Forum Replies Created
In Qld, the bond goes to the RTA, who issue receipts to you and the tenant. At the end of the tenancy, they refund the bond. No interest.
Regards Wylie
Hi Amanda. Also happy to oblige. We seem to be at a bit of a standstill and would welcome a chat. It might motivate us.
Regards, Wylie.
If you have subscribed to the daily property email mentioned on this site, you would have read read this morning that rents have increased and are tipped to increase more in Sydney, Melbourne and Brisbane. I tried to put the quote in this post, but it is all too hard for my Monday brain. I have just increased our rent by $10 per week (still a tad under market I suspect) with no complaint at all from the tenant. I suspect he is also reading about the rent increases over the past months in Brisbane and perhaps thinking we could have increased it more. He is paying slightly under market but we have long term tenants who are no hassle at all and look after the place like home. He has locked in for a further twelve months and, therefore, both he and I are happy.
My thoughts, Wylie.
I personally would not buy a PPOR on a busy road. I also would not buy an IP on a busy road, unless the price was extremely cheap. Don’t forget that many people won’t want to rent it and when it comes time to sell, many people won’t consider even looking.
The only way I would consider it would be a really cheap deal, with good cash flow, because capital gain will be less than even one street back from the main road.
Just my opinion, Wylie.
We have never paid an agent, have had only one really bad experience where we lost about $1000. Tenant damaged some VJ walls, luckily had insurance and the $1000 was insurance excess plus rent not paid in final weeks.
However, we have always owned IPs in the same or nearby suburbs and can be very hands on with vetting prospective tenants and organising plumbers, etc if required, or doing minor repairs ourselves.
However, if you are moving away, it may be best to have an agent.
Wylie
I have just this week been told that I can deposit funds into my Westpac mastercard (making it a credit balance) so that when we go overseas I can draw on the mastercard which is in credit.
I will double check with another branch before I do so.
Wylie.
We tried to get this St George professional package a few years ago. Our annual income was short by $1,000. They wouldn’t budge on this, so we went with another lender, who was more flexible.
The other thing I didn’t like was that they told us “you are a one income family with three dependants, therefore you spend $_____ per year on living expenses”. The figure they quoted (can’t remember, maybe $21K?) was way more than we actually “live” on. I explained that we live much cheaper than that, but again, they wouldn’t budge. The other lender calculated living expenses in a different way and we breezed in.
Apart from their absolute inflexibility regarding serviceability and living expenses, we would have loved the package. Their loss.
Wylie.
I am in Brisbane and wonder if this is the type of set up where a house on a block is now one sixth of a complex consisting original timber house with five new units in the back yard? If so, I wonder if the body corporate fees are equally split between the six.
I ask this because one of my first IPs was one unit in a new brick six pack but the front unit was three levels, three bathrooms. It caused considerable angst because this owner thought he had more say because he had a bigger unit. He wanted things done HIS way.
I just wonder if you are looking at the house, if the reverse would hold true. Would the unitholders at the back want you to pay higher body corporate fees because you are in a timber “old” house needing more maintenance? I’d check out the body corporate very carefully. If it is only ten years old, it may be brick, so I may be barking up the wrong tree.
Apart from that, I wonder about the one down the street for similar money. Is it a unit or a house on its own block of land? I assume for the price, it must be a unit, but if not, I’d say it would be a better bet, because you don’t have any body corporate hassles. If it is a house you could even go down the track later of doing the same thing to that house if the block is big enough.
If it is a unit, then I’d say you have to decide which is better value, better finish for the price and make your decision.
Regarding the split between your partner and yourself. This is a very individual one. I know when we got married, we both brought a house to the marriage. We both had debt. For me personally, if I was starting again, I’d split everything down the middle so that if things don’t work out, there is no haggling, 50/50 split.
Regards, Wylie
I agree. I’d rather eat my own kidney than attend a happy clappy night. My hubby would probably take along a book to read.
Wylie.
Just having told that story, I recall something else I have lost sleep over in the past. After moving to the house we live in now, we decided to sell an IP in order to pay off some private debt to my parents, complete renovating our PPOR and enable us to borrow for another IP.
We put the IP on the market, and first serious buyer spend a day in council trying to get an answer as to whether he could split the corner block and build another small lot house. I must say at that stage, we hadn’t thought of doing it ourselves because we had been told the block was too small. That buyer could get no answer from council and didn’t buy.
We took a deep breath and said to each other, “wow, just as well he got a “no” from council because wouldn’t we feel cheated if this small block had been able to be divided and we had missed out on the profit because we hadn’t thought it could be done.”
Anyway, next purchaser bought it, split the block and put a house on! This was before the really small blocks were everywhere and we had been told our block was too small to split. It makes you wonder why some get a “no” and some get a “yes”. I guess the first purchaser would probably have been told by council to lodge an application, that council would not give an answer without a proper application, ie, not over the phone or even a personal visit. Anyway, the buyer was a developer and did this as a living, obviously knew what he was doing, and probably had contacts as well.
For quite some time after that, I used to mull over this too. We could have done this ourselves and made money. Back then (not now apparently) we could have split the block and sold the land without having to build the house.
Anyway, I used to mentally kick myself when I thought about the money we “gave away”. It took a while to stop beating myself up about this and I am much more philosophical nowdays.
I also have to remember that at the time this was happening, we were fighting with a pool company who had left us high and dry, and planning our PPOR renovation and, realistically, with three young kids, I don’t think the extra stress of doing it ourselves would have been helpful to my life or our marriage.
So, I don’t dwell on it now, and haven’t for quite a long time, but it did plague me for quite a time. As I get older I try to think more of the positives.
It’s funny, but even writing about it now, I don’t cringe like I used to. I must be over it (money isn’t everything).
Wylie.
Looks like everyone is too embarrassed to own up to their mistakes. I must admit, when I read this post, I thought, no way am I going to bare my soul, but here goes.
Probably our biggest mistake was to sell our PPOR which we loved, and move suburbs because we were worried about the proposed parallel runway planned for Brisbane. We would have had double the planes over the top of our house and thought the value of our main asset would possibly plummet. HA, what a joke. The suburb has pushed ahead in leaps and bounds and really, we could have stayed and made good profit.
Having said that, by selling we ditched our mortgage, bought a “worst house in the best street” and borrowed to renovate it. Sold it, made some money and bought another dogbox in another good street. We ditched our mortgage again and borrowed to renovate yet again.
Each time I see the growth figures in the suburb we left, I cringe. However, I am sensible enough to know that if we had stayed, we would have had to add bedrooms and our PPOR mortgage would be bigger and we would not have bought the IPs that we have. We are not “wealthy” but we are well on track for a healthy retirement (fingers crossed).
So, in the long run, I think if we had stayed, we would probably be better off financially for that property, but probably would have more private debt as well.
I don’t know if we would be better off in a net assets sense, and it is too difficult to work out because the people who bought our “landmark” house have plonked a poxy second story on top, so personally, we wouldn’t buy it now, because it has turned into an ugly mess (in our opinion). Even if it sells in the future, it is just too hard to gauge what positive or negative effect the extention has made to the house.
I used to mull over this every now and then, but have let it go now and moved on. We are very happy where we are, but I just wish sometimes I had a crystal ball.
Anyway, look forward to hearing others’ stories as well.
My story, Wylie.
Interesting to hear others’ thoughts. Dr X, your point is valid about whether we would want to live in our own IP.
Our answer is, yes, we have good locks on our IP doors, but not the windows. Same with our PPOR. We have a back to base alarm system on our PPOR and we may well look at putting one into the IPs if asked. So far, we haven’t been asked. We don’t have window locks on IPs or PPOR.
When we moved into our PPOR we had a security grill on every window, with only the bathroom grill having a key to unlock it. We felt like rats in a trap and in fact, the day we moved in, I left my three children in the care of a friend while I picked up my husband from work. I was gone only half an hour, but in that time, my friend decided to go outside into the yard. She couldn’t get out of the house. It was quite a wake up call. What if there had been a fire or other emergency?
We now have grills on bedroom windows and selected other windows (as do our IPs) but not everyone wants to live in a jail. It is a bit like putting rugs in the IPs. Some people rent the house and ask us to take the rugs away, others want them. We put nice curtains up and have found them folded under the house after tenants move out. It is such a personal thing.
I suppose, in the end, we will add security as tenants ask for it.
Personally, I would not feel comfortable renting a house that I would not live in myself.
When I have contacted RTA I will post their take on things.
Regards Wylie.
Hey Oshen, nice try, but a bit cheeky. What I am trying to explain is that my gut instinct would kick in pretty quickily if someone gave me the old “I haven’t rented in a while and have been staying with friends”. Red flag right there. I also realise that people who like to deal with owners and not agents sometimes want to avoid the agent because they have a bad record and agents have access to databases we do not. We take all that into account.
But believe me, there are many people who just hate dealing with agents, for reasons other than they are bad tenants. Many people we have rented to have paid deposits for several houses and missed them all.
Please don’t think we just rent to the first person who comes along. Between my parents and us, over 30 years, we would have rented (mostly without references, and on gut instinct) to hundreds of people. We have only had one money losing experience (this year, lost probably $1000).
So people can wander around looking for us, but when they find us, it doesn’t mean we will rent to them.
We don’t have a foolproof method, but our gut has stood us in good stead for 25 years.
Regards, Wylie.
I agree that some people, for whatever reason, don’t have a recent reference. I know many will think us mad, but for over 25 years of privately managing our IPs, we have never asked for a reference. We go on gut instinct. It has only gone really pear shaped once (this year). My parents have had IPs for 30 years and they also manage privately and don’t ask for references.
I realise this is easier when you meet the prospective tenants personally (as opposed to 600km away).
Your gut instinct is usually right (we have found). After this year’s problem though (original tenant was fine, boyfriend was the problem – and we didn’t meet him at first), I think we will (perhaps) ask for a reference. But I still believe that first instinct about people is a powerful guide.
We used to give the first week’s rent to local agents if they found us a tenant. Usually we never hear from the agent but once an agent did find us a great tenant – a pro who had once been in jail for stabbing someone – hey thanks!! I assume because the one off finding of a tenant puts one week’s rent in their pocket and they don’t have to worry about how bad the tenant might be, because they will not be dealing with the problem.
My thoughts, Wylie.
Definitely get them sanded. It adds quite considerably more than the cost. My real estate contact says don’t do them yourself as he has seen many DIY sanding jobs that look pretty crook. To be honest, floor sanding is very cheap and I wouldn’t tackle it myself.
Regards, Wylie
Thanks for the thanks. I might just add that a relative who used to sell real estate also said that many, many buyers cannot seem to imagine something being used other than how it is presented. For example, people who have a four bedroom home may use the fourth bedroom as a study. She says to always, always put a bed into the bedroom to sell because people think they are looking at a three bedroom house, especially when they are looking at several houses.
It is also why, when we have sold any house, we dress it with nice furniture, bedding, lamps etc. A house with (nice) furniture always looks more enticing than an empty house. I personally also find that putting furniture into a room makes it appear bigger because you can actually see what does fit in, rather than trying to imagine it.
Thanks, Wylie.
I think your idea is a goer, however (don’t take this the wrong way) I screwed my nose up at your description of a bar with tacky posters. I know it is only personal choice, but if I bought a house with a bar it is the first thing I would pull out.
Why not go down the “possible home theatre / rumpus room” path. If you make that rats trap into a comfortable room that buyers can see can be made over into either a 4th bedroom, family room, home theatre (or a bar) they can use their imagination.
I know from experience some buyers don’t have as much imagination as others, so you have to sort of point them in the right direction. But rather than turn the room into a “bar” I’d transform it into a comfortable “living” room and let them decide.
It is a great idea, and anything that makes your buyers remember your house over the other ten they looked at that day has to be a worthwhile.
My thoughts, Wylie.
We wouldn’t be keen on letting everyone know what we have and what our debts are. While within our family and selected friends, we are quite open, we know some obnoxious people who are extremely keen on keeping up with the Joneses and think they have much more than us (who cares!!) and we would hate to have these types know everything about our position. I prefer to let little tidbits slip every now and then and let them wonder.
Bit like the dance of the seven veils, reveal things when and if we wish to.
Personally, I would feel (if all was laid bare in a magazine) like I was walking down the main street naked.
Just my thoughts, Wylie.
Question: For those who do not use an agent, how do you vet your tenants?
My parents bought their first house for about $2000 in the early 1960s. Friend bought two houses in East Brisbane about 1978 for around $18K and $20K. I bought and sold two IPs (don’t remember prices, but didn’t make a big profit – just forced savings really) then my first PPOR in 1983 for $46K. Married in 1986 – sold PPOR for $56K and upgraded to $93K (next suburb, much better house, same market).
My point is that for ever and a day house prices have risen in spurts and then levelled off. Personally, I think houses will keep going up forever.
My $46K first PPOR would sell now for around $450K I guess. If you told me that 15 years ago I would have laughed. The world keeps spinning and houses keep going up. Luckily, so do wages and rents, but not always at the same time.
I think people who say buying a house nowdays is too expensive forget that we all thought that, but most of us did without flash cars and expensive toys and got on with it. Many friends chose to go overseas but my passion was houses. I couldn’t afford to do both, so I stuck with houses. However, if I had wanted to travel, I would have bought a house so someone was paying it off while I was away.
I know I am sounding like an oldie but I really think that many young couples and singles nowdays don’t want the little two bedder as a stepping stone to the next one. They want the four bedroom, two bathroom with everything that opens and shuts as a starter. There are still plenty of “starter” houses which are affordable.
Just my thoughts, Wylie.
Hi, Don’t know much about FHOG but read this week in a Brisbane paper (I think) that people ARE being caught, having to repay the grant and I think fines are on the agenda as well. I didn’t take too much notice but the numbers of those caught have increased each year for three years. They are getting serious about cheats.
He has a good friend in you. He should listen to you and move into the house. I would not risk it.
My thoughts, Wylie.
