Hi Josh: 130pw/$95k – 7.1% gross. Higher than average for Vic (even Traralgon) but not outstanding.

I’d personally give it a miss unless it had growth or improvement potential.

Re the website, it’s very patchy – ie some parts of WA where I know there are dozens of properties for sale have no listings. Got a laugh when looking at the Latrobe Valley. There is a 3br house in Traralgon listed at $13,500 [] But looking at the fine print, it says $120-135,000 []

Peter

Wow, that’s a deep question for TT ; )

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My grandfather used to say no-one ever went broke owning too little, and I’ve taken that advice.

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But did he really say that? I personally would rather owe little than own little!

Indeed with P&I you eventually will own much, whereas you won’t with interest only, unless you make other arrangements (eg hope for capital gain and sell a few properties later, as recommended by John Fitzgerald).

Peter

Can’t say much about about wrapping, but flipping has a long and often dishonourable history.

Historically it was done when the mother was unmarried or the child was orphaned. Other examples of it done compulsorarily was when parents were deemed unfit to bring up the child. Where the child has been a serial offender, custody over him/her may be transferred to institutions.

Lease options can be similar, but in the case of children, can be temporary. Particularly if the parent has a drug/alcohol problem. If the parent is successfully treated, the children might be returned to them.

Renos can vary between simple good upbringing by parents to brainwashing by state institutions, as in Maoist China during the Cultural Revolution. The ‘adding value’ could be things like ‘get good education – get good job’, or to conform to particular doctrines.

As for ‘buy and hold’, with houses, usually the longer the better, but with children anything past their early 20s becomes a liability.

Peter

I forgot to mention that though the above approach guarantees time to get SOME property, unless you’re lucky you probably won’t get the best deals around.

For instance recently I saw a place in a distant interstate country town going for $40k. The large block had two dwellings and a rental income of $150pw.

But with a job you can’t just get up and go, so you lose the deal unless you’re willing to buy sight unseen.

We have:

1. People with full-time jobs who can’t get time off at the drop of a hat, but who can get credit easily.

2. People, either self-employed, students or casual workers, who have more time flexibility, but who have problems getting credit.

Partnerships have various risks, and some of us prefer to go it alone. But people who can make them work would get the best of both 1 and 2, and indeed achieve more than twice what each on their own would achieve.

Peter

Hi Peter – apologies in advance, but I’m about to provide a fairly robust response to your posting. Please accept this in the constructive spirit in which it’s given!

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I live in Bunbury WA

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Nice place! But there’s no need to invest there if you can’t get the yields you want. But there WILL be higher yields within 60-800km of you!

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Please help I have 2 months left to buy something

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Why the rush? If it takes 3 or 6 months to do your research and find a sound investment, so what? Isn’t that better than buying something inferior within two months? And with all that learned knowledge you will be equipped to buy property No 2 quicker!

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and NO ideas.

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NO ideas? Come on – several WA towns that might be OK have been mentioned by name on this and other forums! Have you investigated these (visits, getting past sales data, talking to locals)?

I know that from recent trips 8-9% return should be easy to get in country WA, even in some regional cities.

Yes these returns are not Steve’s preferred 10.4%, but the property may have some redeeming features (eg value adding potential, growth prospects) that still makes it worthwhile.

It’s good that you’re asking questions, but please consider the time of those who take the effort to answer them.

Rather than asking the same question repeatedly, why not assure us that you’ve followed up some of the leads given, so we can help you better with more specific future queries?

Best regards,

Peter

Excellent points Pin!

For my last purchase, I probably did as much talking as you, but did so on the phone before I left home (which explains my latest $300 phone bill!).

In the week or two before departure, I called the following:

1. Local council building dept to ask about natural hazards in area (flooding, wind, earthquakes), preferred building style, new roads/railway lines, major projects in town and more.

2. Water dept to enquire about sewered and unsewered areas

3. Local tourist bureau to send me material on local attractions, a town map and public transport routes.

4. Local property managers to find out which areas and type of properties rent out best and what the best tenants want.

5. Local building and pest inspectors

6. Finally phoned agents to ask what was available (they multilist, so all had pretty much the same).

Almost all of the advice tallied up.

(before all that I looked at economic development info, population trends, prices and yields, to satisfy myself that the place was suitable for my money)

So when I got there I looked around the agents and made up a shortlist from places I’d seen on the web.

My filter of acceptable returns and fair quality property eliminated about 90% of the listings. In contravention of De Roos, I went inside only two and bought one (the one that was my preferred choice before I got there). The decision was made very quickly.

I spent about 7 more days there and did a lot of talking to locals. I find it’s easier to fall into conversation with people in the country than in the city. Or maybe the frame of mind is different and you’re more open when travelling???

Locals often ask why you’re here, and so the topic gets onto property. In my case all discussions confirmed my choice of suburb, and when brought up, that the purchase price was reasonable.

In my case talking to locals did not lead me to other deals, tenants (though I already had one) or me to regret my decision.

People walking along the long path along the beach seemed most easy to strike up conversations with. And yes, I got some evangelising as well from two JWs who I bumped into!

However I did a lot of walking around town and suburbs, counting vacant shops (not many), seeing what were regarded as ‘bad’ areas and looking at other advertised properties.

When an area is being sought after by investors (as this place was starting to when I was there) you can bump into them at the tourist bureau. The tourist bureau staff sometimes mention – ‘oh you’re the third investor to come in today’, so add these people onto your ‘to talk’ list.

I’ve also found managers at the backpackers I was staying at also knew what’s happening and what brings people to town.

The local library was good. Not only did it have lots of PI books, but I also met a lady who had bought a lot of property (mostly land though). Also the library was giving away 12 year old local papers, so looked at prices and rents in them (confirmed info I already had about negligible price and rent growth since then).

Peter

Hi Middler – this topic was raised recently – look up the Collie thread in the archives.

But for Narrogin & Pingelly, consider (amongst other things):

Population Growth
Vacancy Rate

Then look at rental yields available and see if they’re high enough to overcome the negatives (everyone will have different approaches here).

Peter

Hi Kym – I agree it’s opportunity and freedom, which basically boils down to ‘time and money’.

But there needs to be some other element so that you don’t fritter away time as is so easy to do. If you do, you might as well be working and spending!

Every 6 months I produce a statement on the progress of my investments. 2 years ago the aim at the top of it read ‘Capital gain consistent with acceptable risk obtained though maintenance of a diversified portfolio funded by continued high savings and returns on investments.’

I realised that yes I was progressing nicely, but I really wanted financial independence. After years of saving/investing nearly 90% of income came from my job. I realised that the aim should be to more rapidly replace this with passive income, and a new aim was needed.

A few months ago this changed to ‘Financial independence by age 40 obtained through the establishment of a growing portfolio of diversified income producing investments fuelled by continued high personal savings’.

Though the investment vehicles are not mentioned, these two approaches required a readjustment of the portfolio to achieve them. In my case it included adding high-yielding property and the use of leverage alongside the existing savings and share investing plan.

No doubt my strategy will change in the future, but it will be a slow change that builds on the past rather than tearing it up and starting again.

Peter

Well done Scotty! You did well (better than me when I went over there 6 mths ago). Re the 3br units, were they villas in a group of 6 or 8? If you don’t mind me asking, how much was the original asking price, and could they have been bought singly, or did the seller want to sell all six to one group.

In contrast, some places have been on the market for months – eg a place at 305 Picadilly St. I looked but thought the asking price was too much and it was too long a walk to town.

BTW did you notice the novel street drainage there?! If it’s rainy you have to jump open trenches or find a ramp (bit of metal placed over a trench).

Peter

Hi Peter – I’ve noticed that you posed very similar questions not too long ago. Most of us with thoughs on the topic have probably already had our say and don’t have a lot to add.

If you haven’t already done so, I’d follow up the leads given at https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=4039

Part of the fun of all this is doing your own research, studying towns, industries, demographics, prices, growth, rentals, etc. An answer someone else gives might be fine for what they want, but your requirements may be different.

The established RE websites won’t have everything (some people find that the best bargains don’t get listed) but should give you a rough idea.

Just two days ago I found several places in a small (and remote) WA town SE of Perth where the rental return was 15% or more on one of the big Australia-wide RE sites. With lots of properties in that town for sale, I’d be wary, but they are out there. Keep looking!

Peter