Thanks for your ideas, Phillip.  I hear your idea of selling and buying closer on the North Shore, to take advantage of growth there over the next few years.  However, it will be difficult to convince Mum and Dad that selling at what I expect at the moment to be a considerable loss is the best thing to do.  Purchasing the property in the first place was more a lifestyle decision than an investment decision, but given the lack of income from the business, it is necesarry to make a decision now about wether to hold the property for as long as possible or to break free now.

Mum and Dad are 59 – and no, they don't need a big property, they want one.  They were suffocating in the suburbs in Berowra a couple of years ago, and with Dad determined to stay with the business and line the retirement coffers some more, they had to find a compromise between their semi rural ideal of retirement, and staying close enough to the city to continue to earn some bucks.  Everyone's investment criteria are different I guess!

Your DA idea is terrific and would probably suit the property well, but I can't imagine them bulldozing the $100k+ reno.  I couldn't even suggest it after all the hard work and heartache….  they needed that idea 2 years ago.  Oh well.

Cheers
S

wealth4life,
With your obvious knowledge of the Sydney market, can I ask your opinion on my parents PPOR?

They bought 5 acres at Galston in a bush block.  Very pretty, bushland lifestyle block.  They paid $900Kish, with a house on it that had severe white ant damage. (At the time it seemed to be the land value).  After deciding that the cost of demolishing and rebuilding was too great, they have since spent $100K+ on a very tasteful, modern reno, which is incomplete.  The house is quite large, Two storey, large living, 2 1/2 bathrooms, 4 bed plus office/rumpus, pool.  It is not conveniently located, being about a 5 minute drive from Galston shops, and the fastest way to the train line (Hornsby) is the 20min or so drive through Galston gorge.  But it is very pretty, idyllic even with a lovely litte freshwater creek, with turtles and lots of wild animals etc.

They have done considerable improvement to the land, too and have probably freed up about 2 acres as arable (suitable for horses).   The rest is too rocky to be improved for horses.

With their own business in executive recruitment, they are considering, bail out of the half completed reno now, or stick around and try to continue to make the payments from somewhere, hoping that money will come up.. I believe they have some breathing room, being ahead in their mortgage.  They would have about $450K equity.

Interested to know your thoughts on the value of property in this area.  My gut feeling (not knowing the area) is pretty dire, particulary with the reno incomplete.  It will take a fair bit more money to complete the reno, so that is not an option while the company has zero income.

I should mention that they love living there, and would really hate to sell.

Any insight you can give would be useful.
Cheers
S

Mmm interesting.  I'm a sometimes lurker.  Often enjoy this thread.  We are a few hundred km from Townsville and have been wanting to invest again for some time, but have resisted, happily, sitting on high equity and low loans on two properties, waiting for our opportunity.   and waiting.  and waiting.

We notice in Townsville, over the last 5 years or so, massive development of housing estates.  Homes are being built on 400m2 blocks.  People flock to them – their little piece of paradise.   Walking down the street in one of these areas is surreal – rows and rows of little boxes which, to me, look much the same.   My husband and I feel that they are probably the slums of tomorrow.  We have felt that property closer to the coast and the city, in one of the older suburbs, with a 800m2 block would be better buying. 

Just interesting to hear a comment from someone else who opposes these minimal block size developments.

We feel quite safe, with our own business, in the cattle industry (poised to do quite well at least over the next 12 months), approximately 80% equity over our two properties which are  both working class family homes.  One of the properties is in a cattle town, where most of the town residents are government employed, or employed within the cattle industry and there is a massive housing shortage because all the builders left and went to Townsville for the building boom, and it costs more to build a house here than they are worth when they are finished.  We expect the value loss to be not as bad as in  the major cities, or the mining towns (of course our boom wasn't as good either). 

So we wait, feeling quite safe, but despairing at the people around us who are not in such good shape.

Parents with their own business in executive recruitment, and a half million dollar mortgage in Sydney.
Friends mortgaged to the hilt on a little box in Townsville – he just lost his mining job.
Parents three years off retiring whose super fund is crippled.
My little brother – new to the minining industry, having finally got out of drugs, who now can't get work.
My sister who resigned from her executive property managment job following unacceptable workplace bullying (at least my brother and sister have no debt).

So, Grinch, despite my enjoying your analysis of the situation and my preparedness to believe this could be a nasty downturn, I have to pull you up.  Your favourite picture of yesterday could have had our best friends on it.  And our joy at our good position, and our impatience about when to invest again, and our excitement about what cards played right on the way out of this down turn could mean for our own personal wealth is somewhat tempered by the heartache being felt by our freinds and family around us. 

I think it is such a pity that there are so many people out there who never have the benefit of having really struggled financially.  When my now husband and I first moved in together we lived in a country 2 bed cottage with no power, no washing machine, no gas.  I washed everything by hand.  I cooked on a wood combustion oven.  Hot water was generated by the wood oven.  I had to budget the groceries down to the last cent.  We frequently could not afford to put fuel in my car.  I only bought seconds fruit and veg.  I grew quite a bit of fruit and veg and we ate our own beef, and reared our own pork.  All our clothes came from St Vinnies or similar and the furniture was largely supported by old phone books.  I earnt a bit of cash horsebreaking, mustering, or picking and packing small crops.  We made home brew and I sewed useful things from scraps.  We had a small kero fridge and no freezer.  We caught and ate mullet.  At one stage we could not afford to have lunch.  My husband would take a cucumber from the garden and have that for lunch with salt and pepper on it.  $10 was alot of money to have spare.  We'd keep our eyes open at the tip.  This was 1995.
That was such a formative and important time.  I'm so very grateful for the experience.  I've a much keener sense of what makes life happy.  We were quite poor, but we were happy.  We still loved each other (and still do) and had a fire in our belly – which sees us now in a vastly different situation. 
Recently, it was brought to my attention just how lucky I was to have this experience when a young married woman that I know was quite distraught at the fact that her husband could not provide enough money to immediately furnish their house with brand new appliances and furnishing.  She seemed to think that they should both be driving current model vehicles, the house should be immediatley fully furnished, they should be eating gourmet food and takeaway frequently, going out all the time and purchasing things at will.  She was quite unhappy that life wasn't turning out that way.  By contrast, my past means that I am simply overjoyed at my recent purchase of a set of quality saucepans to replace the second hand ones that I have used for the last 10+ years.  Aren't I lucky?
I'm wondering how many similar stories there are out there.
S

Have you a link?
S

You could use an RP data report to get factual information about what other houses sold for.  Though, you need to take the report with you and go for a drive past the addresses sold because it gives you no information about the houses, just the land size and sale price.  It is a good indication, though, and you might be able to fill in the blanks from info on RE.com if they are so slow to remove links.  I still think that if the price is right, it will sell – unless a RE agent stuffs up the market for you first, which sounds like what might have happened.

Another option is to wait until the tenants lease expires, then just put them on a periodical arrangement so the house can be sold vacant possession.  If you have a tenant hunkered down in there on a lease, it may turn away potential owner occupier buyers.
S

This is very interesting, all the talk about getting the balance right, as well as what people are driving.  I drive a 2001 Triton dual cab ute.  At the moment we are thinking about buying a boat for family holidays etc.  It would cost somewhere between $5K and $20K ( we haven't really decided what sort of boat).  If we buy a dearer boat, we will have to borrow money – but it would be more fun.  It would delay our ability to buy another IP – but what about LIFE?  what about having fun with the kids, getting away from the business and relaxing once in a while???  We are torn between our desire to have fun now, and our desire to build wealth for the future.  Same thing with my car, which we are considering replacing before long.  We live in the outback, and it is really necssary from a safety point of view to have a good reliable car.  Especially when you have little kids (youngest 9 mths). 

A bloke who is a bit of a tool, but thought himself a bit of a guru told me once that if you wanted to make money you had to go out and buy a real flash car (BMW out of the show room etc) – then everyone would take you seriously and the money would just flow your way……  If only that was true.  Perhaps it would work if I went out and bought a 5.5m brand new half cabin boat with a 90hp motor? I could drive around Townsville with it on the trailer and park outside the real estate office – that would get their attention! I wish.

Hi Happy Homes,
I've had the pleasure of using Alistair Perry personally ( he replied to your original post saying he ticked all the boxes – which I agree he does).  I can thoroughly recommend him as being the absolute opposite of a dry, drab, lazy sod and will certainly be keeping his contact details for when I need similar services from an IP savvy broker in the future.
Good luck with your venture.
SHales