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Excellent reply. Thanks.
That’s the sort of stuff I need.
I can understand additional cost now. I think from the above the majority of apparent extra cost is from the doubling up of expensive areas.
Kitchens and bathrooms would be far more expensive than say additional bedrooms or living rooms. All the extra plumbing, wiring and waterproofing.
But, I could imagine only a max 50% premium on a single dwelling price to make two townhouses. A 3 bed house has all the kitchen, bathroom etc. so I still think then the price would be closer to 2 x 3 bed houses + some margin to “stick” them together (eg planning, permit, additional insulation and fire proofing) = 2 x $130k (for the sake of argument) + $65k (for the extra planning and crud) = $325k or $162,500 / town house.
Is there a premium added because you’re expected to make better return (ie you can pay so they ask for it)? Which is kind of what is implied.
BTW: I wasn’t literally asking to build two houses really close to each other, just illustrating a point.
Oh and what if you were to build a single townhouse on a block of land? Then build a seond attached to it?
It still sounds like someone is squeezing extra profit at the owner’s expense…
Hi,
The house is being built, admitedly, by a bulk house building company and it works out at $855/sq etre (214 sq metre house).So there are lots of people agreeing a town house can cost more than double that and I’m not about to disagree. But what is it about town houses that makes them expensive?
In my understanding on a town house it is a small house, usually without a backyard. I would have thought a small house would be cheaper, not more expensive.
Can someone please explain?
At the moment I have had a great deal of trouble finding anything in Melbourne with a high rental return.
Have a look a bit outside of Melbourne. Around Geelong, Corio maybe or look to the East a bit.
I’m curious to know why you quote $180-$200k for each town house? That sounds like a great deal more than I’d have thought.
I’ve signed a building contract for a large 4 br + study + lounge double garage + quality stainless steel appliances (dishwasher, stove, oven, rangehood, taps and sink) + some basic landscaping and everything I need for tenents to move in (like carpet, timber flooring, letterbox, clothesline, flyscreens, insurance etc…) for a fixed price of $183k (obviously had to supply land on top)I’d imagine a 3br town house would take less material and labour, particularly if you are building 4 in one go. I’d have thought you’d get some synergy and economies of scale (ie casting slabs would pretty much take the same time for 1 house as for 4 close together).
Where do the other costs come in? My thought of price range would $130 – $160k depending on what finishes you used plus planning and permits, maybe an extra $20k or so for all that junk.
Is $760,000 (4 x 190k) right or would it be closer to $600,000 (4 x 145k + 20k)?
I must say I’ve always been a bit perturbed by the concept of a “drive-by” valuation. I can understand getting a basic ball-park figure for the value of a house through basic observation and similar sales in nearby locations. Unfortunately there could easily be $100,000 difference between a nice facade and a good house.
Would it be possible, for example, to erect spaghetti western style street frontage for valuation? ie: no actual house, just the front of one.
Odd.
Franked dividends have had the company tax taken out already so you will get a rebate. Unfranked means no tax has been deducted or witheld so you will be taxed at your marginal tax rate (that is the dividends are added to your taxable income directly).
Interest on a loan to buy the shares is a tax deduction. However if you are claiming interest pre-paid you can only claim a percentage in the year you claim it and the rest spread out over the next couple. You’ll have to look that up.My two cents:
Always indicate a price.
Always have at least one photo, though you should have at least 3: Kitchen, bathroom, street frontage. If you have a view, include it. When I scan I don’t bother with any ad that doesn’t have these until I’m right at the end of my selection process.
Always include a contact name. If you have a hard name to read or pronounce use your middle name or write in phoenetically. People may be intimidated if they can’t use your name.Yes men and positive people are two very different things. A positive person is a person who has made their own mind up and decided to be positive, a yes man is someone who follows your opinion despite their own.
I have had to move inter-state to avoid negative nellies and drains on my personal energy. I have intentionally surrounded myself with others who will encourage and discuss without blame or put-downs. Birds of a feather flock together but also if you get caught in a flock you will either become one or move on. I moved on and it has helped.
I whole heartedly agree with 1Winner concerning doom volunteers. I’ve seen them and I’ve had to put up with their constant nay-saying. If you so “no, wont happen” long enough sooner or later you’ll be right, but in the mean time you miss all the opportunities. So Sydney isn’t achieving it’s price potential, whatever, get over it these things happen. At the same time there are still plenty of profit making opportunities there.
If it gets too expensive, no one will buy there. They’ll look elsewhere and the price will “fall” and it will rise somewhere else as demand outstrips supply until it is too expensive there and they come back to Sydney. Will that take 10 years? Probably not. But it is possible. Either way it is not particularly important. We live in a not only national economy, but as people are investing in NZ can attest, we also live in a global economy.
DMichie, move on. Pick a new place to doom and gloom about, Sydeny is well covered and I would find more use from information concerning other places.
If you are not satisfied you can use the trade practices act as a bit of a club.
I was sent an invoice for $200 for “major removal fee” as per body corporate rules for the place I moved in to. I looked up the rules and sure enough it said that if you move in or move out of a flat you have to book and pay $200 for administration and supervision.
I wrote a nice letter stating:
I will not be paying invoice #XXX for the amount of $200 based on:
1. I was able to find cheaper alternative suitable service elsewhere.
2. I ordered no such service.
3. I received no such service.
4. In light of what is offered I feel the price is far beyond reasonable and that according to the trade practices act it falls under “unconscionable conduct” based on the disparity in negotiating power between the body corporate and myself.
5. The invoice is not addressed to myself, nor does it indicate relevant GST information.Well a couple weeks later I got a letter back saying the matter had been disposed of with the owner of the unit I moved into. In otherwords they decided it wasn’t worth pursuing.
$66 for a condition report is ludicrous given the effort, skill and length of time required to perform it. Surely you can find someone to do it for less. Heck I’d start a company that just does condition reports, charge $40 / report and everyone can cancel that part of the magement contract and sign it over to me.
I recon a condition report would take no more than 30 minute + 20min travel time = $40 for 50 min work. Line up 10 properties near one another and you’re making $400 / day to wander about and tick off items on a check list.
Rort I say.
My experiences:
I bought a stack of shares on a margin loan:
“Oh you’ve put all your eggs in one basket, you’ll lose it all”
“I wouldn’t invest in that”After I made 64%/annum on cash invested:
… (silence)
or “hmmm, my shares are going ok.”Whenever I mention property:
“I’d keep away from that, it’s at the top it can only go down.” This after property has already gone “down”.I got similar responses about losing weight. (I lost a whole stack a few years ago).
“losing weight is too difficult, besides you’re /I’m probably at my genetically preferred weight”
And after losing 50kg:
“How did you do it? I can’t believe you did it naturally or in a healthy way.” and “You’ll probably just bounce and put it all back on.”If I point out ways for someone to achieve their goals / dreams that is financially sensible I get a strange eye rolling and then: “Well I guess you and I just have a different opion about money”
or the best:
“I think life is to be lived, that’s why I spend my money, I only live once.”
As though I’m not enjoying myself or that making money is painful. I go similar with losing weight: “I just like eating whatever I like, I wouldn’t want to be all miserable and living off celery.” eh?If these other companies can gather the data from government, why not do it as well?
Or buy it from residex then publish it on your own site each week and sell advertising to real estate agents?
Hey, maybe I should keep this to myself and make some money…
Hi,
Like your nick says: nothings impossible. The first step always (not only being the hardest) should be for a plan.Write it down (actually do it, I mean actually actually do it).
Base your plan on:
You budget (write one down).
Once you know how much you have you can figure out how much you need and what the gap is. Then plan to fill that gap. I’m assuming your disability pension is due to physical injury, not mental. It’s your brain that earns you your money, not your body (what do you think controls your body?)
Plan out what you are going to do to fill the gaps you have identified.
eg: you need 20% deposit. You are looking at a 2 bedroom place you would need at least say $200,000 * 20% = $40,000 – FHOG = $33,000 + legals
You can then figure out how long you want to spend saving eg: 24 months so you’d need $1,375 / month. You did your budget so you know how much you can save each month and now you know how much you need to save. Every dollar counts so start looking for savings you can make plus money you can earn.
If it’s going to be years before you are physically able to go back to your old job, why not start skilling up on some other job that you can do.Just sliding on by in life is fairly easy and can be done with just enough effort. If you want to make enough money to be independant you need to work for it. That work includes learning more, planning more, talking more, asking more questions and looking at things in every direction. That’s why its hard to be rich, not because not everyone can do it, but not everyone is willing to put in the effort. Heck, I know I need to put more effort into what I do to reach the goals I want, but every day I try harder.
If nothing else, you can plan out an investment strategy, write up all the budget, research all the deals, negotiate bargains and put it all down in a big business plan and look for investors. People pay for others to do that sort of work.
Surrey.
I’ve found the only place that offers useful free info is
It only covers the ACT however. But it provides fairly comprahensive info about each block including past sales data (for the past 10 years), land tax, rates, unimproved value, block plan, block size, nearby amenities and so on.
Great if you want to invest in the ACT, you can do half your due dilligence for free.
6.25% is a good rental return, but mortgages run at 6.5%…
The main problem with these is the value of the unit is based on the value of the lease. That’s the wrong way around in my mind.
I say that because if you didn’t have the university lease, how much could you rent the place for? Generally at a lower value which to me says the lease is over inflating the price you are paying for what amounts to a tiny bed-sit. If/when the lease runs out, just try selling it… You’ll be hard pressed.
You can get relativley safe interest guarenteed investments that run close to 6.25% (actually closer to 6%) so why the risk of student accomodation?
I think my point has been proven by the discussion:
If you’ve got enough clear equity to live off, you’ve either got enough rental income to live off or you could cash in your huge gains and put it in an annuity retirement fund with a diminishing base and live like a king for more than long enough.
Equity cashed in (assuming you’ve held for 12 months) will only be taxed at about 24%, and only once. A $10 M gain = $7.5 M net. I can’t speak for anyone else, but I know it would take me somewhere in the realm of 150 years to earn that much after tax on my current working salary! So lets say I expect to live for another 50 years, that means even without earning interest on that lump sum I will be livin on 3x my current salary until the day I die without working or worrying or even thinking about it.
Talk about big numbers! Now if you put that lump sum in an internet account at 5% you’re talking about $375,000 a year! Sure you’ve got to pay tax on that (oh boo hoo) but in anyone’s language that equates to big bucks AND no mortgages to service. Mind you at that sort of income, unless you are a gambling addicted fool, you can’t help but make more money which means each year your income would go up.
Why the F would I want the hassle of talking to banks and arranging finance to live off my equity when I’m a multi-multi-millionaire earning hundreds of thousands of dollars each year on bank interest alone?
Gak!
[blink]Rightmove urged sellers and estate agents to drop their prices to help to improve affordability and market conditions[biggrin]
Yeah the sellers will drop prices to help those who can’t afford them
[biggrin]That’s one of the funniest and strangely the most left wing solution I’ve heard. How about the government step in and play the sovereign right card to take posession of the houses and sell them at a socially responsible price. They’d of course have to block the sale to anyone who could have afforded the house at the original price. Then when the new buyers turn around next year and sell for a staggering profit the government could step in again and cap the house price to maintain affordability… and so it goes…
Open markets, like the property market largely is, are quite good at self regulation. If the owners are unwilling to drop prices then that means there is demand enough to retain them. When the house prices no longer attract any buyers they will drop. Those who must sell due to other pressure will drop prices. I mean it’s not rocket science, it’s psychology [biggrin]
A wise man once said “everything is for sale at the right price”. It might be more reasonable for everyone to list that price. That would jump up the number of ads and would make the median house price rise too.
Quite a silly article, except for the stamp duty short fall to be experienced. That is a genuine problem when govs plan expected taxes in their budget during boom times.
The biggest problem I have personally with borrowing to live is the psychological effect of carrying possibly millions of dollars in debt. I have lain awake at night worrying about what little debt I have (in comparison to what it would be if I lived off it) even though my income (from all sources) covers it easily with enough to spare for more investment.
The thought of being 75 and carrying $1 million in mortgage doesn’t sound like stress free life.
1,000,000 * 6.5% interest = 65,000/year to pay
use 70,000 to live on for the year I can keep going indefinetly (in theory) so long as my equity doubled every 7 years (which in theory is the long term average).
So, sounds good. But if I wait an extra 3 years and sell all my IPs to get $1million post CGT and invest that wisely I could fairly comfortably get 7% return on my cash (through a managed diversified portfolio) which = $70k / year, but I’d have to pay tax on it so I’d end up with something like $50k afterwards. I’d have to wait those 3 extra years and live on $20k /year less but I’d never have to worry about debt collectors.
Of course if I figure it right I can spend $70k each year (just like living on equity) and the diminishing lump sum would run out after about 25 years. So if I figure I’ll die within 25 years and also that I spend the entire $70k each year on non-saleable assests (like just eat top food, grog, go on holidays, get hookers and burn it at the casino). Of course on $70k net a year I would end up with some assets after 25 years so if I lived a bit longer I’d still have money.I think that is a less stressful life. Though in truth I can’t see myself ever not investing, even just for fun as I find it a worthy challenge.
I don’t think anyone would be happy trying to squeeze all they did into a 12 hour window.
What can I do in 12 hours to increase value?
1. Mow the lawn, trim the edges (3 hours)
2. Replace a door (2 hours)
3. Re-tile the bathroom (7 hours)That’s probably about it really. Now if someone asked me to do that while 20 other people were all doing stuff too and a camera crew were snooping around… yeah I’d get cranky and demand a beer.
I think it’s more the case that people are very familiar with and know how to assess cars. We use them every day and know many metrics by which to judge them. There is also little legislation and paperwork involved in buying a car so we feel more “expert”.
What all that means is we can poke and prod and make longer better decisions about cars than houses. We look at a house, shurg, and make an offer. The only think we know is that we want a house, not much else really. So fear and ignorance keep us from making the same depth of decision.
Does that mean we make better decisions buying a car? No way. Buying a car is almost a complete no-no in my book regardless. They are expensive, poluting and aren’t nearly as much fun as a motorbike [biggrin]
The assumed increase in value would certainly be a big factor in taking less time to consider. Once you buy a car you’ve lost money. Once you buy a house there is the glimmer of hope that you will sell for more. Most likely though stamp duty, agent fees, legal costs and other associated crud will eat up the first 3-4 years of profit.
I thought it was fairly standard to have a remote control garage door opener and motion activated lights on new props?
Being a long term renter, my preference is for remote garage and lights. I’d easily pay $10 a week more for that. Getting off my motorbike and using a key and physical effort suck too much to not pay extra.
As for a pool… I’d pay less for a property with a pool rather than more. When I was a kid we had a pool for a while and it was work, work and more work keeping it clean. I don’t even know how much all the pool chemicals cost.
I think secure car parks are the least measure in the city. If the IP is in a block you’d also want at least one CCTV camera on the garage door. Scum like to break in to garages and nick stuff, break stuff. Much of the time these scum are known to the cops and a simple image taken when they enter and/or leave is enough for them to get picked up.
In the burbs CCTV’s may be a little much, but motion lights are just handy.
