Forum Replies Created
Thanks guys Yes its a mixed bag at action. I wished I kept my big mouth shut. On inspection the agent even asked me where I was planning to put my furniture. I hope Bob is correct I never thought of it like that Bob maybe your right. I did see a few others at the inspection. I am concerned about the dummy bidding, yes I feel auctions need to be monited by some athority as surgested. I like the place buy Im not going to pay more than I can build it for that I can tell you, Im fact Im only there if its a bargan.
I think I may have a bit less competition as you must have your finance appoved and the 10% deposit ready to go. I guess I just set my limit and after that they can have it.
Cheers
Tony………………Scamp
Yes I think it may be a good idea. Its a morgagee sale mate (one of many to come). I think I showed too much intrest in it and the agent is on to me. I dont trust this person that much. I feel they may dummy me up. I will try to find a friend to bid for me and tell them I m in mexico. The agent has already posponded the auction 2 weeks so it get more people intrested, more to bid against me.
Cheers
Tony…….
Reddy
Im glad to hear you may not loose on this deal. Look at it this way use this as an experiment for the next place you buy. I feel we all can learn from it. You can now see how fine a line it is between making a profit or loss. My concern is this Why invest in real estate just and I mean just to break even and have to borrow 80% of 227,000 being around 180,000 to do it. Forget about the concept of negive gearing this is what the real estate agent will say to you when you show them that you have done you home work and you are loosing money.
I comend you on effort, risk & willingness to have a go, well done. Its easy to sit back and do nothing and much safer. Finding a property, area with capital growth is getting harder. Five years ago much easyer as property anywhere was going up but not now. I was not far off in my 5.2% rent return try to remember this figure is EBIT before intrest & tax and running costs. Reddy for what its worth my personal opinion is the margins are now to low and with an uncurtine economic enviroment rising intrest rates many people are pulling out of the market. If you have to rely on renting rooms to students to break even why bother. Im sure you have read scamps comments its not as bad as that "yet" but look at how many more properties are on the market and its not just in Hoppers its all over. The 227,000 would have been a good buy for first home buyers as a PPOR to ride out the slow down in prices but when finance is around 9.50% and average C.G. are 2-12% EBIT I would not break my legs getting to the real estate agents office.
I hope you have a better run with the next place & wish you all the best, lets know how it all works out for you.
Regards
Tony…………
Kaus / Sati
Im not meaning to be too critical here, but you have borrowed $450,000 in late 2003 its now 2008 dont you think its a bit late to ask the question bellow.
What is the return on this investment and how it is calculated? Given the rate of interest ie 9.44%
May I ask why you brought it if you are not able to do the simple ROI calculation? Im sorry to say but I feel for you, this to me is not a good investmentGross Rent @ 275 p/w = $14,300 p.a. less your running costs, rates, agent fees, maintainance, vacancy etc. say $40.00 p/w. = 12,220 this is a 2.71% return on the $450,000 before the cost of your finance 9.44%. On an intrest only loan its $42,480 p.a. or $816 p.w. as pointed out by duckster. I wont labour the obvious any more.
My concern is this: Why are people buying real estate with out doing any financial calculations? Im seeing it more and more property sold for less or the same as it was brought for 2 or 3 years ago. Is it because they are told by agents you will double your money, you can never loose on real estate, its safe as houses. My favouret is " its called negative gearing".
You will never make money on an investment that is sold for less than you paid for it, simple. You will not make money from rent if the rent is less than the intrest + your costs, simple. These cases are a indicator that the market will slow even go back. Most smart investers have their money in the bank at 8.45% fixed not great but better than the above.
Sati my friend if you keep this place you may loose more money if you sell it now you will loose money not a nice place to be. Its called risk verses return. I hope you find a solution you are comfortable with. All the best.
Regards
Tony……I agree totally John
Im attending auctions and Im getting sick of it. As an investment I can't see a return but for mum ,dad & 2 kids, 2 income couples the biding still goes on. Im after a nice place to live in as my PPOR I would like to think it will also make me a nice profit if I sell but as an invest ment the capit gains are not there at present and maybe not in the near future. I think I will stick my money in the bank and go sit on the beach in pattaya, Thailand for the 2 years.
Cheers
Tony….Reddy
I know the area you are in, Hoppers C.Gain has not been great nor is it the best part of Melbourne, if you know what I mean. If you had brought in 03 it would have been diffrent. These area are not great capital gain areas. They are cheap for a reasion, cheap to buy into and cheap when you sell. May I ask how much thourght you put into this purchase before your brought. Domains report said Hoppers had gone back by 1.5 %. If you have borrowed 100% your rent income may not even cover your intrest on the loan. If the place is costing you too much each week to cover then hey sorry to say it but bite the bullett and put it on the market. Buying costs & selling costs + your intrest will most likey eat any profit you make and since you have not had it a year you dont stand to make any anyway. What do you think will be the out come?????? Even if you paid cash for the place and are getting a 10% rental on the value of the place & it cost you $300K thats only 15,600 p.a before running cost and income tax. Thats a 5.2 % real return before tax & running costs. You can get 8.45% at the bank with no risk & no running costs.WILL BE GOOD IDEA TO KEEP THE PROPERTY OR SELL?
If you keep it its not a great investment is it? If you sell it you may be very disapointed with the result. Only you can make the most suitable decision. Not everyone makes money from realestate in fact some loose. I hope you make the right choice and you are happy with it.
All the best
Tony………………………….Cashpool
I think its intresting why you look for these areas. I lived in Footscray in the hight of the "H" boom. There was a form of cash converters on every corner. Basiclly it had a bad reputation. But to my supprise I had no problems at all when I lived there. My point is crime, hooning, drugs etc happen in all suburbs in all states. Im now looking at a suburb in the west and when I mention it to my friends they tell me Im mad, because of it reputation. Most places reputation is based on bull shit from what they have heared or read. Cheaper land/ house prices tend to attract lower income people ( working class). To buy into these areas has pros & cons. However I feel that as land gets short and prices go up (if they do) these suburbs will be more attractive. But if it become a strong buyers market then why would I buy in a poor suburb. I worked in Social work in Melb. west suburb 8 years ago. I wish I had of purchased 2 or 3 places now. Anyway a few thing to think about.
Cheap to buy into.
When you go to sell the bad rep. may still be there, making it hard to sell.
Lower rent returns, higher defalts.
If one day you want to or have to live there, will like it.
More mogagee, repos. Detract from the value of your property.
Cherrs
Tony………
Hayley
The infomation given to you by Skip is well worth taking. I attend these actions and hunt them out during the week to get a bargan ( most of the time its a waist of time). Most banks wont give you any info about a property and will refure you to the agent. They have a legal obligation to show they have tryed to get the best price, not offen can you do an over the phone deal, beleive me Ive tryed.
Good luck mate…
Hi folks
To buy or not to buy is still the question. So many opinions, some say house prices will fall big time and for me I really hope so. I feel its ok to read other peoples opinions, cool, but at the end of the day you would be an idiot to act on any advice if thats what it is, you read on any internet forum. Ive been working hard to find a good home at a bargan price over the last 5 months, even land, and I have not been able to buy one under what the last punter brought it for. Ive approached banks & finance companies and even vendors under stress. Try telling them that their home is going to be worth 30% less next year so you best sell it to me now. If houses are falling, and I mean the average family home price not the crazy sydney places with a view of the opera house, can some one give me the address of a place and supply me the pre sale purchase price and what it is now on the market for. Something is only what you can sell it for, true. But if the bank says it owes us 250,000 then they will not sell it for 200,000 beleive me. Fear & Gread, Ive never been gready in my live but now Im regreting it. I now have been thinging I may be forced to buy out of fear because if the bubble does not burst soon Im #$%&*? My understanding of real estate is limited & property investing the same, I have an MBA and own a calculator and with all the talk of doom and gloom I just cant see it out there in the market, in the estate agents window or at auctions on the week end. I think I will wait a few more months to see if the RBA lifts rates. I also think the Aust. economy is more linked to Asia not the USA or UK. Asia, China, is booming and still buying our mining resourse. Property in Shanghai went up by 30% in 12 months. Also imigration to Aust. is putting demand up and there is still plenty of building going on, just take a drive. I also feel the banks are not stupid they will not lend money for housing, 100% in some cases if they think, as many on this site do, that property prices are about to fall. Lenders look on low docers not as home owners but renters. Their monthly repayments just cover the intrest and when it all gets too much, the for sale sign goes up. The lender gets the intrest they have paid over the last 3 years and now have a assett to sell to get there money back, next customer please. I do hope that prices fall for the sake of all average people in this great country not so wel all can get rich but so we all can have a place to live.
Cheers
Tony ……………Hi folks
To buy or not to buy is still the question. So many opinions, some say house prices will fall big time and for me I really hope so. I feel its ok to read other peoples opinions, cool, but at the end of the day you would be an idiot to act on any advice if thats what it is, you read on any internet forum. Ive been working hard to find a good home at a bargan price over the last 5 months, even land, and I have not been able to buy one under what the last punter brought it for. Ive approached banks & finance companies and even vendors under stress. Try telling them that their home is going to be worth 30% less next year so you best sell it to me now. If houses are falling, and I mean the average family home price not the crazy sydney places with a view of the opera house, can some one give me the address of a place and supply me the pre sale purchase price and what it is now on the market for. Something is only what you can sell it for, true. But if the bank says it owes us 250,000 then they will not sell it for 200,000 beleive me. Fear & Gread, Ive never been gready in my live but now Im regreting it. I now have been thinging I may be forced to buy out of fear because if the bubble does not burst soon Im #$%&*? My understanding of real estate is limited & property investing the same, I have an MBA and own a calculator and with all the talk of doom and gloom I just cant see it out there in the market, in the estate agents window or at auctions on the week end. I think I will wait a few more months to see if the RBA lifts rates. I also think the Aust. economy is more linked to Asia not the USA or UK. Asia, China, is booming and still buying our mining resourse. Property in Shanghai went up by 30% in 12 months. Also imigration to Aust. is putting demand up and there is still plenty of building going on, just take a drive. I also feel the banks are not stupid they will not lend money for housing, 100% in some cases if they think, as many on this site do, that property prices are about to fall. Lenders look on low docers not as home owners but renters. Their monthly repayments just cover the intrest and when it all gets too much, the for sale sign goes up. The lender gets the intrest they have paid over the last 3 years and now have a assett to sell to get there money back, next customer please. I do hope that prices fall for the sake of all average people in this great country not so wel all can get rich but so we all can have a place to live.
Cheers
Tony ……………Thanks Guys it seems a bit like whos sueing who. I think it will be back on the market soon.
Tony….
Richard
You said that this case is nothing uncommon. When the bank will not had over the title it puts the buyer in an bad position. You have no title the cost of sueing even if you win, the vendor has no money anyway. Does the morgagee insurance pick up the short fall on the loan. Also if the vendor is falling behind in repayments it will go to a mortgaee sale anyway and may be get less. Is this something common? Any surggestions as I like this place alot but I did not make it to the auction. I was thinking of approaching the vendor and letting them know Im still intrested. They are on the verge of bankrupcy. Can I offer them the amount that the bank want to release the title, provided it still a bargain of course. What your thourghts on this.Cheers
T…………..Qlds007
Yes thats what its all about. But if the vendor can pay out the loan with their own money + that of the sale the bank should not care about the actual sale price. Who sets the reserve in this situation, the bank? It waists the buyers time and money, inspections, when it cant be sold. Will the buyers get first preferance to make a new offer?
Thanks
Tony………….
Its not stupid at all to consider the aspect of the block I would say its a must. Im a bit fussy and go to the extream on this. Not many people do it Im supprised. I dont like corner blocks, Sola panalles on the frount of the house are a no no in most estates or the builder will charge more. I also consider the trafic and the interfirance from head lights at night and trafic safety. My friend has a house next to the hyway and it is a concern as to noe day he is going to wake up with a car in his bedroom. Cross overs, sun and light. Even the distance from the surage & electrical can cost more if its at the back of your block.
I was in a position which the agent told me the place was sold at X amount and disclosed the figure. However as no contract was signed and it was suject to finance I was told buy another member of staff No its not sold yet. I was encorage to make my best offer as there is another offor on the table right now. Well boys and girls the place is still for sale 3 weeks after. I did put in an offer and was pushed to make it my best and I may not get another chance (all sales talk). Some agents will tell you there is another offer, some will even tell you the price but untill you see it in writing dont beleive it, Why should you? You will never know if there is another offer 100%, however its not seen as ethical to tell others peoples offers. Make your offer on what you think the place is worth to you, end of story. If some one whats to pay more fine. I called ther bluff about the other offer and it never surfaced as it was 6k more than mine, so is it still on the market. Remember an Agents job is to sell for the best price your job is to buy for the best price. If you really like a place (try not to get to emothional) try to make your term more attractive 30 day settlement no finance, 10 % deposit on the table tomorrow morrning and give them 24 hours to make up there mind. However never slam the gate behind you, If your offer gets knoked back stay firm as they may get back to you or give them the hint you may be able to go a bit higher but only a bit then see what happens. I feel like others now is a buyers market, cash is the king not Elivis.
Good luckTony
gmh454 wrote:Not just the halving of rates and the speculation referred to but the deregulating of the market meant any homelss drunk could get not only 100%+ finance but a cheque for many thousands on top, a whole industry of people , brokers, spruikers, bankers, agents and not to be left out TV, with the Block, Hot Property location location, all created an unreal world, where assessment of investment, rate of return, became meaningless.
I am an accountant and when people would tell us what they were buying we would ask what is the rent and calc net rate of return, which sometimes was as low as less than 2%. When we would advise them of this we were always comforted by the client's confidence that the capital gain would make that return immaterial. Could not loose, can't fail….
I totally agree with you my friend. I went to a financial planner the other day and he said the same thing, young people obcessed with property as an investment even after been shown the sums with a retune less than 2% some refuse to beleive that property does not double every 7-10 years. I have seen so many young and some not so young vendors left scratching there head on aution day when not one bib was offered. And for the life of me I cant justify entering the property market as an invester at present. However Im always looking for a bargan.
Reminder apparently tonight on 4 Conners ABC there is a program on intrest rate and there impact on home owners, so I was told.
Keep the good news coming.
Tony…….
carlin wrote:Forumites may be interested in watching 4 Corners on the ABC this Monday night at 8.30pm. The program is about increasing mortgagee sales.Concur with Blogs and others here – too many single income/two+ kid families buying McMansions as their first home and shopping too freely at Harvey Norman = difficult times ahead.
Carlin
Thanks so much, I try to keep an eye on all TV shows (that are worth it) as some show the true picture of whats happening. I will watch Monday 4 corners for sure. Also Insight on SBS had a similar show last week . Yes Im sure Harvey N has done alright out of young First Home Buyers. Some times "24 months intrest free" means we wont allow you to pay the intrest for 24 months but after the 24 months its a diffrent story. In relation to what you saying, I had a friend who would sit in his house in the dark (no lights on) in order to save money. The leather lounge set he brought was very comfortable pity I could not see it.Thanks
Tony
virgininvestor wrote:You guys should be fortune tellers!!
So basically for saying normal people with families and who enjoy life outside money are 'F$#%ED'
Grow up and may god give you a soul.
Mate not alot of insight or useful information in the above.
It is an Investment forum and no body has said anything about "normal"
people with families being 'F$#%ED' . So I dont know why you would write that. Anyway enjoy your weekend.
Well Boys should I buy now or wait.
All posts have been great stuff. Im a cash buyer ( yes the harder I worked the lucker I became) and Im getting cold feet as I see the market at best softening. The delema for me is if I put my cash into a nice place am I going to see my assett decrease in value? New as to existing. If I build now I feel I will not loose as much as the cost of building matterials will have to go up at least with inflation. So the cost of building the same place will have to be more next year, as opposed to buying existing witch will not have new applances with warrenties & need some work. However, what sets the price of housing thats on the market, in part isnt it the cost of building the same place new hence " you cound not build it for that price" . If so what about the morgagee sales what will drive their price? I have yet to see a morgagee sale thats been really cheap in fact I saw one go for more than you could have built it. What are the best opptions for a cash buyer in this market? I can see more morgage stress to come it just has to happen. This can lead to fire sales, but at what damage to the lender and owner. I used one of the morgagee calculators online and If a couple borrowing 300,000 k @ 8.25% over 25 years, monthly repayment will be $598 per week, a situation thats not possable on a single wage or even 2 average wages. I can only smell smoke in these cases. So, will I get a bargan with a magaree sale? Should I wait till there are more on the market? Will the govenment jump in and set something up to keep people in there homes as they seem to cop it for each intrest rate rise (we know they dont control the reserve) but Joe average blame the current govenment for there own poor financial management. I am concered as to fringe suburbs dropping in value, I would have thourght they would go up as people cant afford inner, why is this. Global econmomic factor and globalization. It seems that the world wealth is now starting to balance out (look at China) we have had it too good in Aust. for a long time. In some countries average people can never own ther own home, never. Land & homes are handed down, you are born rich or you stay poor, simple no way out. I see Aust. changing also. So are we I best to get in now and just see what happens. Any opinions on the above would be appreciated.
ThanksTony……..
Nat
Im not a an invetment adviser or such so this is only my opinion. If you have $160k in cash to invest have a look at all the options. Why property? Its on the way down or at best flatening out. Property is a long term investment if you want out in 3-5 years in a flat market you may only break even. Ive seen it in recent sales. A high groth corradoor if you find one please let me know asap. A 160k investment in a TD at 8.1% ( and the banks are screaming for money now) will get you 12,960 pa. Thats $249 per week of course its before tax after 30 % tax its still $174 clear a week garenteed 100%. You will have to borrow to buy anything with your 160k. and have all the running cost. The rent will pay most of the intrest & running costs and you win on any capital gain , if there is one" if not you loose. And you only get the gain when you sell it ask a real estate agent how much to sell a place for 350000k its about $9000 so you can take that of your profit to start with.Cheers……….
people with families being 'F$#%ED' . So I dont know why you would write that. 
