Forum Replies Created
Hi Nigel
The suggestion given today is that with Melbourne CBD never have a shortage of Overseas Uni Students, especially Chinese Overseas Students, rental increase has been solid for years and the demand for such “student accommodation” will not die down any time soon.
So the option of “buy a ‘student accomidation’ and then rent only to Chiense overseas students and collect good cash flow” is one option that come up in our topic….
Hi Tony
A few questions.
How high is vacancy rate would you consider to be “very high”?
While I understand what you say when you said “If you are looking to build a strong portfolio you need capital growth”, but how do I avoid the situation of “I buy the next property and then I run out of money” if the ROI is not satisfactory?
I mean capital growth is definitely something I need to keep in mind, but if I get to a point where lenders are unwilling to lend me money because “I keep on buying low ROI properties to a point that I ran out of money”, then that capital growth is no use to me.
I certainly don’t want to “buy today and sell tomorrow” either.
And a lot of the strategies I have been offered with are all based on the assumption that the market is going up, and those strategies cease to work when market takes a dive… but I want a strategy that works even when the market stalls or when the market is going down rather than going up.
Basically…
Some of the opinions she offered, such as “buy apartments rather than House” and “people are starting to not prefer big land as generations go on”, are quite against many suggestions I learned from experienced property investors.
So I am interested in hearing from experienced property investors as what they think of opinions provided by the accountant?
Forgot to mention a few more things:
I had a look at the map, locationwise, it looks OK. 3 minute drive to regional city’s shopping centre. There is also a train station within 5 minutes drive away, which connects this city to capital city. Nearby schools are also within 5 minutes driving distance.
One thing that raises another question mark in my head is looking at historical trend, the capital growth has been somewhat inconsistent and it goes up and down for a bit, rather than going consistently up like capital cities.
Jaxon, this one is probably for you. Back then you made an excellent deal in Cohuna, where the ROI is above 11%. But looking at the capital growth for Cohuna, it also was not consistent and went up and down between 2010 and 2017, so what made you pick Cohuna despite the inconsistent capital growth?
teach kids about finance and how to save. Teachers have the worst record for savings and wealth creation so look carefully in the mirror mate. We have a 27 billion dollar credit card problem, why, lack of education, kids lease cars, why, bad education, first home owners now are going to use their parents equity to secure their first home, why, because we are not teaching our kids how to save, soon we will be having 100 year home loans like in Japan, how much more do you want Derek …
Teach the rule of 72 … teach compounding interest … teach how to save @20 per week … teach financial basics … teach the effects of interest free store accounts … teach how to read a contract … teach how not to get scamed … teach how to survive without a credit card and a mobile phone until they have income.
I cannot believe that people who want to get RICH and HAPPY are falling for the debt traps, you don’t need to be a scollar to work out the numbers but why is it that 97% of Aussies are going back wards ????
Fully agree.
Our schools are teaching our kids to work for others, but they don’t teach our kids financial education.
If Australian Government truly wants phase out overseas investors, they can do what Canada government did… by charging 15% or more foreign buyer tax….
Don’t think Australian Government would resort to doing that any time soon.
Jaxon
You are reviving a thread that is more than 5 years old.
Wondering if the others are still reading that thread at all..
Saw that.
The area is Vermont.
RE.com says median price is 555K, but if I drill down into “sales history”, I can see similar sized units gets sold ranging from 500-700K. The 2 most recent sales all hit up to 700K, while the rest just really varies.
Hi Benny
Thank you very much for the good explanation.
To answer some of the question you asked. No, truth be told, I was pretty sure I bought above market value.
I myself was actually not so interested in buying that property (it is the 2 bedroom unit I spoke about in another thread), and back then in October-November last year, my family was actually looking to buy for a place to live in, primarily because we liked that area and we wanted our son to go to school in that zone.
However, my wife quite liked it and she rationalized that even if we buy it for investment, we can move in for a year or two just to get our son into the school and move out again if we wanted to. Back then we also didn’t have deposit to win any auctions for large properties, so we ended up landing on that one.
Back then was also a time when I was not so familiar with property investing, so rather than buying under market value properties, we bought it at an auction (I find auctions tends to conclude with price above market value most o the time).
So no, I definitely do not believe it was bought at below market value, which is why it came as a shock to me when I saw the HTW report… I thought I read the figure wrong… to the point where I thought HTW made a mistake or something.
But, I guess now that I have calmed down a bit. It makes me quite happy to a degree.
I would be even happier if the rental income can be higher. Currently, the weekly rental income is only a bit more than 350, less than 400, which means despite what appears to be a good capital growth, but ROI is veeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeery low.
Also, how long is the validity period of the valuation?
Hi Benny
No, I did not request for the valuation.
I simply spoke to my broker about refinancing my investment loan from my current bank to a lender which he has contact to for a lower interest rate. (my current bank offers 5.1% IO while the lender — which is not a bank — introduced by broker is offering 4.4%)
The property was purchased for 550K, with a 440K loan.
However, back then I didn’t understand the advantages of using IO, so I picked P&I, so in actual fact, now the loan is just slightly over 430K as I have been paying almost 9 months of P&I.
The valuation happened in background without my knowledge. Just that once the report was ready, my broker sent it to me as an FYI.
I did a quick search on realestate.com.au, and found the properties of similar size have quoting from between 500-550K to 570-600k, with a few exceptional cases where similar properties got sold close to 650K.
It makes me think the valuation is probably reasonable… though to be honest, I expected capital growth to be lower than 50K in 8 months…
I also didn’t think a valuation with HTW would happen as part of refinance… I have always been under the impression that lenders have their own appointed valuation entity and the valuation figure is usually pretty close to the property’s selling value, if not the same…
Thank you very much Corey
The broken has assured me at least for the past 4 years, they have not increased the interest rate for this product. He also explained that not everybody gets exactly the same interest rate. For example, user A may sign up with this product with a rate of 4.5%, and user B may sign up with this product at a later time with 4.45%. The rates for user A and B are slightly different, because during finance situation between when user A and user B joined are slightly different, but once signed up, the rate remains pretty much unchanged for both users (that is user A gets 4.5% for long term and user B gets 4.45% for the long term). He said this has been the case for the past 4 years that he has worked with Resimac.
However, with APRA making the regulation and banks tightening the lending, Resimac is also doing something similar too. I got information that starting from 1st September, new applicants will be signing up with 4.6% while existing applicant’s rate will remain un-changed at 4.4%.
Initially I was not too sure how best to verify the broker’s information, but I guess with Richard’s response in this thread (which is pretty consistent with the broker’s advice), I think that should be fairly accurate.
Thanks Richard
Based on your knowledge or experience with them, would you know how frequently they might change rates for existing Horizon product users?
Cheers
StevenThanks all.
I attended the workshop earlier this week. It was 2 hours instead of 3, and I agree, she is a great presenter.
She didn’t dive too deeply into the how to execute her strategy part, but that’s expected as the amount of details will probably take hours of days to cover.
I didn’t sign up the $6K course though, not because I think it is not valuable, but if I do that on the spot, my wife will have an issue with me for doing this without her consultation.
The thing about her training course is that not only does the course include teaching materials, but also gives students access (she said unlimited access) to her legal team, her finance team, her portal where she gets all the first hand distressed property information, etc… which to me sounds like a very good deal. Also, if I can just do 1 of those deals right, I can make a 30-50K profit, which easily covers that 6K course cost. (difficult to convince my wife though, which is a shame, otherwise I think I would have signed up on the spot)
Hi Richard
What does “honeymoon product” refer to? When you say a product is “honeymoon product”, are you refering to packages with ridiculously low interest rate in the beginning and the rate will hike after a short while? Does that mean the concern raised by Corey does not apply to Horizon product offered by Resimac?
The amount being refinanced (if I choose to go ahead) does exceed 300K.
Cheers
StevenHi Corey
I just looked at the document I was given. The product is called “horizon <= 80 LVR Standard Var & Loc Inv”.
Are you able to tell the nature of such a loan by looking at this product name? Does it look like one of those “lender special” loans that will experience rate hike later on?
The major banks are charging me 4.5% interest rate for P&I.
Problem now is while I do have more than enough income to sustain it, but the idea of me feeding 700+ per month out of my pocket (because my property is in an expensive area where rental income doesn’t catch up) is less than appealing to me.
The broker who spoke to me said in the past 4 years that he dealt with Resimac, Resimac has not raised the interest rate over and above any other lander and he has assured me that he will not sign me up with a “lender special” loan, which is the type of loan that attract clients with lower rate and then hike it.
How much trust to put in that?
Hi Jaxon
When you buy properties inter-state, do you make a travel to the site every single time?
If not, how do you ensure the inspection done by the person who does it on your behalf is accurate
Hi Zen
Thanks for the feedback.
So how much is actually being presented in her workshop from what you remember?
When I signed up for the workshop, I was also given the option to buy the following books for $17, which I did:
Property Developers Guide to Success
Property Developer’s Essential Legal Kit
Reports 1 – The Economics of Property Development
Reports 2 – Property Development: The High Level PictureHopefully those books are useful.
I think at this stage, I will skip the $6K course for now… but I will listen to her presentation at least.
Which area was that? The one you mentioned with 0 growth and people not able to pay rent?
