Forum Replies Created
Richard
Bought block in Mandurah WA for $17,000 cash when 17 in father’s name (his name, my dough)and transferred title when 18 and built first house for $55,000. My first home loan.
Clive
Hi Guys
Best Move – Investing in property from the age of 17 even though I didn’t really know what I was doing and made a lot of mistakes.
Worst Mistake – Not understanding the huge difference location makes to capital growth.
Key advice – Do your research, work out the worst case then go ahead and do something.
Best book – Noel Whittaker’s first book “Making Money Made Simple” got me started.
Tips
1. Formulate a strategy, if you don’t know what your strategy is then you don’t have one.
2. Read, ask questions and seek those who have done or are doing what you are looking to do.
3. Try not to follow the herd. Invest with the head and not the heart.
4. You will screw up occasionally. Learn and move on.
5. Remember to live as well.Clive
Yes, it certainly gives pause for thought. Here was a man with more wealth than most yet obviously deeply unhappy.
Clive
Hi All
Regarding this Waroona property
Located in fast growing community of Waroona is this great investment. Currently tenanted as commercial laundry depot @ appox: $1800.00 per month. Leased until 2006, with 5 year option over 400sqm of floor space.This place is a commercial laundry that is very positive cashflow. 11 second rule:
$415 / week = $207,500 price for 10% return. Since the price is < that = most likely cashflow positive.The draw backs I see: commercial property generally needs 60%LVR or lower and from the photo’s it looks a little old so may need some maintenance soon. Lease will expire next year so be prepared for it not to be renewed.
Good points: cashflow positive for sure. Waroona is set to burst at the seems in the coming couple of years. Alcoa is investing very heavily in that area and there is a great demand for commercial space.We had a look at this place about 8 months ago. Yes the numbers sounded good but the linen company wasn’t going to renew the lease. To say it is a bit old is an understatement.
It was hard to envisage finding another tenant in a hurry either as the street where it is located is quite “dead” and is on the opposite side of the highway to where most residential development is. In fact it is down the road from the pub which also looked a shadow of it’s former self. It used to be mandatory to stop there on the way home after Footy or Cricket.
Anyway it wasn’t for us.Regards
CliveG’day there
Personally I use Devfeas 5.0 (now superseded by Devfeas 6.0) to carry out my feasibility studies.
The software is created by the Andrews chaps in South Australia. I don’t remember the website, maybe http://www.devfeas.com.au?
It is not cheap, mine cost $500 but new version is probably more, but a good package.
As with all software, it is ultimately only as good as the data entered into it.Regards
CliveBigfella
I used to dislike Bunbury. It was a town planning disaster but I have changed my opinion now.
The town centre is alive and vibrant and there are some really nice older houses in the back streets on large blocks.
It’s handy to the wine region also.I think you could do much worse.
Clive
All
Yes it stinks here in Mandurah, it’s horrid, it’s awful, whatever you do don’t come here!
Seriously though the only smell these days is the smell of car fumes when the traffic gridlocks.
Mandurah has had astonishing growth in the last 4 years. I believe that it is grossly overvalued however I have been saying that for 2 years so what would I know.The rate of growth in population has exceeded the capacity of the infrastructure. There are twice as many people here as there were ten years ago but half the number of pubs. This situation is being rectified with the redevelopment of the Brighton Hotel and Peninsula Hotel.
The town centre road system is a major screw up as is the dual carriageway with multiple traffic lights. Both of these items are scheduled to be sorted. The council plans for the town centre are quite impressive.
The average income in Mandurah is low, so the rental rates are also low. Much of the population are retirees (not the wealthy type either) who don’t pay top dollar for anything, or the unemployed.
Many of the purchasers of the top end properties are from out of town and will not be living here full time I predict. A trip around Port Mandurah during the week confirms this.
I have just sold a 4 bed 2 bath brick tile house in Dudley Park for 245K. It rented for $200 PW. A friend has an 850K apartment in the Ocean Marina and gets $350 PW for it. There is an upper limit to achievable rental and it is around $350 PW.
As for Golden Bay, I looked at it but decided against investing there because no train station was planned for the location. It’s definitely in the growth corridor though.One other plus is you don’t cop the MRIT on your Land Tax bill in Mandurah.
Will the growth continue? I don’t know but it certainly doesn’t appear to be stopping at the moment.
Regards
Clive
Jhopper,
Yes Dale Alcock is one of the Directors of the group that comprises APG, Webb Brown etc.
When I finally parted company with APG I was then faced with the dilemma you described, get plans drawn up, get approvals, find another builder etc. I decided at the time that with the additional delays that the risk of being caught in a down market was too great so sold the block. As it turns out I was wrong about the downturn.
As you correctly point out, most 3×2 and 4×2 houses (in the 120K range) look so alike that it is hard to see how copyright infringement can be determined. Nearly all seem to follow the same formula.
All I know is that in future I will have plans drawn up independently of any builder if contemplating another development.
Regarding APG I think they have a great product, their small lot buildings look great which is what drew me to them in the first place.
I just think the way they do business needs work, particularly with respect to being upfront with costs.Regards
Clive
Dazzling
I couldn’t agree with you more. It becomes a major burden as it increases exponentially. I was bitching about paying 10K last year but 36K is murder.
The solution you mentioned is one, or else you get into setting up a Trust for every property (expensive and a lot of paperwork) or spreading your investments across different states.
Mogul75 has a point in that this burden is rarely if ever covered in any of the books we all read.
In WA properties deemed to be in the metropolitan area also cop the Metropolitan Regional Improvement Tax on top of the Land Tax.
Regards
Clive
Crusader
I am assuming you are self managing?
Your Lease Agreement should spell out the notice period required to be given by either party prior to expiry of 3 year term and the details pertaining to renewal as well.
Regards
CliveGday Andy
I have been through a similar situation last year. I had engaged APG to design 3 townhouses for a lot I wished to develop. Based on their conceptual drawings (after $1000 deposit) I paid another $3000 per unit for PPA. They estimated 160K each for construction but later came back at between 180K and 200K.
I signed building contracts but then all sorts of delays with gaining approvals meant that construction did not commence by due time so then price rises were imposed (around 6%).
Eventually it became unfeasible to obtain building approval due to the Water Corp reqiring a sewer to be replaced and concrete encased.
The builder wanted 54K to release me from my contract however after involving a solicitor we settled on 18K (The costs they had incurred).
Now I wanted to obtain the plans however as you have mentioned the builder owns the copyright (even though I paid for them) and they would not even sell them (not their policy). I believe you must change the plans by 20% to avoid legal action (check this for sure).
So bottom line is they own the plans and if it is any of the Webb Brown Group then they will not sell them to you.
You will have to get new designs drawn up (that you own) and start tendering the job out.
Hope this helps.Regards
CliveKrusty
The situation you refer to can occur when you have a negatively geared property before taking into account the non – cash deductions (ie depreciation) which in new shiny apartments with all the trimmings can be quite substantial in the early years. This is how some marketing groups sell apartments as “cashflow positive”.
It is important to bear in mind that the amount of depreciation deductions will decrease in subsequent years.Regards
CliveGoldenchild
Capital growth next 12 months, who knows but I believe your selections are good ones. That corridor is only going to keep growing.
Clive
Angel
Based on your numbers you would be better off spending your deposit on shares in a large Australian telecommunications company or bank.
Not that I am recommending any shares but it pays to compare what else you can get for your money.Clive
Terry
If both partners work and are in the top tax bracket, how does a discretionary family trust improve the tax position?
We are in that position. We have a Trust but I really set that up to provide another entity in which to hold property because of Land Tax. Our income tax situation has not changed.Regards
Clive
Hi Scout
We do own commercial property but do not profess to know everything about it.
1. Yield – there is no “norm”. The rate of return will almost always reflect the risk involved. For example a building with McDonalds in a premium location could yield only 6% because investors are prepared to pay more for the security of a tenant like that. On the other hand a building in a small town with an unproven business as a tenant may command 15%.
Typically a tenant will pay most or all outgoings.2. Typically a deposit of 30% is required for commercial investment, sometimes more depending on the quality of the lease etc. The interest will usually be higher.
3. Depreciation allowances can be high in some new commercial buidings although in our case buildings have always been old so have only claimed on fixtures and fittings.
It pays to check the age of the property and have a Quantity Surveyor prepare a depreciation schedule for you.Regards
Clive
Any Perth landlords…..Yes we’re here.
Rob
I would not have the confidence to buy property sight unseen.
In the last fortnight I have looked at 2 properties in my hometown and both times the agents had made serious mistakes with the property details.
First one the agent says that block can be subdivided into 4 green title street front lots hence the 299K price. I think hang on I am sure that street is R25 not R40. Pull out scheme map and sure enough R25. Agent only mildly embarrassed.
Second one another corner lot supposed to be 893m2, suitable for duplex. Check it out, gee it looks small for 893m2? Check rear fence line, mmmmm looks like it has already been subdivided.
Check DLI and sure enough block is now only 580m2 and not suitable for any subdivision at all.
Agent highly embarrassed.Regards
Clive
You would think so but at the end of the day buyer beware.
A quick look at local real estate liftouts will always show a listing with a beautiful beach photograph but then the price seems too low and you find that the property is in fact 500 metres from the beach.SMTM
