Forum Replies Created
I too am wondering what your motivation is, John, and who you are. I see you haven't answered the question I raised on your original post.
Do you not want to answer the question? One moment you are introducing yourself as a newbie, the next you are launching long essays at us. Please tell us more about who you are and what you do for a living. Who do you work for? What do you sell? As you pointed out in your first post, sources of information can be tainted by their motivation. Forgive us for searching to understand yours.
SKev,
Hi and welcome,
on the to broker or not to broker questions. I really think that if you find a good professional, no matter what their field, they add value to what you are doing (as Richard said). A great accountant is worth every cent he charges, a great broker is definetely worth using, I use an insurance broker who saves me thousands and gets insurance on things I couldn't insure without his help. There are bad ones and good ones of every type, but if you can have a really good professional recommended to you, it will be of benefit to you. A good RE agent can also be a helpful ally.The professional you use should not just be good, but should be good at Real EState type work. For example, Richard continuosly demonstrates a very strong knowledge of brokering for property investors – and he is an investor himself. The accountant you look for should be a property investor too, if you can manage it, or at least should specialise somewhat in tax accounting for property investors. Good advice is worth the money you pay for it – and sometimes it doesn't cost you anything.
S
What sort of LVR for rural property purchased at Auction?
Potential security which I have to offer is 1 x PPOR, 1 x res inv, $100K plus cattle.
No cash deposit (unless I sell the cattle, which takes too long really).
SPeppersGhost wrote:apart from that first week out of the hospital… scary as hell. That week for me was like the opening scene of Saving Private Ryan…It's really not that bad, PeppersGhost – you big sook. Not even for the mother! (Unless you get very unlucky). Take that week off work, step in and do the washing and the cooking and let the new Mum sleep and care for the baby and recover from labour or surgery (or both).
Sorry, can't answer the CGT question. I'll leave that to those who know for sure, and I'll stick to my area of knowledge – babies!
Enormous and heartfelt congratulations to both you and your wife. Such a very special time of your lives. The kids are the best and most important investment you will ever make. Coming from a Mum of three who eight months ago had her last baby and is sadly letting go of the baby years ever so slowly.
Now you can't leverage your super to do that, can you?
Put happy and well adjusted family, time to spend with the kids above point number 2. Kids need your time, no one ever says they regret spending too much time with their kids. As modern and affluent parents it is too easy to keep working, keeping earning the bucks and keep buying stuff for the kids to make us feel better. They don't need stuff, they need you. It is terrific that your wife will be a full time mum. I am (basically) and I count our blessings every day – we are so very fortunate to be able to do that, many simply can't.
Things I reccommend: Steve Biddulphs book, "Raising Boys", Dr Spocks book on Child health and parenting, breastfeeding, a sling (like the way people carry their babies in third world countries) and a cradle that rocks and can go next to your bed for the first 6 months.
Good luck
SI reckon financial best is probably to rent a place to live (worth about 650K or less) and rent out 650K place. Lifestyle does come into it, though, and personallly I much prefer living in my own home. Of course, that is a very short answer and there is alot to consider and you need to confirm the answer with some maths.
Yeah, I'd certainly call that a good deal too, if it fit my risk profile. Certainly, deals like that are unusual. In the town where I live, there is currently a 1 bed house for sale for $88K. Don't know what it would rent for. I'm not interested cause I currently have other plans.
The other thing that I'd call a good deal is anything within my financial scope, fitting my risk profile that was cash flow positive at 100% finance (I have equity elsewhere but little cash), but this is also hard to find.
I should probably add inflation to the list of things pushing the price of RE up. What is more annoying than the rise in values is what I see as a rise in values compared to rents.
I don't have the millions, but even though I'm somewhat unqualified, I'll second dwolfe's opinion on multiple lower value ips being a better solution than million dollar ip. One common thought is that in times of downturn, lower end property is less affected than top end property, in terms of value, rentability, rental rate, everything. I think we see real evidence of this in the recent downturn. During the recent downturn, my IP (lower end freehold residential property) continued to gain value, and rent continued to rise as it has always done. There is alot of sense in this.
Bump..
I'd also like to know.
Hello John,
The article appears to be well written and researched, except for me, it fails to substatiate its claims with referencing. When an opinion is stated as fact, I always like to know who's opinion it is.
I'm also wondering if you have some sort of relationship with Australian Real Estate.net or if you just found this article on the net, surfing around.
Next I'm wondering who they are? Perhaps I should already know.
While the article points out that movements in the drivers of demand for property in Australia can be defined statistically, it doesn't say where to get these statistics (sorry I ran out of patience to follow all the links), or specifically how to apply the statistical analysis. Nor does it answer the question "What to expect of the Australian Property Market" and it is always interesting to know peoples opinions on this, even though most investors will do their own analysis of the regions they are investing in.
Lastly, the article really seems to focus on indicators of negative and flat growth, and barely touches on indicators or positive growth.Thanks for the article.,
SThere are many forces pushing (or that have pushed over the last 10 years) the price of property to the current levels. First home owners grants, previously low interest rates, immigration, the cost of developing land, the shortage of trade labour, the mining boom increasing average wages (particularly in some areas), the normal cycle of the economy… I could go on and on. Possibly even the widespread use of realestate.com etc meaning investors can easily review property across Australia.
Can't comment personnally on wether in is harder to find good deals now compared to any other point in time, or wether there is alot more investors. I think the question is too imprecise to be answered really – harder than when? what do you consider a good deal? I notice that many experienced and successful property investors still find "deals". Successful investors still find a way to make money in the current market. I'm struggling to find a "deal" which fits my criteria – but I have to look to myself (I believe) to discover what is going wrong. How am I limiting my own success? I have some ideas – my physical location limits my exposure to a RE market, I have a conservative risk aversion, I have limited cashflow.
My point? Don't blame the market – look to your own limitations and work on them. You can't control the market, but you can improve your own success through enough hardwork and education.
Those are useful variations on the standard approaches to finance. I'd like to see us pay property off (ie make repayments on principle and interest). I can't get around (perhaps you can) the fact that in order to pay the principle off, I need the repayments to be greater than the interest expense, and therefor, I need the net property return to be greater than the interest rate. The answer lies not so much in finance structure (though I'm quite certain that clever finance structure has important consequences for tax and for future flexibility), but in the structure of my investment – to achieve a greater cash flow return than the interest expense – which is a big ask at 100% finance.
Perhaps, jamescameron, the answer for us lies in making our second investment cheaper than the first, or the same price. If I were to purchase a second investment home at the same value as the first, the two would make their own repayments. My desire to purchase a more expensive one (as a part of a plan for a future ppor in a certain area) is stuffing that up.
Discussions such as these are useful. They make us think.
SFair enough Richard, restructure loans you say. Come the end of 2010, I will have paid out the remaining $65K on our mortgages and will have 100% equity in our real estate (investment and PPOR) and cattle (about $150K worth). We have negligble personal borrowings. I don't know how to restructure this.
But, still, two properties are going to struggle to make the repayment on the newly acquired property (because the new one is worth twice the old one)
It seems to me that jamescameron and I have a similar problem – returns are only 6% and we don't jave the cash to make up the shortfall.
One idea I'd like to explore is using the sharemarket to build deposits. A carefully selected, positively geared share portfolio might be a way to build wealth without borrowing half a mil. I have no knowledge of the share market but my Dad's portfolio returns greater than 10% in dividends, with cap growth on top.
I'll be really interested to see the suggestions you receive. I have over 600000 in equity and not enough cash flow to leverage it. What a waste.
S
JacM wrote:Hi!The general idea in property seems to be buy and hold. In other words, buy, add some value (eg renovation, or spruce the place up a bit), and rent it out. You are on a massive salary and therefore you will absolutely be in the top tax bracket. You will be able to negative gear any losses on investment properties against your income.
There are quite a few different strategies for property investors to pursue. You need to research each avenue specifically, independently and consider each objectively along with your goals and your financial and practical capabilities. Many people no longer subscribe to the idea that negative gearing is a good thing. Many consider it rather old fashioned. This decision should be made by you, for you, given your own knowledge of your personal circumstances. Given your high income, it is true that you may like to consider negative gearing, but you should also consider the many other strategies that you can read about on this site and you should realise that each strategy has a different formula for success.
About being worried that someone will say that you made the wrong choice.
1 – that person may be an idiot
2 – I'm pretty sure that there is some famous quote about the only way to be sure of not winning is not to play, or something like that. Don't be paralysed by fear. Become empowered with knowledge (no I don't have anything to sell). Learn and make the best decision you can and be happy with that.Brett, back your instincts and pass. You're right on the money. Too dodgey. Agent's will say anything. They're not bound.
Oh, and perhaps just for all the trouble they've been to for you you could organise some free publicity by sharing that little story with, say, Today Tonight or someone. Wouldn't that be fun.
There are people out there sadly not as switched on as you are, who may benefit from hearing a story like this before they get tricked.
Good on you.
I am in a differemt state, so the law may differ.
Get independent legal advice if you really want out. I got out once on the building clause due to evidence of a roof leak. Finance had been unofficially approved (ie verbally). It was a bit dicey but the vendor decided not to pursue it.
Determine what you stand to lose by continuing and what you stand to lose by terminating.
If you decide to make a lower offer, involve your solicitor (the one doing the conveyancing for you).
Next time consider "finance to the satisfaction of the purchaser" and "building and pest reports to the satisfaction of the purchaser" and having a trusted solicitor review your contract before signing.
Hello Mackay people.
We are considering moving to Mackay in about 3 years. We are looking at purchasing an investment property there in the meantime, so that we have a PPOR ready for when we move, and so that we get a foot hold in that particular market. I could really use a contact who can advise me on what are the better areas to live in and the worse areas to live in, schools, employment etc. We have our own business at the moment and want to stay with it for a few more years because it is good $, but we want to go to a bigger town for the kids education (we live in a very small outback town at the moment). When we move, we are not sure yet what we are going to do for a living. One idea is for me to work in Real Estate, as I really like real estate and have had success in sales in the past. Another idea is for hubby to go into the mines, but with no mining experience, we are not sure what opportunities there will be for him. A friend says that in the next few years there will be opportunities for inexperienced people to get into the mines as there are quite a few new projects planned.
Anyone with any useful local knowledge, your assistance would be greatly appreciated. Particularly, a local RE agent told me (yeah I know, never listen to what an agent says and hence me trying to get more info) that while during the economic downturn Mackay values took a bit of a hit, the RE market is well on the road to recovery with very high buyer interest and next to zero bargains available. Any comments?
TIA
SHa Ha.
You sound a bit like me – you sort of want someone else to give you the answer. It would be much better if you found your own answer. Here are some tips:
1. Define your goals (do you want to build wealth, or just enjoy life or both)
2. Define your capabilities, practically and financiall (do you have the time to supervise construction of a house, do you have time and skills to invest in renovating)
3. Sorry but you just have to do the maths – painful as it is. I'm sure you are capable – I have to assume that someone with your income is likely to be pretty smart and capable.You can do well by either being lucky or by being well informed, skilled and having made a good plan. You will learn a tremendous amount by doing the maths yourself. Points 1 and 2 may help you to cross a few ideas off that list straight away.
Good luck
SJason,
We did not invest in Townsville, mainly because not being on the ground I found it very difficult to get a very good buy. I still feel that the market is overpriced, and at least for me, does give sufficient ROI. We have invested in cattle instead and enjoy a low debt positive cash flow position for the time being. Another reason for not making an investment was due to our desire to move in the next few years and the fact that we did not want to tie up equity that we may have to access over the next few years.
If you'd like an opinion on any areas, if you don't know Townsville very well, I'd be happy to help. Just reply on this thread if you want to contact me as I visit the forum rarely at the moment.
Goodluck
S
