Forum Replies Created
For those that are not familiar with it BAXTER is a neighbouring suburb to Frankston. [biggrin]
If you want to find the “starting line” but can’t maybe it’s because there isn’t one; that is, you haven’t drawn one.
Maybe you could ask yourself a few questions (perhaps even share them with us here) like:
What is your financial position; working, unemployed, have saved some money, need to find a way to budget better etc.
What are your goals; investing for capital growth or for cashflow.
What do you hope to achieve by investing; financial independence, early retirement, SMSF (self managed super fund).
Where do you want to buy; interstate, overseas.
Once you can answer these questions for yourself (and us) we can help you with making some constructive comments; as it is we know nothing about you.
Cheers,
Jo
Originally posted by aussierogue:
i would also add that the bad suburbs done good are usually ones within 1-15 km of the city center.Yep, I have to agree with you Aussie; as much as some of the more distant areas may pick up in popularity given their affordability, unless (as you stated in another post here) unless it is near water, the chances of them going from bad to good is possible, but to blue chip is not likely (well probably not in my life time).
Cheers,
Jo
Originally posted by Derek:
Bear in mind that sucessful investors are long term players.And in addition, the longer you play the better your chances of winning!!! [biggrin]
Ronulas,
There is some truth in what you are saying, and in 24 years of investing I have seen many areas that were once considered “undesirable” become highly sought after.
Off the top of my head I can think of two distinct Melbourne suburbs in which this has occurred; these being Ashburton, Ashwood and Preston. However, there are certain areas that regardless of good infrastructure have remained relatively low in terms of growth for various reasons. One such example is Springvale.
The key for me is infrastructure, not trends. You need to keep an eye on trends certainly, but bear in mind these change; children grow up and move out of areas, the aged move out and into nursing home, areas become fashionable or fall from grace at a whim. But as long as there is good infrastructure; plenty of parkland, schools, medical centres/hospitals, shopping complexes etc etc., sooner or later, people will move there. It may take many many years, but as long as there are amenities available poeple will make use of them and communities will grow.
Cheers,
Jo
Brad,
You are missing 2 things here:
1. If the news even HINTS at a possible IR rise, and it is bandied about enough, people will tend to hold off from buying because it means they will have to pay more. On the other hand, another reason they will consider holding off from purchasing, is because they anticipate that an IR rise will force more sales, hence give them more opportunities as well as greater negotiating power for their money.
2. An IR rise will not see less properties on the market, but in fact, it will see MORE properties being put up for sale, mainly from people who (as you said) are living on the edge with the current rates.
Cheers,
Jo
Originally posted by tony wpb:
i own probably australia’s largest property investment company (in turn over of sales ). i have in excess of 60 properties (val in excess of $20M),95% of those are bluechip propreties. in my experience do not invest in low demographic areas( i learnt the hard way). i never use wraps , the key is to own , who wants $20/wk that is not life changing and can easily be lost by damages , maintenance and non paying tenants.just negotiate a great deal, a fantastic area is richmond in victoria , its surrounding suburbs are substantially higher values most $100K+ and it is currently going through a lot of transformation, it has transport, infrastructure , etc. i have recently negotiated 10%+ rebates, plus an on going annuity. that is you get paid an income on this deal for the next 4 years at $100wk plus the rent and these are not inflated prices. the deals are there just ask , the developers and builders will negotiate if you ask the question . i am new to this forum as well, it is a great way for you to learn, but don’t let negative opinions stop you just use that info. to move forward good luckHi Tony,
I am curious to know how the properties that your company has on its books can achieve as much as 10% returns. I initially thought these to be businesses, however upon checking your website realised you deal with residential as well as commercial investments.
I know Richmond very well. I grew up in North Fitzroy, bought and sold properties in most sectors of the City of Yarra and as such was astounded to read that you could achieve such returns in areas which are amongst some the more exxy parts of Melbourne. As for your reference re low demographics, I think you are downplaying some of the perceived negatives of Richmond, albeit a viable CG area, it does have pockets which contain (a) high levels of unemployment, (b) high crime rate, and finally (c) high levels of asian communities.
Again, I am bewildered as to how can you achieve 10% returns when the average yield is 3.98% on a median price of $450K residential property?? [blink]
Please explain……[biggrin]
Bryonent,
Here are a couple of links that you may find informative re Richond (council = City of Yarra). Please note 50% of householders in Richmond are renting, many are singles, childless couples or single parent families, hence as an investor in makes good sense to purchase there.
http://www.aussiehome.com/trendCharts/vic/
You will need to select RICHMOND here and plot it on the graph. You have the option of plotting either by price or percentage. Please note, the data is only to June 2004 and as yet has not been updated.http://www.domain.com.au/Public/SuburbReport.aspx?mode=buy&searchTerm=3121
=http://www.yarracity.vic.gov.au/
http://www.yarracity.vic.gov.au/publications/council%5Fplan/pdf/council-plan-04-08.pdf
Please let me know if you need any further info. Having grown up, attended school and worked in the suburbs within the City of Yarra, I know it like the back of my hand. [biggrin]
Cheers,
Jo
Not really sure luckyone, it may well be. Don’t forget banks tend to give very conservative valuations, hence it may have been worth more at the time.
Check with the ATO if this valuation is sufficient, otherwise you may need to get an independent property valuation from someone who can backdate it to the time you moved out (preferably a valuer who deals specifically with CGT valuations as they are used this sort of thing).
Give the ATO a call to start with on 13 28 61 and ask for the CGT division.
Good luck,
Jo
Luckyone,
You will be exempt from CGT for the period of time in which it was your PPOR, and (now here is the really really good news….) IF it has been an IP for <6 years AND provided you did not claim another property as your PPOR in the meantime, you will still be CGT exempt.
However, if this is not the case, then the cost base calculation would be from the time you moved out (the value at that time). It is not a matter of how much it has or hasn’t gone up during the time it was an IP, it is more about how much you sell it for. For example, if it was worth 200K when you moved out, and you sell it for 200K then you’re fine, but if it sells for 220K then you will be liable for CGT on 10K (using 50% discount on the 20K profit as you obviously owned it for longer than 12 months).
Hope this helps.
Cheers,
Jo
Originally posted by woodsman:
not a realistic guide to the current market value….Recent comparable sales of similar properties are better for you in ordre to judge what would be a fair and reasonable price for the property.Well summarised Woodsman,[biggrin]
Council Valuations are used by councils to determine the annual council rates.
Land Information Certificates / Valuations are used by State Revenue Office to determine Lax Tax.
Although worth taking these valuations into account 99% of the time these figures are very conservatively calculated and are consequently way below the current market value of the property.
What you should be looking at in the Section 32 is the AMOUNT of actual costs associated with respect to ownership of the investment, that is look at HOW MUCH your council rates and your land tax bill will cost you each year.
Do not use these documents to try and justify the sale price for the property. This is best done, as Woodsman has suggested, by observation of similar properties either currently on the market, or that have just been sold.
Cheers,
Jo
Originally posted by Spanky:
What is the problem with buying property now, (at the top of the cycle) if history shows (and history generally repeats itself if you look at the price fluctuations of almost any asset or commodity) that in 10 years’ time, (remembering property is a LONG-TERM ASSET) that property is going to be worth considerably more than it is today – especially if it is managed well??I partly agree with you Spanky,
Yes buying property at ANYTIME is always a good move as over time it will appreciate. The difference between buying at the top end as opposed to the bottom end of a cycle, is that if you buy when prices are up, you are paying inflated prices for perhaps the same property that in say 6 months would be more reaslistically priced by a reduced 10, 20 or 30K (a nice little saving wouldn’t you agree???) [blush2] But not everyone can buy at the low end; sometimes people just don’t have the finance available to them, hence are restricted to buying when they can and sometimes this is at a time when property prices are at their premium. All in all there is no bad time to buy, only a right time for YOU (that is, when you have the money). If you don’t have the money, then regardless of the cycle, it is the WRONG time to buy!!!
BTW….the bit about “especially if managed well” I can’t see how this has any bearing on the property value. Sure it’s important, but it will do Jack in regards to adding value. Perhaps you mean, that good management will ensure the property is kept in good order, hence not trashed by undesirable types, in which case, I agree. Aside from this I cannot see the correlation.[blink]
Who cares if prices are high now? Barring radical changes to Investment Property laws from the Government, prices will go even higher in the long-term.
As per my inference above, seasoned investors tend to “buy low, sell high” it is in their best interest to do this, for the purposes spelt out above, basically, better value for your dollar that’s all. As stated, buying is always worthwhile and the right time is when you CAN AFFORD IT.Who cares what these so called “experts” say???
That’s right “who cares?” No one is suggesting you take the “experts” words as gospel, and I think if you ask most long term investors you will find alot of them will listen to what the experts have to say, but in the end, make up their own minds, which often tends to steer them in the right direction. This comes with experience, and the longer you are in the game, the better you get at knowing what “expert” information is spot on and what is total BS (or at best, misguided).Age doesn’t negate effort – you can never be too young or too old.
Partly true (again) however, the younger you start the better off you will be. If you buy when you are 45 you only have say 20 years worth of growth before you reach retirement age in which you may like to make use of the CG, whereas had you have bought it at say age 25, the same property would have had many more years and hence made your twice the money again!!!Age does not negate effort, but it can limit the amount of CG because of the reduced time in which growth can be achieved. I say “can” because as with most things, property also has its anomalies; but these should be treated as a bonus and not banked on as they are sporadic. Thus, when considering age and investing, think of it like a bank term deposit; the longer the term that you keep your money in the account, the greater the interest paid.
Like any investment vehicle, property investing is (as you correctly acknowledged) long term, and the longer time you have to be in the game, the better your end result. Start young, research lots and often, negotiate for the best value for your dollar, and in the end, it should hopefully prove all good for you!!!
But above all…..HAVE FUN!!!! [biggrin]
Hey Kathy,
What do you reckon??? Should I buy myself a block of chocolate or a block of flats next time I go out??? [blink]
If you’re thinking it’s personal choice, and based on my own set of financial circumstances; then BINGO. You’ve just answered YOUR own question!!! [blush2]
Your ONLY investment has a return of 5.4% and no doubt you are probably paying interest at the variable 6.95% (correct me someone)…is this manageable, yes or no??? Bear in mind, that you have also had a 15% CG in value (from 227,500 to 263,000) which for many investors is a major bonus. Hardly anything to be scoffed at now is it???
What EXACTLY do you expect people to tell you here???
The bottom line….it is up to you, it’s your property, and you’re the one that has to pay the mortgage repayments every month; so it HAS to be YOUR CHOICE!!!
Good luck,
Jo
That’s an excellent summary Michael; you have IMO described the Melbourne market perfectly!! [biggrin]
Cheers,
Jo
Micasa / Brenda
If you sell ANY INVESTMENT you will be liable for CGT.
If you sell under 12 months you pay 100% CGT, if over 12 months there is a discount of 50% for CGT.
If it is a PPOR then it is CGT exempt.
So if you move into a property (claiming it as your PPOR) then decide to rent it out for a while, you have 6 years in which you can do this and still be CGT exempt PROVIDED you do not claim another place as your PPOR at the same time.
Micasa, re whether you should hold or sell; that’s up to you. Remember, CGT is calculated on the profit made between the cost base (what you paid for the property + associated costs ie. stamp duty, legals, building etc) and the actual price you sold it for.
In your case:
210,000 + 30,000 + 255,000 = 495,000
If you sell both at 340,000 each (as stated)
680,000 – 495,000 = 185,000 profit (less 50% held for 12mnths)
You pay CGT on 92,500This figure is then added to your yearly income, and you are then taxed according to the normal scaling system.
NB: These figures do not take into consideration things like commission to REA for selling, legals etc which is calculated as part of the cost base.
If you sell one, then you need to split the cost base and profit figures above accordingly.
Hope this helps,
Jo
AN INDEPENDENT VALUATION!!!
As it is your PPOR you are entitled to rent it for up to a maximum of 6 years and still be CGT exempt should you sell during this time. However, you will need to know what it was worth (to calculate the cost base) at the time you moved out (market value) hence I suggest you make this a priority. It certainly can be done later down the track, but why not do it now, get it out of the way, and save yourself some money which may have to be paid to a valuer needing to research what the prices were X years ago when you moved out.
Hope this helps.
Jo
Hi ss2306,
Okay first things first….take a deep breath, count to ten, and slowly release…….[biggrin]
Better??? [blink]Seriously, as a mum/wife/investor/head pencil sharpener in my house, I can apppreciate what you’re saying, and certainly buying interstate when you know little or nothing about a particular area is SCARY stuff; that’s why computers are such a god-send!!![angel]
Do a bit of research, look at the real estate websites, pick a few areas, see what prices are being sought to buy and to rent; look up council websites for those areas and see what infrastructure plans are in the pipeline and so on.
With regard to Frankston:
1. There are a few threads re Frankston (especially one or two recent ones). Use the search function (top left hand side of screen) and you will find it brings up a few pages relating to discussions/posts people have made on the area.
2. Take a look at these links:
http://www.id.com.au/frankston/forecastid/default.asp?WebID=10&MnID=1&PgID=1http://www.id.com.au/frankston/commprofile/sitemap.asp?WebID=120#AreaLinks
for starters. There are so many others; just use your search engine (ie. Google, Yahoo, Sensis) and type in “Frankston” and it will bring up heaps of things that will help.But to give you a quick overview…..
You won’t find +CF in Frankston, not even in the cheaper pockets of it (ie. North Frankston); only way they will become +CF is if you buy cheap and spend a little on the IP and increase the rental.
IMO the value in Frankston is two-fold, it’s near water and there are lots of new projects on the horizon for Frankston and it’s surrounding suburbs all along the Pennisula, thus allowing for great opportunity for good/excellent CG in the coming decade.
House or unit??? Much of a muchness really. I guess it really depends on the size of your purse/wallet. If things are tight, a unit may be the way to go, but if you finances can cope, go for a house.
One day should be enough time to give you a good feel for the area. Drive around it, look at the “less desirable” pockets of Frankston (ie. North) see the callibre of people there, then do the same for the South, be awed and inspired by the luxurious homes around Oliver’s Hill and so on. There are lots of cafes along the Pennisula, and if the weather is nice, try walking along the beach, ice-cream in hand (a MUST) [biggrin] and really make a day of it.[sunny]
Cheers,
Jo
I had no doubt about it Karl….you’re a lucky man!!! [biggrin]
Keep up the good work; that was a very thought provoking thread/post!!! [thumbsupanim]
Cheers,
Jo
Hey Karl,
Good for you; wish I was more into gardening but my fear of getting dirty has forced me to make some life changing decisions ie. hiring a gardener…..ahhh well…they tell me change is a good thing!!! [tongue]
But I daresay, you shouldn’t have too many problems convincing Rita (I’m assuming that’s the lovely lady next to you in the members pic page) to adapt to change, thus being more in tune with yourself and your goals. I mean come on….you guys are even colour co-ordinated in your choice of clothes!!! Now that’s what I call a perfect MATCH!!! [biggrin]
Cheers,
Jo
Originally posted by Karl and Rita:
Anyone who says I have no choice chooses not to make a choice.Great post Karl, and yes some very valid points you make there. However, you need to remember…..
The real issue that needs to be addressed in such situations, is not the person’s reluctance to make a choice, but the reasons given for the resistence. Often fear (as the result of ignorance, pre-conditiong, past experience etc) is to blame for the unwillingness to change. If someone doesn’t want to make a choice, of course they will not be happy about it, and as such they will not (want to) see any other options/choices, let alone be appreciative of any potential benefits for doing so; that stands to reason. The key here is simple, address the person’s fears with as much empathy and support as you the willing participant of change would like shown to you, and in so doing, you will maximise the opportunity to successfuly introduce the changes.
Cheers,
Jo
A useful link to add to your favourites and check periodically for valuable snippets of information, try:
http://www.iproperty.com.au/Content/Content.aspx?TopicId=3748
With respect to this thread, scroll down the page to the following articles entitled:
Sea Change May Lift Rates
21st January 2005Love Affair With Holiday Homes
14th January 2005Cheers,
Jo
