Forum Replies Created
Yes, I do own an apartment in South Melbourne, which is extremely close to Southbank. My comments are not based on the attempt to talk-up the area, purely based on my experiences in this area over the last 3 years in total.
The commercial realities for owners and renters are self-evident ie depressed prices, subdued rents. I just don’t see the demographics of the area turning this area into a slum. Time will tell though.
James
Kay,
Definitely disagree with the slums of the future statement.Many of the residents (outside of professionals) are international or students of varying Asian backgrounds, and even Asian families who have migrated to Australia. Unemployment is not an issue here.
Whilst the buildings are not the HMAS in Port melbourne or The Melbournian on St Kilda in terms of style (and price too) these are not the Central Equity buildings of the early 90’s, which they had received their bad reputation for. I currently rent in a 10 yr old CE building in Southbank an can attest to the sound proofing issue (or lack thereof) as one issue. However, I had lived previously in a 2 yr old CE, with no issues whatsoever.
Southbank is predominantly office and residential towers, so in terms of residential infrastructure ie shopping, restaurants etc, you need to go to Southbank/Southgate or Clarendon Street South Melbourne (5 mins away).
No doubt an oversupply currently, which is being reflected in subdued rents 1br for newer building about $270-$300 and 2br $350-$400. As an investment, it is very marginal whether you would buy. If you chose the premier buildings though, you are paying ~$600k+ in The Melbournian.
But again, given the inflow of people into inner-city and migration, the imbalance is not as severe as everyone thinks.
James
The application of taxes and/or duties between the different levels of government are very rarely co-ordinated. Different political climates, state economies and budgetary considerations, tend to override the logical approach of a strategy to minimise the distortions that taxes have on the economy.
Word is that the NSW Libs will have as their re-election bid to withdraw the exit tax….Not sure how this will now go, given the $300m deficit the Carr government has just reported (first deficit in a decade)
James
As for Peter Garrett, the last high profile recruit that came to the Labor Party was Cheryl Kernot…..and she was a real bonus!! (well at least for Gareth Evans)
James
Character Movie
Selena Kyle Batman Returns – Catwomen
Michelle Pfeiffer (prrrr!)
Jack Napier Batman – The Joker (Jack
Nicholson)
Frank Dux Bloodsport (Jean Claude van
Damme)
Stanley Goodspeed Leaving Las Vegas (Nicloas
Cage)James
Redwing,
Instead of selling up, I rented out of my previous PPOR and am now renting myself. I have rented two blocks from where I used to live (which means my walk to work is now 7 mins instead of 15).
I am paying approximately $400 month less (although I am staying in a smaller place/older place – this was done deliberately though). Of course all other costs ie rates, body corporate, insurance etc are now tax deductible. This is worth about $4000 annually, which I can now claim on tax.
Given the market conditions around Southbank/South Melb (where I currently live and work), I will be renting indefinitely into the future. It is a far better financial decision to rent in this area than to own, given some of the uncertainties around in the inner city apartment market.
For example, very broadly a recent 2br apartment would cost ~$380k, to rent would be about $350 per week. Even on a 80%LVR, mortgage payment is ~$2144, compared to a calendar month rental of $1517.
I can do this quite easily as I am living by myself and don’t have to take into account a girlfriend/partners’s wants/wishes. I don’t think it is intuitively positive for this concept to be accepted by most people. ie renting is wasting money etc
When my lease expires at the end of this year, I am looking to upgrade into some of the newer properties in the area. This would reduce the monthly benefit from $400 to $250-300, although I would be living in almost new accommodation and nice views. This would also mean a 1 minute work to work. Best not tell my manager, especially if I am running late in the morning.
James
There does seems to be an inconsistency between the “no advertising rule” and the “Need Finance?” section service offering. Of course, it is Steve’s sight, so he can run it as he sees fit.
I would be far more inclined to speak to those who have contributed to this forum. And given the comments so far, that is a competitive advantage for those brokers on-line.
James
Just to clarify,
NSR – net servicing ratio?
UMI – ??????Derek, I agree with you wholeheartedly. Our economy is not recognisable from the early 90’s. One thing is also certain. In 2015, so to will today’s economy.
This then begs the question, what do you think this means for property within the new macroeconomy environment.
James
Ian McFarlaine is the Governor of the RBA, of whose responsibilities include amongst others
1. monteray policy
2. objective of achieving low and stable inflation over the medium term
3. maintaining financial system stability and promoting the safety and efficiency of the payments systemIf there is someone, who does not have a vested interest in talking down or talking up an investment class (eg property), it is the Reserve Bank and its Governor.
His comments are measured and informative, as he provides a broad economic view, without the spin that we endure from the politicians. However, I personally disagree with his views on reducing incentives from negative gearing. The costs you can claim against property is no different to those that a business has available to itself. We all saw the effect that flowed on from Keating’s attempt to take away negative gearing in the 80’s.
One thing that is overlooked,IMO, is if you have investment properties (or even PPOR), and their price has reduced, so what. As long as you can continue to service the repayments and other costs. Longer-term property is a good investment, so maybe the more immediate pressing issue is going to be the opposite of ‘wealth effect’ (refer Alan Kohler in todays Age & SMH).
James
In 2009, the plan is to have follows;
Number of properties: ~8
Net equity: ~$1,100,000 (forecast at average of 2-4% capital growth for the next 5 yrs)Within the next 2 years, assist (financially) my parents build their holiday home on the island my father was born in Greece.
Keep educating my sister, to purchase another few IP’s (she is happy with one currently), or at least another investment vehicle ie shares
The other goals start to morph into personal/marriage/family ie non-economic goals, which would be made easier through the achievement of the above.
Would be interested to know if anyone in 1999 had a 5-year plan? Did they achieve, fall-short, exceed? What obstacles & challenges they were confronted with?
James
SuperTed, is this just a marketing exercise or is there a change in policy at ANZ to be more aggressive in the housing market?? ie servicevability criteria etc
Would have thought that most banks being the conservative organisations they are, would be less inclined to pursuing market share in the housing investment market now…
James
In light of 2 x 0.25% interest rate increases, NSW exit taxes, the effect on the property market over the last 3-6 months has been, IMHO, disproportionate. (And not forgetting that most states have now 1st home buyers stamp duty concessions of some sort).
If you believe the figures, Melbourne has dropped in the vicnity of 13%, because interest rates have increased only 0.5%!!…….For a $300k P&I loan @7.07%, this is $100 extra per month..Not sure how logically that this $100 can precipitate such a fall. This in the context of lower taxes, relatively healthy economy etc..
I would say the evidence is there which points to the fact that most people are influenced by non-economic factors…….Call it gut feeling if you like. Ultimately though, it does becomes a self-fulfilling prophecy….
If the probablity for interest rate increase is eliminated in the short term (12 months), I think that will give a floor to the softening market…How much…I think in Melbourne at least, there is some very small downside still, based on interest rates as they are.
James
Agree with Kay, more detail please…However, in anticipation of that, I am pre-empting some of my questions….
Whos is the person/organisation giving the guarantee? Will they still be around in 5, 10 years
What are opportunities for capital growth? Location
Is the property ‘specialist’ because it is designed specifically for lessee? Could it be leased out to another tenant without substantial costs?
James
MrSimba2,
If two people purchase an IP under common tenancy, the legal ownership is 50/50. The deuctions are allowed in line with ownership rights ie 50/50.
If you buy as tenants in common, you can assign whatever ownership split you like. ( eg 60/40, 85/15 etc). There might be some advantage if for example a couple had significant diferences in income and assign ownership to maximise tax deductions.
Under tenants in common, both people are joint and severally liable for the debt. That is, you guarantee the due performace of the entire loan, including the other person’s share.
For the purposes of serviceability and LVR for another IP purchase, the entire loan and the entire loan payments are taken into account (not just your share).
James
Lambsie,
Eligibility for deductions (self-education) is that you can claims deduction for those expenses
a. in which maintains or improves skills/knowwledge that you exercise in your current income earning activities
b. more likely to lead to an increase in income from your current income earning activitiesIf you have not started investing, then the expenses you metion would be deemed to result in new income earning actvities, and therefore are incurred too early to be regarded as being incurred in gaining or producing assessable income
With regards to books, do a search on this site as there are many posts which indicate best books and their respective ratings from the reader/poster.
James
Great journeys start with the first step. Congratulations…and to many more in the future…[party]
James
1Hotvaluer,
If you are holding property for the long-term, surely, Tasmania, doesn’t have the fundamentals to be an optimal location to invest in property.
From 1976-2000, population growth in Burnie-Devenport, Hobart & Launceston are in the lowest 15 cities in a 70-city average. Other cities/towns in this bottom 15 includes Mt Isa, Broke Hill, Mount Gambier (Source: Bernard Salt Report 2003).
You would be in a better position to know property prices, but just wondering whether over time, you yield will continue to rise, only because the value of the property is falling. Burnie is an example of this, especially after the woodchipping industry was all but closed.
Outside of logging and eco-tourism, what industry does Tasmania have to attract jobs, industry and people with high disposable income?
James
Stelep7,
A $550k debt will take a substantial amount of investing in cashflow positive investments ie more debt, to generate the cashflow to start making a dent into the $550k. It sounds like your brother is at the point where his threshold (at least psychologically) totake on more debt has been reached. If you were both comfortable with taking on more debt, and undertake that strategy then you have at least passed that hurdle.
Cashflow positive investment (esp in property) are becoming more and more rare. Maybe NZ is an option (Westan & Muppet on this forum have had experience in this area and could provide some pointers). I am not well-versed in shares, so I couldn’t comment with any conviction there.
Irrespective, to take the approach, you need more debt to pay off the existing capital losses. I agree in principle with the other comments about selling to pay down debt now. You can then start at looking at cashflow positive investments and start building from there.
James
Mikefrost,
Not sure about the project you are referring to so cannot talk specifically, however, I had looked at student accommodation in Melbourne. Next to Swinbourne University in Hawthorn.
The size of each apartment is between 25-40 sqm. Banks are not keen on giving loans even to 80% LVR. Therefore you will have to put in more as a deposit to qualify for finance. The greater the deposit you need to fund, the less you have to invest elsewhere.
Land component is very small for these apartemnts, and I think, will not have a substantial capital growth potential compared with say a 1 br apartment of more normal size. (Of course to be honest, I am biased towards capital growth over cashflow).
The ‘market’ for your rentals are students, and whilst with greater numbers of international students, will probably always ensure they are filled, we are not necessarily talking about renters with substantial disposable income (whether international or local) and am suspect about the potential for growth in rents over time.
Similarly, I think the market for potential buyers is also small, so if you needed to re-sell, it may take some time.
I think, I have probably painted a negative picture from my perspective, but would be interested to see what other people think.
James
