Forum Replies Created
- units4me wrote:Cargill wrote:You say you would prefer the south or southeast of Melbourne. Can you say why? Virtually all of the resources of the city are north+west of the Yarra River – commerce, entertainment, transport, hospitals, education, shopping, arts, etc – very few of these are out south or southeast. There isn't really a commercial hub out there (Frankston, Ringwood, Dandenong don't really cut it).
Cargill, you need to leave the west one day and have a look over in the East. You will then realise why the equivalent house in the east costs twice as much as in the West. Supply and demand is what drives up prices, and the demand is far higher in the East. People are not stupid, they vote with their feet and can see value in a better area, even if it costs a lot more. BTW, I can't imagine which resources you are referring to.
The east has always been more expensive than suburbs in the west. Its been like that forever but I don't see the same room for improvement in the East as there is in the West. Footscray, Yarraville, Seddon and the like are going through massive gentrification and the growth in these suburbs will be well above that of the Melbourne average in the years to come. There are still many derilict industrial sites in the West that are constantly being re-zoned as residential areas hence further increasing the price of property in the area. I think a wise investment would be in one of the areas above since they have historically been industrial suburbs that are being turned into shopping, transport and residential hubs.
As for Moonee Ponds and Ascot Vale and Essendon as well, they have been affluent areas for quite some time now. There are many $1 million plus properties in those areas and the average price is well above the average for the West.
Keilor Downs/Taylors Lakes are about 14km from the city. Lots schools, shops and only takes about 15-20 min to get into the city via the tulla. Very low crime rates in the area and houses re relatively new. However for 300K you're probably more likely to get a large unit instead a house. Closer to the 350K mark you'll e able to get a nice house with about 3/4 bedrooms, 2/3 baths and enough space to park 5/6 cars in the driveway.
It's also very hard to get a valuation for diamonds. It depends on a lot of different things. The weight, the clarity, the cut etc etc. Any one of those things can either increase or decrease the value of he diamonds. Gold or even silver on the other hand is straight forward. You just have to weight it and you know the value.
Wow, sounds like you got lucky and a lesson well learnt. If I was you I would continue looking at things that you can develop and what it is going to take and cost to develop. Most importantly, try and find out how other people have f#cked up. It'll just better prapare you when you get an oppurtunity to do it yourself.
In my planning I am making sure I can get through even the most un-imaginable situations like 10% interest rates, drop in house prices, decline in rental return and have to resort working an unskilled job if I get sacked from my professional position. I wouldn't even consider something if it was a house of cards situation. Especially when everything is so so uncertain.
We're definitely in a rough ride at the moment but I still think Australia is much better positioned than most of the western world. So the devastating housing chrisis in the US and massive price dive in the UK will not happen here. I would expect a very moderate decline in house prices by the end of the year. Possibly between 5-10% overall decline by the first quarter next year.
At the moment sellers are still demanding the same prices as when the property market was at its peak. one house I was interested in in West Footscray got passed in at Auction in October last year for $400k since the vendors wanted $410k. I think at that time last year people didn't really realise how deep in the sh#t this economy is and how long it would actually play out. That house is still on the market today, still demanding the same price. I'm sure everyone here knows many many properties with vendors that are being just as stubborn.
I think it is going to be interesting to see what happens when we have 1, 2 or 3 quarters of negative house growth. If there's a 10% drop in prices the $400k property will suddenly be worth $360k. Is the vendor still going to be demanding $410k or be kicking themselves that they didn't sell when the property market was more healthy and not have had to waste an entire year selling a house.
If there is atleast 2 consecutive quarters with significant price drops I think some vendors will decide to quickly cut their losses short and sell their house before prices decline any further. It is going to be a very very long time (10+ years) before we see the kind of sharp rises in property prices that everyone (especially vendors) seem to have taken for granted.
You don't have to "move quick". Relax and take a deep breathe, Lol.
You obviously haven't been looking at properties with a serious intention to buy for a very long time. If you did you would have had your finances sorted out and you would know exactly what you're getting yourself into. Besides, it's not the last good deal to ever come along. In this economy there's plenty more to come. You're better off missing a possible good deal than getting yourself into some very serious financial strife.
SHale, is this house in a new estate or an established area? I assume the house is in an established area which doesn't have many renovated houses. A high number of renovations usually takes place in areas where urban gentrification is taking place and the main factor that is driving up house prices is the fact that the suburb is becoming a more attractive place to live. If your house was renovated do you think it would stand out from the pack more distinctly?
Hi Mliew,
So your thinking about a shift from Oak Park to Noble Park? That's a pretty big leap across town, well for me it would be since I'd be totally separate from all my family and friends. Would you be as comfortable with this move compared to where you're living now?You mentioned that Noble Park will be a major activity centre in the 2030 plan. I believe Footscray is also another one of these centres and it is only about 6km from the CBD and has excellent public transport. I reckon that Footscray will also undergo a more major gentrification due to its proximity to the city and the rapid gentrification that has already taken place in some nearby suburbs like Yarraville and Seddon. Admittedly I don't know Noble Park too well but I am a big fan of the growth potential of the inner west. So if you're looking for better capital growth, you'd probably be better off as close to the city as possible. And as Kris mentioned, properties closer to the city can demand higher rents (closer to universities, CBD, etc).
If you're comfortable with renting out the second bedroom of your unit (to a friend or advertise the room to strangers) I wouldn't bother with the 1 bedroom idea. I think if you rent the second bedroom out of a 2 bed unit it will work out cheaper than having a 1 bed unit.
And like Kim said, don't budget with a 5% interest rate. Use something more extreme like 9% or even 10% (as I do). This way you'll know that you'll be able to sustain repayments and most of your lifestyle if the economy takes a turn for the worst. The last thing you want is to fail making repayments in a property market where prices have plummeted, thus leading to forecosure and losing your hard earned deposit.
Also, don't always believe the rental return that real estate agents quote on a property that is for sale. Infact, I think it is good to reduce the rental return they quote by about 15-25%. Browse the rental section of realestate.com.au and determine for yourself what you expect the reantal to be. In my experience I have come across some real estate agents that quote a rental price ridiculously over and above what anyone could reasonably get. You'd also have to factor in property manager costs, inurance, rates etc etc that will all reduce the rental return.
I think there is also an "emotion" factor when people go to bid on a house. Some people just want particular house that badly that they are willing to pay almost any price to get it even if they know they are paying too much. From my experience in going to a fair few auctions over the past few months it is typically the houses that are on nice quiet and attractive streets, in desiraeable suburbs that have transport, schools and shopping nearby that fetch top dollar. This is regardless of whether a property is renovated or not. If the property meets all the other criteria there will be a lots of willing renovators to bring the property up to scratch.
I personally think the key to a good investment is spotting a property that has heaps of growth potential, perhaps something that other prospective buyers may have missed.
SHales, with the house you have mentioned above, I would ask myself whether you think the street, the suburb, and the nearby amenities are enough to get you a good price. If you're not in a trendy or in-demand suburb then a renovation may help attract buyers have a bit more money to spend.
Also, I have never enquired to a council about moving main sewer lines but I would imagine it would be a definite no no. and even if you were to pay for the works yourself I reckon it would be in the tens of thousands of dollar.
I would stay away from the house if your planning on utilising it for units. Look around and you'll eventually find plenty of properties that don't have easements running through the block. By the sounds of things there is no way of building units with the sewer lines in their current position. You'd be better off paying a little extra for a block clear of any easements, will give you more possibilities.
This sounds like a scam!
I was actually at an auction last week in the old/original part of Kensington. A very nice 2 bedroom house got passed in at $360K and sold immediatly after the auction, presumably for $380K-390K. The house was already getting $350 per week rent and could probably be boosted up to $370 or $380 with a new kitchen and some minor cosmetic works around the house. To me, the relatively low sale price of the house indicates that market has definitely stagnated and perhaps even shrunk. The turn out at this particular auction was very small, probably only 25 people. It just depends on the day and the property I suppose. An auction that I went to in Yarraville earlier that day had about 200+ people there. The house in Yarraville was in very very poor condition and needed some major structural work and only had one bedroom, yet it sold for $350K. As an investment the Yarravillle property would have been a terrible buy.
I've been looking at properties (generally under $400K) fairly extensively over the last few months and get the impression that sellers still want top dollar for their properties even in these uncertain economic times. A few sellers have already started to reduce their prices but most are generally holding out for what they could have got a year or a year and half ago. One house I was interested in in West Footscray got passed in at Auction in September last year for $400K . I believe the owners want about $410K for the house, yet similar and sometimes even better properties in the vicinity are selling for around $390K. There is just no way these guys are gonna get what they want for the property. If I was them I would be spewing I didn't sell in September last year. Their stubborness has cost them an extra 6 months on the market and reduced the price of the property another $10K.
Unemployment indicators are also painting a pretty bleak picture. Figures are set to rise above the predicted 7% to around 8.5% by the end of the year. When in the last few months have predictions actually been worse than initialy anticipated? Never! All economic indicators are becoming gradually worse as more reliable data filters through.
I am predicting that house prices will continue to fall. It just seems completely illogical to assume otherwise. The lowering of the interest rate will help cushion some of the impact but what good are low interest rates if you don't have have a job? If there are 2 consecutive quarters with negative growth in house prices sellers that have been holding out for a high price will panic and sell before the market gets any worse. I think many people will just decide to cut their losses before the economy sinks any further. Best time to buy will be in another 6-8 months.
What about stumps that have been eaten out by termites? Are they also bouncy or do they remain strong? I'm not sure whether there are any tell tale signs by looking at the condition of the inside of the house, but this house seemed like it was in pretty good condition internally. No cracking in the walls and the floors seemed reasonably even for an older house.
I have just looked at a few pictures on Google and I would say that it is probably closer to termites I think. There were small cavities throughout the weather board. It looked like termites had dug tiny tunnels throughout the wood. Does dry rot look like this or does it have different characteristics.
crashy wrote:offer your services for free to other people doing renos, get work experiencealso try to get a job as a trades assistant for a tradie
I've actually thought about doing this but I would be restricted to only working on weekends as I have a full time job throughout the week. Not sure if tradies would even need anyone just on weekends.
I have had a look on seek and other job sites but this kind of work didn't really come up in any of my searches.
Hey guys, really appreciate your responses.
My aim is to buy something that does require a basic cosmetic enhancement, however it does expose me to additional competition from other buyers as there will also be a sizeable pool of people that will also be prepared to do the same thing. I have been inspecting properties and researching houses for a few months now and have a fairly good understanding of which properties get snapped up quickly and which ones stay on the market for longer. I think the propery above is definitely a more risky venture considering the uncertainty with repairs involved. I would definitely only buy an older house at a private sale and have it subject to an inspection. I think that would help eliminate some risk and alert me to exactly what needs to be done.
I guess I've always had a passion for undertaking a project like this and hearing success stories from friends about renovations that have resulted in massive profits has just fuelled that passion even further. I would have to agree that perhaps I am putting a bit of emotion into my search but I am not going to let that get in the way of my budget and the returns I expect to get from the property. I actually think that a little bit of emotion is sometimes a good thing as the same emotion might be used by prospective buyers further down the track if I decide to sell the property.
With regards to time/rent lost as a resut of renovating, I am planning on living in the property for the first 6 months since I'll be getting the FHOG and doing all the reno work in that time. That way I suppose I wouldn't be losing any time, unless it took much longer than expected. Thats another thing I would have to factor in. I will have to make sure the job is do-able in 6 months and mostly on weekends as I work full time throughout the week. Will it be possible to claim back the depreciation on the renovation if it is done while it is my PPOR?
After reading all the above i think anything like the above house probably is a bit toooo ambitious for an initial IP and reno. But I am very keen do a bit of work to a place if I think I can add some serious value to the place that exceeds my outgoings. Hopefully doing as much as I can by myself will also help maximise returns.
Do you guys know of any detailed books or resources that can be useful to a person willing to undertake their own renovations? I am just thinking of tiling as an example, I have seen it done many times but I would also want a detailed book or something that can guide me through the process. Also, any books or magazines that go through what other people have done to renovate a house. Something that would expalin the steps involved eg, taking the walls down to studs, getting asbestos removalists is, laying the tiles etc etc. Once again guys, any advice is greatly appreciated.
I don't have an investmet property in these areas, nor have I lived there but I have been watching these areas closely over the last 9 years and they have had exceptionally good capital growth. I think Footscray and West Footscray are priced around the same as the Melbourne median price while Yarraville was once well under the melbourne average but is now about 20-30% over. I am just speculating now but I believe Footscray and West Footscray still have a longer way to go towards developing into premium suburbs while Yarraville is already quite nice at the moment with more limited possibilities for improvement.
Another problem with yarraville is the amount of trucks that will continually frequent the area for many years to come. Those massive petrol tanks at the end of Francis street aren't going anywhere in a hurry either. However, the suburb is quite trendy and yarraville village is quite a cool place and adds a lot of value to the area.
god_of_money wrote:I don't think it will be going up by 5-10% in the next few years.. in fact the opposite or stagnant.I was thinking the exact same thing! The buyers have all the power in this market. As much as I'd hate to pay LMI, I would probably go through with a buy if I thought it was an incredibly good deal with the potential to eventually get reasonably good capital growth in the long term. I'm in this for the long run and really only looking at areas in Melbourne close to the city with urban gentrification potential. Until I come across a deal like this I'll be saving more towards my deposit.
In the news today Ben Bernanchi (sp?) announced that he predicts the US economy to be in recession well into 2010 with possible positive growth in mid to late 2010. That is ofcourse if the rescue package the Obama administration has concocted actually works. So I guess it's safe to say that property will be stagnant or will decrease in value until 2011. This is a global economy so we can't be expected to grow without inviting a few of our neighbours to join us.
And even when that time come around, prices will rise very slowly. Interest rates will be low, unemployment will be higher. This makes the perfect recipe for low inflation.
^^^That sounds like a very awesome deal indeed. Good work dude! I'm being as vigilant as I can in my property research. i'm looking at all the factors you have mentioned but still haven't come across anything that isn't a pretty standard deal. Another main factor I'm looking into is rental income. My target is 5% of the property value each year, however I would probably bend slightly on this if the house or unit was smallish but the land had development potential.
