Forum Replies Created
Hey Foundation. Look, you obviously are a smart cookie but all I am saying is that when I wanted to buy a house, I didn’t let anyone (even the bank) stand in my way. I couldn’t afford a whole house, so I went shares with my dad in a unit, which we rented out. I lived at home and was about 18.
Next I bought a quarter share in a house with my dad, brother and ex-boyfriend.
Next I bought my own house and actually lived there. Money was REALLY tight and if I couldn’t have afforded it, I would have gotten in a boarder.
My point is that if you want something badly enough, you will MAKE IT HAPPEN.
I don’t know much about macro, micro or anything else. I know that we have made good money from renting houses and we have never been making great salaries. We did without and scrimped and scraped for years while we were getting our heads above water. I would not change a day of it.
I believe it can still be done if you want it badly enough. If I was starting out today, I’d get in a boarder or two to help me through the first tough years. I will be quite happy if my boys live at home but buy an IP to get them in the market.
My first house I was earning a pittance, but I sacrificed and drove a crappy old car, didn’t spend much. I just believe that many people are not prepared to NOT go drinking on Friday night, or buy their clothes from Lifeline if they have to. I know many women who think nothing of spending $160 per month on their haircut and have their legs waxed each month (and some whose daughters are already getting used to this!!).
My point, I suppose, is that any time I have wanted something badly enough, I have made it happen and have done so through all sorts of economic scenarios.
Could I suggest you lose the sarcasm.
Wylie
I have to disagree Foundation.
Friend of mine in my suburb bought the house that backs onto their side yard on 24 perches. She split the block and took about 8 perches from the back yard and then sold the front house, now on 16 perches for the same price she bought the house for. If she had held for a little longer, she would have made money on the deal and still gained 8 perches. When the next house came up, she did the same again, cut off another 8 perches with an in-ground pool and sold the front house, again for about what she paid.
I have a relative who used to sell real estate. The land content is only part of what people are buying. Unless the land is big enough to subdivide, many folk don’t want a big block and quite often, the block size has little bearing on the cost of the house – at least in my inner suburb.
Wylie
No it doesn’t clarify it really. I am talking well under $300K and also what happened to having a deposit?
If you save say $20K deposit and buy for $250K the loan is looking manageable. It is how I got on the ladder.
Wylie
When house prices as a multiple of income is quoted, I often wonder whether the figures are a bit rubbery.
I mean, a first time buyer is not going to be buying the medium priced house generally. I am talking the Brisbane market here and if a first home buyer wanted to get into the market, I think they could still buy a unit or outer suburb house for well under $300K which is not 10 times average salary.
I just think the figures can be used and twisted like any statistics. I still think a cheap, maybe crappy house is well affordable. A bit of elbow grease and time, and you are onto the next step up the ladder.
Wylie
Hey Picklesam.
I think you are making lots of sweeping generalisations. I have three children, oldest 18. He will not be having a car bought for him. I know of only one similar age child who is having a car bought for him, on the condition he doesn’t touch drugs or alcohol, and the car will be a cheap one. Of all my son’s friends, no-one is getting a free ride. They all have part time jobs.
And the baby boomers didn’t push the property prices up. That is the market cycle, and it has been going on for longer than the boomers have been around.
My hubby’s maximum loan for his first house was $35K (back in 1983) and he had saved a deposit of $20K, otherwise he wouldn’t have been able to buy his $54K small, crappy house, which nonetheless went up with the market and which we sold many years later, after turning it into an IP.
Each generation says the same old, same old. How can we afford a house? My parents had to take in a boarder in order to pay the mortgage. My mum had three children under three and a boarder to cook and clean for.
The answer is that this upcoming house buying generation will have to save like mad, don’t spend on “stuff” and buy a small, crappy house which they may renovate and make do with until they can move to the next rung of the ladder.
It was the same for my grandparents, my parents and me and now my children will face the same challenges. Even though we are in a position to help them financially, we certainly will not be “giving” them anything on a platter. They need to learn the value of money and work.
Wylie
If he is a reasonable chap to deal with and will co-operate with you in minimising the time the house is empty, why not cut him some slack and advertise NOW for a new tenant, house available from say, next Saturday, if he can get his gear out by then. If he is in advance with his rent and paid up until the weekend, you may well find a new tenant and not lose any money, specially in the current rental market.
If he is uncooperative or surly, I’d still advertise NOW for whenever his stuff is out and claim whatever is owed to you from the bond.
For me, it would depend on how his attitude is, as to what I would claim from the bond. Perhaps if you can afford to cut him this slack, it might just make him feel a bit better about his situation, but of course, it depends on your ability to wear a small loss, and of course, his attitude.
Don’t forget that you will more than likely be able to ask substantially more rent from the next tenants as rents have increased in many places (not sure where your IP is).
Wylie
Like Duckster said, each agent has their own idea of how much over the base figure it will go.
One local agent is so out of wack, that when we see his price guide of $400+ we assume it will go for at least $450. A friend was very keen on a house he had for sale – offers $300K+. She put in an offer of $345K based on the fact that a previous offer of $330K had been rejected.
Turns out the lady of the house would not sign anything under $360K.
It just makes a mockery of things, and wastes peoples time if they are not in the market at the higher price.
To me, seeing a guide of $300K+, my immediate thought is that $300K will buy the house.
Wylie
I would suggest a trusted local real estate agent to give you an idea of what this house is worth now, and what it would be worth once the work is done.
Also get that same agent, or one who knows about rentals, to give you the same figures for what it is worth per week now and once renovations are completed.
These valuations will help you make up your mind.
One thought I had is that you can always do the reno later and if you can get into another IP now, then you have another house ready for the next boom. However, I don’t know the market where you are and you would need to know whether the local market has hit its peak. If so, you have time on your hands and could do the reno now and start getting higher rent and still buy another IP before the next boom.
If houses are still going up, maybe put off the reno and get another property, if your finances support it, of course.
Wylie
I know not everyone agrees but I am of the school of thought that property will double about every 7 to 10 years. I bought my first IP nearly 30 years ago (I am 46) and have watched three cycles. I don’t think things will be any different from now on, and if it were me, I would hold onto them if you can afford to.
Even if they never go up in value (don’t believe it for even a minute), your rents will and your loans will go down.
Every time we have sold a house, we have regretted it, even though it was necessary to consolidate debt and for living expenses with three growing boys and school fees etc. The choice for us was for me to go back to work or sell a house. We chose to sell a house which was the right decision for us.
If you retire in 15 years I reckon those houses will be worth a lot more then than now. I don’t know the suburbs but unless they are lemons, you will be sitting pretty, in my opinion.
I know a family with many IPs who decided to sell them all up just before the last Brisbane boom and put their funds into shares. I know that they will have done very well in shares, but their (guessing here) $2M portfolio of houses would certainly be worth more than $4M now if they still had them because the houses were in good inner ring suburbs.
Maybe their shareholdings are worth that much now, don’t know.
Wylie
Would be interested to know where your properties are to give everyone reading an idea of why they have not increased in value since you bought them.
Could you post the suburbs to give us some more info?
The other factor about the cost to hold them wouldn’t worry me at all if they have a chance of making good capital gains. We are in exactly this position with substantially more holding costs but quite comfortable that the values will increase over and above our costs, albeit it may take some time.
Wylie
I live in Coorparoo and have spoken to a few local agents recently regarding our IPs (also in Coorparoo). They all say that this local market is humming along nicely (Greenslopes, Holland Park, Coorparoo, Norman Park). Prices are rising, not at any great speed, but travelling slowly upwards.
Our equity has increased over the past year, however, we don’t hold any units, only houses, so don’t know about units.
Wylie
I saw on a renovation show (Australian show) the other day that reeded side faces down. It allows air to circulate between the boards and the joist (or whatever it is called) and allows the water to get away from that joint. I had heard this before, but now I have seen it on tv, well it must be true[biggrin]
We also have a small entrance deck on an IP with it laid showing the grooves. I don’t like it and think it looks dirty, possibly from having water sit in the grooves too long.
Wylie
In answer to dare to dream’s question about paying a family member to manage properties – yes you can.
Our IPs are in hubby’s name for tax purposes and he pays me the fees he would pay a manager. It is not a dodge though, because I actually do manage things for him.
Our accountant does both our taxes.
Wylie
Dazzling, I have send a private email, but was wondering if you and other forum members think it is a problem that men tend not to “vent” their feelings like women are prone to.
You know, have a good whinge and a really good sook, and feel better after.
I have a good life, happy marriage but just before Christmas I just felt blah! Like someone had lifted me up and I was living in a parallel universe, not really connecting with my family. I was depressed – I have no doubt – but it went on for about a week before I felt better. I didn’t feel close to my hubby or my kids. I really felt like I could have left home and started somewhere new.
I have experienced depression in close family members and would not want to feel like I did for any length of time, though I do accept that we can’t feel on top of the world all the time.
My hubby would rather have his teeth pulled than really “talk” about his feelings. He sees it as being weak in some way, and that it doesn’t help how he feels when he is down, which is a bid sad.
Wylie
Couple of thoughts popped into my head when I read this.
1. Find out what it is worth by getting a proper valuation done. If the neighbour who obviously wants to buy it to make his development more substantial is prepared to give them a good price, why not consider selling it. Each family group then does what they want with their share. This is especially tempting if they want out of the business.
2. What is the site worth to lease the business to someone else and just hold the land for future development.
2. I can’t imagine the problems that could ensue if five different family groups all had input into developing the block themselves, especially if some or all are worried about going into debt.
Good luck, Wylie.
You have the same protection of a bond. It must be lodged with the RTA (in Queensland anyway) within ten days of receiving it.
You need to do all the things that agents do, like an entry condition report, hand over a booklet about “renting in Queensland” etc. It is all available on the RTA website. I don’t know about other states, but they must have this available somewhere, I just don’t know where.
I have found that the better our houses are, the better quality tenant we get, so don’t worry too much about the fact that it is new.
Having said that, some people just don’t care, so take out insurance. But don’t get hung up on general wear and tear. It happens to every house.
Wylie
I find it a bit slow at times, and sometimes I just give up when a page just will not load at all. We have cable broadband.
I have assumed when a page won’t load (even though it is telling me it is loading) that there is some problem with the site.
Wylie
I cannot help you with conditions because we like to live life on the edge and usually go in with a cash offer and no conditions.
I will leave it to others to advise on conditions.
All I would say is to be careful about how they are worded as you can get caught if the wording is out. If you have a solicitor, I’d have them advise of the wording of whichever “out” clause you use to protect you.
Wylie
I would insist on a written contract, signed by you.
The vendor can then countersign whatever he thinks fit. If you are happy with his counter offer, once you sign off, it is done.
No way would I do a verbal offer. How do you know what the agent will say to him? How do you know the agent will even tell him?
Wylie.
I think your plan sounds good. If you are single and not needing a big house then why not look at doing this. Short term pain for long term gain.
If I was single with no kids, I would do the same to set myself up for later. But make sure that if the living with friends thing doesn’t work out, you have an exit strategy that will not leave you scraping around for money.
Wylie
