Forum Replies Created
D,
I couldn't agree with you more – the forecasts have been off and none of the major institutions stuck their neck out to predict this earlier. There are millions of economists out there whose full time job (if they haven't been retrenched) is to model the financial market – so if even they got it wrong, what chance have I got.
Having said that, I don't believe they should throw out the models used to forecast economic expansions/consumption, energy needs, etc. Rather, they should continuously review the model to see where they are flawed, and how they can be updated. For example, to say let's totally neglect the growh in BRICS and its impact on global energy needs (plus its correlation with depleting fossil fuels) would be unreasonable.
On mine closures – my personal view
There is no doubt that there is a current stall in energy consumption, however commodity Multinationals need to maintain a medium-long term look on the global demand – so they are not caught out like some of the coal majors in the past 24 months. During the boom, some companies found themselves to have under-invested (both in assets and human capital) and tried to catch up through aggressive investments and acquisitions. Since then, there have been a myriad of commodity companies setting up mines – however some were too aggresive either in their demand forecasts, or production economics. This would inevitably contribute to mine closures given the massive drop in price/demand. As an example, some minor oil companies in the US acquired oil acrerage to produce based on a sale price of $70 – $90/barrel, compared to the majors who use sale price of $30/barrel. As a barrell price drops below $40/barrel, we'll see all the earlier companies close down – but there's still profit to be made (albeit a much smaller one).I'd be most interested to hear people's views on the 12-24 months outlook.
Regards,
Albertwealth4life,
just wondering if you got the deal with your offer? I think we're all very curious to find out.
Thanks in advance
AlbertMay I suggest that you look into some of the following: world's forecasted growth (e.g. BRICS), forecasted demand for energy (International Energy Agency), depletion of fossil fuel (primarily oil/gas/coal), investments (past and recent) by private and government bodies (e.g. even recently, there are still Chinese state companies buying into Australian mining companies).
From my own brief research (plus the fact that the oil MNC I'm with is still investing USD billions into its people and assets in asia alone!), it is still a fair bet – as long as it is aligned with your investing strategy, risk profile and you've done your DD.
Regards,
AlbertI fully agree with Nigel – do your own research (cannot stress this enough), not only on the market, but on the agent you use. I *thought* I did enough research, whilst relying on my "buyer's agent" in going into a JV in Rio Grande Valley – a mistake that cost me $12k + lost opportunity cost + forex lossess (around 20% – but this was a risk I was prepared to accept). I invested $27k and got back just over $15k a few months ago. Below are some of my learnings:
1) Being pressured into signing the JV agreement (which was just over 3 pages from memory) without having my solicitor go through it (quite foolish on looking back)
2) Did not see the alarm bell when the US buyer's agent failed to provide evidence on the area's fundamentals and comparables, and was very slow in responding
3) The builder did not provide statement of accounts of the expenses
4) The builder sent the money to the US buyer's agent and i was not informed by either the US buyer's agent or the builder – until I checked.I still believe that there are good deals in the US, but obviously you'll need to know what you're getting into. I always challenge myself – why buy in a market where there is 9 months of oversupply, rather than a market that is vastly undersupplied (I don't have the exact figure of undersupply in months).
Regards,
AlbertI found this article insightful when it comes to the reasons behind the plunge of the AUD – just as I expected, it is not as simple as I (or we) thought
http://www.theaustralian.news.com.au/story/0,25197,24463330-5017978,00.html
Hi Richard,
Thanks for the heads up. Will keep your points in mind.
Regards,
AlbertHi Richard,
That's one of the aspect that I'm currently working on, until the end of the DD period – where I'll be getting inputs on development costs(council/contributions and townplanners/surveyor/engineers fees), development finance (waiting on my current broker to reply on this), sales, etc.
I have heard that banks can finance up to 70% of end value. Is this true – if so, I suppose they require pre-sales, development experience, etc? My worst case scenario is to tap into our (my brother and myself) equity (a bit more than $500k) for the development cost and if need be, into our own cash reserve. Even then I'm not sure if that'll be enough….
Interested to hear your inputs.
On another note, thanks for your recommendation on Steve H. I like the way he explains things and he's on the ball with email responses so far. He's helping me with structuring a trust for this development. I think it must've been nearly 2 years since you recommended him to me!
Regards,
AlbertHas anyone seen the ABS link posted by Scamp? I haven't seen any replies to that post, but I'm trying to make sense of the 2006 stats. I see the total private dwellings in Australia being 8,426,599 and the total occupied total dwellings being 7,596,183.
My interpretation is that there's 830,416 of unoccupied private dwellings (total – total occupied)……..which isn't quite logical and doesn't match with the messages from the government/real estate bodies/increasing rental price + queue on rental waiitng
list……Willing to sell mine as well. Just email me if interested.
Eternit,
I must say I got a shock when I first saw the fee on our first PM agreement @ 8.8% but I soon realised that that's the market rate (that property is not too far from your area; it's in Marsden). I got the same rate for our first property in Ipswich but have since negotiated the rate to 7.5% (5 properties in that area).
Having said that, I strongly believe in paying a reasonable rate (e.g. 8.8%) for a good PM service. Unfortunately our PM in Marsden is pretty sub-standard – young PM, poor communication (which is very important as we're overseas investors). The new PM for Ipswich is very proactive and firm; so I'm quite happy with her so far.
Email me if you're interested in her contact details. I believe she'll cover Browns Plains.
I bought my first property from them. First dealt with Mark (he left), then George. They have a dynamic list of properties that you can choose from. Like any good BA, they ask for your investment objectives. Being my first deal, George was very patient. Looking back (it has been 1.5 years), I can understand how frustrating it was for him especially when he negotiated a good price for a property in Redbank Plains (would've had good +CG by now).
Would like to mention a special thanks to Richard (post above) – he got us the loan for that property. I must say Richard, after 18 months/5 properties/2 brokers +3 bankers, you're right up there as far as professionalism and efficiency. Look forward to working together again.
Albert
Matt,
The posts above have reaffirmed my perception that there's a mixed bag tradies out there; ones who are out there to earn a decent living (like wriggles), and 'the rest'.
Also, it's quite clear that once you find a good one, you'll want to build a rapport . I currently have a job of painting/carpeting/bathroom upgrade for 3 of my units and a house – based on the "referral" system, I think I'll be contacting the various Real Estate professionals that I know/trust to get some referrals.
Does any of you know if there's a post on the forum that's purely to recommend tradies? That'll be an idea!
Lyrae,
Did you get referrals from friends on good tradies to use before you started your renovation?Albert
Matt,
thanks for the input. Touching on myth no.3 – say you're looking for an electrician to re-wire one of your investment properties, and you have not used any electrician before. If a friend recommends an electrician whom he/she has used previously, would you be comfortable with using him/her? If so, what checks would you peform?
Albert
Crashy,
You hit a good point there. When the job is "lump sum" or "turn key", there is a tendency to include contingencies etc. Having said that, even with your regular tradies, do you still get quotes for new jobs?
Do you believe in using tradies recommended by friends? Do you personnaly recommend tradies? I've heard that some people are afraid to recommend for fear that their "realiable tradie" will be loaded with requests.
Regards,
AlbertI’m in the process of opening an account with HSBC….just wondering if a normal savings account will do for mortgage applications? or do I need a different type of account?
Albert
I agree with Todd. I’m onto my third property, all bought sight unseen whilst sitting here in front of my PC in Malaysia.
As Lomas said, you can find out a lot about an area (some times more so than a local); rental demand, local economy, council policies, demographics, etc.
Having said that, I strongly believe in getting “an eye on the ground”. This is to weed out things that cannot be seen from the online pictures (eg undesirable neighbours, quality of the street & surrounding areas, and local opinions/ local knowledge). Since I focus on a particular area (or two),I have established relationships with one or two PM from that area. He/she will help me check out the potential properties for me.
I’ve now taken the next plunge; to do renovation/minor development (build/relocate a house onto a block) all the way from here.
All the best
AlbertHas anyone visited Springfield/Camira lately? Just wondering how’s the area developing….
I’m currently considering going into this area.
AK
hi there
I’ll be doing a similar trip like yours this coming May. I just started property investment late 2005, and my investing partner and I are in the process of closing a deal in SE Qld. I’m currently working in Asia, so we bought the property sight unseen.
Since I do not know much about Qld, the aim of the trip is to familiarise myself with the following areas:
West (Ipswich and surroundings)
South East (supposedly growth corridor)
Gold Coast (I heard vacancy rate’s rising? possible price drop?)Do you (or anyone) has any advice in terms of the best people to contact to get an idea of the specific areas? Since I’m new to the area, I’ll need some guide in moving around? So far, I plan to meet
1) My Buyers Agent
2) My Mortgage Broker
3) The Building inspector who I knew through my first IP
4) Property ManagerIs it wise to contact the real estate agents? I always have the feeling that I’m expected to buy something after he/she show me around.
Would appreciate any feedback/advice.
wellontheway
