Forum Replies Created
- I made it clear both in writing and verbally to the agent that this was purely to start negotiations, and was not my final offer
Making that statement is a definite mistake, live and learn.
In fact IMHO giving any commentary on whether this is a first/middle/final offer is a mistake.
Simply state your offer clearly with any offer conditions and always have an expiry (~24 to 36 hours). If you can substantiate all the better although I never have.
While we are on the topic, as a general bit of advice never ever increase your offer in the same phone call that your previous offer is rejected, never even say that you will put in another offer even if you fully intend to. Just cover the topic of why specifically the offer was rejected (conditions, deposit, price) then thank the agent and get off the phone. Then do not put in another offer for at least a day or two, longer if you can stand the wait and the market isn’t hot.
CG = capital growth
NG = negatively geared (investment property)
PG = positively geared (investment property)
CF+ = cash flow positive (investment property)
OPM = other peoples money
CGT = capital gains taxFWIW = for what its worth
Some comments:
Careful which entity you buy properties in, eg, companies are not entitled to the 50% CGT discount.
Mixing money and family has been known to cause problems, not always, but often enough. Setting up a proper structure will cost some $$$.
The beauty of property as an investment lies in the ability to leverage into it. Buying it outright loses this key advantage.
$10k each is not far off every family members being able to invest in a county property on their own.
It is not really the right time to buy country property IMHO unless you’re thinking of WA country. The rest of Australian country property has pretty well had it’s growth this decade. Remember the “ripple” theory, booms start near CBDs and travel out, and the next boom even near CBDs is still some way off on the Eastern seaboard.
Originally posted by sverma:Does the buy property on big block, rent out the current property, hold for a few years, subdivide & sell formula still work?
I forgot to answer this.
My answer is YES!! Or at least I hope so, I’m just about to settle on just such a property. [biggrin]
Eastlink will have a positive impact, but IMHO just one factor is not enough to drive growth by itself.
The Geelong road upgrade is a good example. This upgrade + the Melbourne boom rippling out + the Geelong waterfront upgrade all were factors in the growth. Of those the most important IMHO was the Melbourne growth.
Given where we are in the cycle, I can see outer suburbs doing it tough growth-wise for quite a few years to come. This one upgrade is not enough on its own to push the market ahead in a significant or sustained way.
Originally posted by bobbackoz:The units are specialised retirement units with 100% occupany rate and at least 8 people on a waiting list to get in. Good location waiting for the financials to come in. Anyone recommend finance broker.
OK, all my negative comment stand then. For the reasons stated I wouldn’t touch it with a 10 foot pole. Occupancy and waiting lists mean nothing, it is a very poor investment IMHO.
What are the management & body corp fees. I’m guessing $$$$++.
The LVR lend on specialised units is often not good (especially if not fully contained and/or <50sqm). Hard to buy, hard to refinance, hard to sell.
The CG is likely to be very small.
Sorry to be a wet blanket on this. It all depends on whether it is a special purpose unit, if not then disregard my negativity above.
Originally posted by mapleleaf:So we have decided to maximize the money we have to buy several residential poroperties as a start and then to move onto commercial when we are more established.
That’s a great approach. Build a wealth base in residential, then branch out into commercial or investing in a business.
Originally posted by Sweet:Hi guys,
In terms of investment property, which is better for a beginner, residential or commercial property?
Residential
On realestate.com.au it is easier to find commerical properties that provide higher returns than say most residential properties, why is this?Higher return = higher risk.
Also, as commercial property asks for prices into the millions, is it still easier to borrow this kind of money from a bank if you pay 10% on the deposit and all those other closing costs?No. Commercial finance is typcially 60 to 75% LVR and the rate is higher. This reflects the risk of the investment, banks are not dumb.
There is no free lunch I’m afraid.
Ms Wakelin suggested Surrey Hills’ comparative lack of diversity, and resales of new developments in Williamstown could explain the data.I have to disagree with Ms Wakelin. The reason for Surrey Hills having a lower December 05 median than in December 03 is that the 03 figure was a massive aberation (it went from ~540k in Oct ’03, to ~680k in Dec and back to ~540k in March ’04). In fact the trend is strongly up over the past couple of years and now sits at $650.
Just shows that the even the experts sometimes shot from the hip and don’t do the most basic of research.
Why not get a LOC in place now so that you do have fund available by the time of the auction?
The answer is that you do not need a bank cheque, all you need is a personal cheque. Just make sure beforehand that you LOC is set up.
Bid away at the auction, and if you win write out a personal cheque. When you get home, transfer the funds (eg phone or internet banking) from your LOC to your cheque account.
Easy as that.
The answer is he get back whatever he paid (not sure about the medicare levy though).
Your example is not realistic though
1) noone earning 100k is paying 50k tax
2) a 100k shortfall is massive, not affordable for someone on 100k/yr unless their partner is also earning big bucks.I would try and contact the beneficiaries and explain the situation.
Perhaps see if you can negotiate some rent free period, or reduced rent period, in return for not pursuing a claim over the property through the courts. I would discuss this though with a solicitor first to see how realistic your chances are in the courts.
For an investment I find it helpful to evaluate against 3 key crtieria. For me an investment needs to forfill all 3 to even be considered.
Capital appreciation: does it have a history of increases, is supply limited, is demand sustainable
Income: how much, how reliable, how much gets eaten by running costs
Collateral: Will banks lend against it, what LVR, what rate, what conditions
I would see a marina berth as being shakey on at least 1, and probably 2 of the 3 criteria. For me that would rule it out. However I don’t see a problem in someone having it as one of their “speculative” investments making up no more than 5% of a portfolio.
I would think the policy has to in the name that appears on the title. The insurance company can confirm though, just give them a call.
Originally posted by clones:Originally posted by shake-the-disease:210m2 says it all. Why buy a such a property when you can get another one for the same price with 700m2. Remember, land appreciates, buildings depreciate.
Neighbours will be very close and there will be a tiny backyard. Who is going to demand this sort of property in an outer suburb, especially in 10 years time after the house is not so new anymore?
Well, I believe the opposite, if I am going to rent out a place I would prefer the one without backyard and in a small place where I do not need to spend time maintaining it.
I believe small place are better for rent adn large for sell.
Clones
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The net result is not so much lies, damn lies and statistics but rather vendor dreaming, buyer wishing and agent glossing.Do you have kids though? That suburb in Melbourne the key demographic are families. I have kids and believe me, I would never ever rent or buy a property that is so small, I don’t care if the place is gorgous with gold platted taps and a 100 inch plasma screen.
Having kids but no backyard is a recipe for parental insanity.
Take out the insurance.
A trust structure is one defensive barrier, don’t think any barrier is fool-proof. Insurance is a cheap and effective additional barrier between you and someone sueing you, and as pointed out, it will protect assets within the trust as well.
Pros:
– low entry price
– good gross yieldCons:
– Banks don’t like them, especially under 50sqm. Because of this your LVR is going to be lower (60 to 70%??), negating the low entry price pro.
– High risk of poor capital growth
– Low scarcity factor
