out for just that little bit more to make it more CF+ve as is adding value things like whiteware , cable, etc
thank you terry!
crashy, I didn’t know you were a kiwi, hello properly!
A westy as in west auckland??Hi
Re Crashy v. Westan,
AFAIK the top of the market suffers the most in a property downturn and the bottom of the market the least. So you can get the 3 million places for 2 million, perhaps – that gives crashy his 30 percent less – because less buyers in that bracket. but the ones under 500K if there is such a thing in Sydney, will never go down 30 percent.
It’s up up up.Also crashy I think you have a very stock-market mentality about property investing, seems that’s your specialty, but the truth is that the property market is owner-occupier not investor driven – like I have said before on other threads- once people think ‘this is a nice place to live in our price-range’ they tend to stay there for a while. So it’s heaps slower to go through it’s waves- which aren’t as up and down radical as you’d like them to be in order for you to win your ‘shares are better’ argument.
Like someone else said here which I totally agree with, it is the media affecting buyer confidence which controls the market, given the current absence of any real economic factors like inflation (capped) interest rates (low) demand (rising population) – and the economy, which are still all good – with the exception of apartments where supply might temporarily outstrip demand.
cheers-
Miniyeah I’m all for it, it’s fun, a bit like watching two people….uhmmm…
play tiddly winks*winks*
