Forum Replies Created
- Originally posted by Monopoly:
Hi Timan,…drop the rent…. at the end of the day, everyone loves a bargain, and as Richmond pointed out; better 10 dollars a week less and tenanted than empty for months!!! Jo
Hi Timan
My wife and I’ve enjoyed almost 100% occupancy on our numerous IP’s over the past 20 years or so because we follow a couple of simple rules:
1. Charge market rent whenever you can (“make hay while the sun shines”) BUT…
2. DROP THE RENT $20 BELOW MARKET PRICE WHENEVER TENANTS ARE HARD TO FIND. (We find 15% reduction is usually enough to get a tenant)As long as you’ve geared your IP’s to be able to comfortably drop rents in the short term, there is no long term pain.
Bottom line: we are FEARLESS about our ability to ALWAYS have our IP’s tenanented, and you need to develop a fearless attitude. If you allow fear into your mind, it will paralyse your future decisions to keep on buying more and more and more and more IP’s. You will become Chicken Littles (the sky will fall on our heads, we won’t get tenants, the Reserve Bank is going to put up interest rates, there’s going to be a recession in 2008, etc etc etc). As Jo the wise forumite comments above:
“At the end of the day, people love a bargain”Cheers
GregHi Milly
Seems to me that Terry and Aceyducey are BOTH on the right track, so perhaps a combination of both their suggestions is the way to go.
By the way, I got your PM, and will reply soon
Cheers
Greg F
Originally posted by Milly:I am wondering if anyone has ever had to make a bad financial deal for the sake of a family member. Tis a dilema when your business brain is at war with your emotional brain.
MillyHi Milly
I love your commitment to your dad, but he won’t thank you for making a bad investment decision on his behalf.
I assume the duplexes are a duplex pair which are strata titled????? If so, he should just put one on the market and keep living in the other one.
Re my thoughts about investing in duplexes, see my post today under the heading of “Duplexes”
Cheers
Greg F
Originally posted by amber_jag:Is there something about duplexes that i dont know about. She advises me that i should get in early as they go like hotcakes…but that could just be real estate talk. I dont want to be too eager but this seems like a really good deal…. Any hidden traps etc etc. Thanks guys.[biggrin]
Hi Amber_jag
By the way, do you own a Jag? Mine is an awesome Pearl Grey 1988 XJ6.
Re duplexes, please consider building your own duplex pair, it’s dead easy or at the very least you’ll embark on a steep learning curve. There are heaps of people on this Forum who’ve done it. My wife and I own a number of duplexes built by other people, and while they ended up being good investments, they took 12 years before they doubled in capital value. If we’d had the guts to build them ourselves 12 years ago, rather than pay the profit to some other investor, we’d have doubled our investment much, much sooner because we’d make our $$ on wholesale price, not retail
One of the secrets to making speedy capital gains is to get cheap (well below market value), blocks of land and build brand new brick duplexes or a brick house on it. So how to find cheap blocks of land in the city? Here in regional Qld, there are a FEW houses within 3-5 kms of our Post Office built on SEWERED (very important)1/2 acre blocks. For example, one street away from our home we just missed out on buying a beauitful old weatherboard house on 1/2 acre for $165,000. Now here’s the trick: If we cut off 1/4 acre, we could still re-sell the old house on 1/4 acre for $155,000. So, minus costs, we’d get a 1/4 acre block of land for $10,000!!! Allow approximately $15,000 – $20,000 for subdivision and other council costs, and the fully developed block will only cost us $25,000-$30,000. Here where we live, the minimum price for a sewered 1/4 acre block on a bitumin road so close to the Post Office is $80,000 – $95,000. That’s a $55,000 – $60,000 INCREASE IN YOUR NET WORTH/EQUITY BEFORE YOU’VE EVEN STARTED TO BUILD ON IT. Now you register as an owner builder and do your own sub-contracting or get a builder to build a new brick house or a couple of duplex units on it which you might use as long-term rentals, and your property portfolio is off and running with a real head start.
Check the “Subdivision” posts in the past month on this Forum. There’s so much expertise andinformation re subdivision here, so if you know of any such 1/2 acre blocks near your home (and I’d encourage you to think locally, get to know your local ared intimately).
If you just ask the question, you’ll easily link up with other forumites in your local area who run their own local property investing group. These groups meet regularly to swap tips, ideas, resources etc etc
By the way, ignore the agent’s spiel, because it’s the proverbial CR_ _.
Cheers
Greg F
Hi Folks
Does anyone know of a property development course in Qld? I’m particularly interested in subdivision, then building duplexes etc on the land I subdivide
Cheers
Greg F
Originally posted by nordicskier:Considering dabbling in this property. I have sent copy of lease agreement for legal advice. Size is over 50sqm, hopefully okay finance from bank. Expecting only 70% loan on valuation. Seems good, stable yield of 6.5%. Any problems with Pacific International Melbourne?
Hi Nordic Skier
Serviced apartments are MASSIVELY DIFFICULT TO FINANCE, yet many of them are really sound investments. I found this out over the last month when trying to finance a serviced apartment in Mandurah WA (I own 16 IP’s, and servicability isn’t a problem). The banks hate serviced apartments because, if you default, they find it a lot harder to force you to a mortagee auction (ie., sue the living daylights out of you) since the Management Company stands between you and the bank.
After many mortgage advisers told me they couldn’t help me, I finally found a broker who found a local WA company who will lend 80% LVR on serviced apartments!!!! This is an awesome deal, considering this property meets the 11 sec formula on NET returns (although not on GROSS returns). $90,000 for a 1 BR wheelchair friendly apartment returning approx $159/week with no outgoings except rates.
If you have any problems with finance, PM me and I may be able to help you with phone numbers/ names etc. I predict you may have problems finding finance, so please let the forum know if/when you seal the deal. Okay?
Cheers
Greg FCan we have some clarification please??? Is it the two books and your “surprise” we are bidding on or is it the books seperately?
Steve,
Due to the recent down time, is it possible to have this auction extended and to be run as Book 1 and Book 2 so we know which one is being bid on??? Or are you auctioning the lot as one auction?
And Mike’s old book is also being auctioned.
I like it. I think the Auction should go until tomorrow night some time or even Saturday to give everyone a chance to bid.
Make me feel like a tightass!!!!
OK…
Book 1 – $150
Book 2 – $100Is that more suitable?
Auction both books off. I will bid for them… first offer…
$30 FOR EACH!!!
I had to up the offer as I like the Smith Family!!!
And I don’t want the prize as I would rather see it get auctioned on the site and the proceeds go to charity. I am happy to pay retail for it when it comes out.
Give the book to Mel!
I would love to know how Mike came up with the right answer when the question used 2.25%.
Well????
Can you explain the answer??????????????????????????????
Mike, don’t those selling costs apply to a property that sold for $486,666.67???
2.25% of $438,000 = $9,855, not $10.950.
Have I missed something?
Steve,
If you mean (sale price) minus (purchase price plus closing costs) less (negative net annual cashflow), the answer is $8,350. Are you certain C should be $18,350 and not $8,350?
Sales costs and commissions cannot apply in the answers provided because no answer allows for the $9,855 or the last number would be a 5.
Thanks.. will check them out.
Answer = E
After paying all expenses, allowing for the negative cashflow and selling costs, the return on the initial 100k is a loss. Obviously tax deductions and depreciation were not used in my calculation as they were not provided in the example.
I should also mention that after reading SIS’s post below that I do not agree with any answer. I just find answer E to be the closest to my answer.
Workings…
$438,000 (Sale Price) less 2.25% (Selling Costs) = $428,145
$428,145 less $9,650 (Negative 1st Year Cashflow) = $418,495
$418,495 less $320,000 (Initial Loan Amount) = $98,495
$98,495 less $100,000 (Initital Cash Put In) = –$1,505
That is the main problem. Can’t find good help! Solicitor is on holiday until August and my accountant is not the best.
Where can these be bought?