Forum Replies Created
Congratulations Samuel for starting !!!
Heres the trick. You can sit there and save and save and save for your next deposit. Or, you can play smarter than that and look around for a situation where you can make your 20K a starter deposit for what you want to buy.
Lenders will want to see the following from you. Assets. Income (ongoing not temp or part-time). And rental returns.
Do you have a good credit history? Build one !I know that 10 years ago you could do wonders with a shoestring and 20k deposit. Now you just need more to swing the deals. And a better set of credit records.
If you are smart eager and ready to make money .. you might consider thinking smart. Can you go in conjunction with a working partner? Can you get an ongoing job to supply enough income to get something?
At 18 .. if i could live it again .. i would slap myself into a two job situation, fulltime day and additional. Go to the banks once i become fully in the job .. thats at least 3 months or more … and find out how much i can borrow.
Outside of that .. you'll be relying on creativity to put together your first couple of deals. And for this i suggest you read how other people achieved that. It may give you some ideas.
The best place to start is close to or near your comfort zone.
Dont you DARE think you can start wheeling and dealing large figures multiple properties and large bank accounts all while creating viable taxation offsets …………….. from going out there and picking up the latest Property Magazine and reading an article about someone with barely no experience in real estate makes squllions in just a year or two.
For every positive writeup from someone who was an amateur investor there would be 8 to 10 who would have experienced trouble or even failiure of their investments due to one simple problem. Lack of experience in dealing with the situation properly.
You'll need to grasp the concepts of what and how your property will work. Why one property is a good investment and another is a money pit. You'll need to study your market and become an instant expert in your market. You'll need to learn how to negotiate to make a deal effective, and how to approach a potential vendor to get him interested.
Some of these you can grab from books. Others you can grab from feet on the ground .. assessing your potential area. In the realistic term unless you are looking for retirement .. your investment plans should stretch 3-7 years depending on your current economic conditions and family status. You'll make mistakes .. or you'll be smart and learn from other people's mistakes. One will save you time and effort, the other one will cost you money and time before you learn.
I follow up with asking.
Where did you come across this exciting bit of informational recall?
I have placed two posts about Queensland. Both were about the Gold Coast and its relevant troubles. None were about Queensland as a whole. I dont look at Queensland as a speculative market outside of the areas i am already aware of and concentrate on. I dont like taking on a bigger boat of expectations than I can deal with.
The post you may be referring to?
Following up from that post .. I did purchase in Kedron .. I have built a couple of townhouses and refurbed 4 Brick Veneers since we last spoke. In troubled times I still made good money on all my deals (the townhouses are rented out now .. not being sold) and managed to enjoy a quality result.
I have about 270+ posts. Feel free to guide me to that vital section where i would have spoken about the Queensland market in 2012. I have spoken twice about the Gold Coast and its ongoing troubles .. because thats an area i actually know something about. Talked about the opportunity that lay ahead after the QLD flooding for people who were prepared to invest there. And there was, lots of it. And I did invest there.
Now to follow up with an actual answer to the forecast for QLD in general? I dont believe that QLD will recover in the near term until the situations overseas clear up. Brisbane and the Gold Coast are highly reliant on the tourist dollar and foreign investment for the way its currently set up. It doesnt mean that both situations cant change. As of 2012 they are geared to markets that thanks to a high dollar .. the tourism market is drying up. Normally any city dependant on singular industries or flow-on from these industries suffers in tougher market conditions. So in short .. a change of dependancies is required to straighten these two towns out.
Again .. it doesnt mean that there isnt good deals still to be found and had in QLD. You just have to know where and what you are dealing with and how to realise its maximum potential.
I'm buying at The Entrance NSW at the moment.
Simple pleasures .. such as an easy to access beach .. fabulous views and a great atmosphere are my general guidelines for beachside property. And the prices are scandalously cheap now.
5 yrs or 10 yrs .. i know that it cant last like that.
Bravo Alex SC !!!!
* Thunderous Applause *
Dont worry .. Freckle is an expert. He's also someone who titles me a snob without reading my posts. And goes on about a doomsday without actually riding to evidence on it. Even if you examine his graph it extrapolates a short term movement onto a long term US schedule. Which is like saying by training a stallion you are guaranteed a Phar Lap. Its a non sequiteur.
And wait for it .. he's RICH ! Cos he said so. And thats worth listening to.
As Henry Ford said in cross-examination about his sanity .. WHY DO I NEED TO BE AN EXPERT .. I HAVE PEOPLE AROUND ME WHO I CAN ASK FOR AN EXPERT OPINION.
In other words .. there will be people who will take the majority of opinions and decisions by 'experts' on here and make their own fully qualified opinions to go forward. They shouldnt rely on a single opinion. Accumulated factual evidence provides a degree of truth regardless who it comes from.
As I said before .. I wont debate Freckle .. he knows too much.
Goldies .. historically for me .. CBA plays waaaay too conservative to make my deals work. So as far as I'm concerned thats their problem not mine.
I go elsewhere to make my deals work. Thats just what happens in a genuinely competitive loans market.
My suggestion is to sit down with a multibroker such as Aussie … or similar. Someone who has access to the broader market. And who is aware of your current limitations with the deal .. and who has the best approach for dealing with these limitations.
Scroll up .. you got two fine loan brokers sending you messages in this thread. *HINT HINT*
If you got figures you know you can work with .. just find a broker who completes the deal.
The valuer has to be boring, traditionalist, accurate and factual. Its what he does .. and if they cant rely on him .. they just wont use him. So he doesnt make his numbers from the air.
He takes his look at your current property .. matches it with other equivalents in the area and matches it based on a reasonably conservative outlook and overall assessment of the market state.
Your property fetching $300 is not the market in its own right. Its ONE of the items on the market. And if you have a situation where the market has moved quickly in the area .. you may find the valuer will stick with older equivalents for trying to pass the deal. To properly assess the market in Parkes .. he must look at an overview of similar properties and what the most recent rental achievement has been. Working through or for a finance broker or bank … he will probably put a conservative estimate based on the median market conditions.
Be assured .. the price you pay or get VALIDATES market conditions .. and if consistant with other prices in the area it will influence the accepted market value. But as a single price .. its not the market itself. It remains the market for that individual property, or group of properties.
Hi there Ben,
Negotiations on a deal is about realising what is in the deal .. and creating a win-win situation for BOTH parties. In other words .. your effort would be placed on making the deal as easy for the vendor to take and work with .. so you can make your money and do your efforts on the property.
People tend to confuse adjusted terms with actual negotiation. And thats not really a negotiation. Negotiation remains to actually LISTEN to what the vendors needs are and try to reflect that best in your stated offer.
In this case your basket of knowledge extends to the idea that the vendor is retiring to the coast. In that case the most likely scenario unless he's super rich is that he's gonna need the money he gets from the sale to fund his next proposition. Which sort of puts a dampener on your idea of vendor terms. Vendor terms may ask for a bit more on top of the interest component, but sale actually takes place when the FULL amount is paid. So your retiree may be waiting a LONG time until you refinance and he gets paid. That just doesnt work.
Subject to finance clauses are very standard in the industry. If you have ANY doubts about getting finance .. whether its due to income levels or valuations … include the clause in your offer that the offer is subject to finance. With competing offers .. it reduces the surety of settling the deal versus an unconditional (finance ok) offer, so it may come across as less attractive. Keep this in mind if you are competing for a deal.
I dont know enough about the status of Early Access in NSW or its legality to make a proper comment on the subject. But having done it several times before. I know i should …..
Good luck with your Negotiations.
I think the best way to make money from development still remains to over-estimate your market. In other words .. produce a product that sits in the right position .. provides the right criteria PLUS a bit more … at a margin that remains competitive.
Items like this sell well and sell quickly. A dud position or improper product can have your wait times increased anything up to 200% over the right items.
This is where the market knowledge of your area remains paramount. When purchasing land .. make sure its enough for your idea, and you leave yourself room in your budget for cost overrun.
Personally I think 200k is not enough for anything more than purchasing a house and building a unit (or more) at the back. Its a good starting figure and great deposit .. but you remain limited on what you really can do.
With that sort of budget and 1000k net income .. i'd stick to renovating older style places purchased under market value. Its a good starting position and will get you familiar with market demands. Do a couple of those with a decent margin and you'll have a real bank to work with .. allowing you to achieve a lot more.
Remember with development .. your two enemies are holding costs .. and loan repayments. If you create something and get a 'close enough' value … dont be afraid to take it. Good money is better than fighting holding costs and having not enough money.
Also see if you can build a bank / lending institution trust relationship before heading to the big stuff. The more reliable you are as a consistant repaying customer .. the more flexible the financial institutions are with their lending capabilities for you.
The best way to judge if an improvement will make the difference in a purchase is to gage the market properly.
How do you make that judgement call? Off existing knowledge. Thats a mix of agents .. listed rentals .. and previous rentals.
So what you grab is a snapshot of the market at this point in time .. and what your comparables in the market or recent listed rentals have been. Thats the only way you verify your expectations.
Sometimes not renovating is the best call in tighter markets. Simply because the market changes from greater expectations to working more towards value renting .. bang for buck. Asking more may not produce the desired results. Validate for yourself by talking to agents and property managers especially whether there exists enough demand in your NEW range for your property to lettable at this new price. But upgrading for the long term .. improves value. Make the better judgement calls by questioning the current market and future demands. Thats the type of knowledge that an agent has.
ummester wrote:Yes, you can sell your peas if there is demand and funded customers. Pretty hard to move them if the cutomers can't pay.Welcome to the market cycle. You see … if they arent paying ….. you dont fill places. If you dont fill places you REDUCE your rents to a level where the place will be filled. So if the rents are extraordiarily high .. and yet there are people out there who are MEETING the rent payments on a regular basis .. and there is a low vacancy rate, wouldnt you say that the market is doing what it is intended to do?
No wafty stuff needed. Thats whats happening. And if you feel in your part of the world that the market isnt doing that .. then you gotta ask why. Cos if your rents are at the right level .. and you got the right product for current demand .. then you got a tenant .. dont you?
How low do you think it will go .. and more importantly .. do you need to care?
If the rate is at a level at which the deal you want is feasible .. the answer is go for it.
Dont hang around at a level where the most likely maneuver is up .. telling yourself its going to go a quarter percent lower. Golden rule of the markets is .. dont try to pick the bottom .. and dont try to wait for the top. Get your loan in while the money and feasibility is good … so in the long term you make money.
Two things I dont need a crystal ball to see are .. the Europeans wont play nice to settle their debts .. and when they stop playing nice .. the banks will lock up on funds. If they are offering any money at the moment .. now is the time to put your hand out for it.
Tiger_ra,
Property is not a set of fixed figures and stated results. Its an ongoing supply and demand equation. So just because a median figure is generated to cover the suburb it doesnt state the individual performance of any particular property. It just gives you an insight into the current median expectations within that suburb or zone.
YOUR expectations on the property should be based on what your investigation into the needs and long term requirements of the area need. If the area has a high demand for unit housing .. then thats going to be an acceptable long term investment. If the area has a rushed need for development land .. BE CAREFUL. Lots of councils are looking now at acceptable development zones rather than ongoing multi story building across the suburb. This revalues the land component outside the zones. So within the zones the land is more expensive than outside the zones of future multi story development.
The same should be said about your figures on what you are prepared to accept as a return. The preamble is that if you pay for a property in a better area you should be expecting better capital growth. Thats a wonderfully conservative and naive format of investing. As an ongoing supply and demand equation .. property is also subject to trends. So what was a desirable suburb 20 years ago may not be the suburb of choice 20 years later. And vice versa. If its not liked and not wanted .. property will just trend along at a level on par or just above par. At which point including expenses .. you are actually losing money on the deal.
At a return level under the current interest rate .. you'll be paying the difference plus expenses out of your back pocket. Map the likely percieved movement in both rents .. and price for your property over an extended 5-10 year period. You may catch a boom .. you may stagnate or even take a minor loss in the market. But the map will provide you an insight as to how long the property is going to be an expense out of your wage earnings and by how much. Thats something you'll have to take account to work out how long and how willing you are to support your investment.
Negative gearing is there for when you have an excess income and wish to reduce your taxable income through claiming the costs and interest involved with a property as allowable deductions. So if you are on a high income or a brain surgeon this sort of thinking may make sense. Negative gearing is the gamble that your outlay in expense will be offset by future capital gains performance and ongoing property growth. This in itself may take time depending on when you invest in the property cycle. It also can be badly damaged by higher interest rates (again .. it all comes out of your pocket).
Negative gearing has a place and a purpose. And if you fit this situation then it might be for you.
There is a simple reason to be within swatting distance of the property. If you are not within a distance to be able to monitor the property, you are totally reliant on the property manager to protect .. maintain and keep you informed of the status of your property and its tenancies.
I would love to say that all property managers are saints and produce fantastic results within reasonable budgets, but then I can also say that Alice in Wonderland is a true life story. Neither are true.
The minute you DO find a good property manager you get them for four to six months and they move on … retire .. or delegate to a junior. So try to have a good property manager running your properties .. and just in case .. be within easy monitoring distance too.
There are two ways to think of the current scenario .. loss or opportunity.
As loss .. the chances of certain assets falling are pretty realistic. However others are featured as better long term concerns.
Gold – Tenuous to down.
Silver – Room to move still but very high.
Raw Metal Commodities – High in demand thanks to the upswing in both China and India.
Rare Earth Metals – Very much in demand. Any mining companies who offer these .. snap up.Collectibles – Thanks to the downturn .. every man and his dog is selling the family silver. In this case there are some once in a lifetime opportunities. There are TWO 20 pound 1914 issue notes on the market now. There are only 7 in existance totally. A deal to pick up? YOU make the decision.
Property – Depending on economic pressures .. a dip then a sharp upswing for all the wrong reasons. So dont get caught in the dip .. and try to aim for the upswing.
As stated above .. the fact that everyone is selling their pieces to make ends meet means that for collectibles (cars, coins, comics) the rare items are coming out of the bottom drawer. THIS is probably the best place to look for value investing.
Banks with a 6% return GROSS will leave you with a hole in your back pocket. There are better choices.
The other possibility is to put the money on TD 6 month and have money available when other people dont. Thats how to take advantage of tough times.
The Japanese Banks .. given entry to Australia as a possible market .. will do what they can to make an impact in the financial arena.
However .. my guess would be the market in Australia is very much pivotal around the four pillars at the moment and any foreign entry would find the grounds for establishment very difficult.
The only grounds they would have for greater success is that they are not likely tied to specific categories at this stage. So they can approach with an open mind our current system and find a niche.
Doubtful that such an area exists though. There is no advantage for holding a savings account .. they would all be borrowing off the same wholesale money markets that the other banks borrow off .. so the likeliness of rate competitiveness is limited. Service is being whittled away at banks .. so .. there is no specific area that they can create a leading niche category.
After saying all that .. i'm sure they arent going to enter the markets blindsight .. so i am hoping to be proven wrong.
Japanese have a habit of researching their markets thoroughly before any possible achievement .. so if they are coming they'll have bags of research and expectations. Its just knowing Australians that may be their point of weakness.First part of the process is to be within easy swatting distance of the property. If you cant be within a 30-40 min drive of the property, then you make sure you have a property manager who will act like your left hand.
Second .. when is a property an investment as opposed to a nice house in a nice area? When you can purchase a place for either under market value (or perceived market value is wrong) and there is a possibility of extending, improving or upgrading the property in the near future to maximise returns and/or rentals.
Thats why you need to be 100% on what the values are for property in that area. 2br flat? 2br unit? 3 br house? If you can pull out a list of properties and be able to identify which is a deal and what is not .. you are on your way to quality investing.
So in summary .. become the expert on whats going on in Muswellbrook .. and then use that knowledge to purchase well.
Thats really all there is to it. And once you've done that .. do it again and again and again.
Oh yes .. while you are at 1 or 2 properties and a novice .. try to buy into good areas with better tenancies. Its not that bad tenancies are a problem .. but they require extra knowledge of what to do and extra finance to back yourself up on them. Which as a starter in investing you just dont have.
You have to consider these factors when approaching a rental property as an investment.
Frequency of tenancies – How long will the tenant be staying? Each new letting incurs a letting fee and this will affect your overall investment net result. Every time your property remains empty there is a potential for it not to be filled. Slight .. but possible.
Security of Employment – You dont have a magic crystal ball to predict the future. But if you cant see the existing industries surviving 10 years .. you are looking at the potential for a dead investment. No-one to let to .. no-one to sell to. And that can be the end of your investment.
Convenience – What are the important factors for living and working in this town or city? Does the property meet those conditions at the time of purchase? Transport, shops, access to local roads.
Condition – Is the property ok to run for another couple years without maintainence being necessary? Is there problems with the placement or security of the property in the near future? These should always be in the back of your mind.
Market – Does your property fulfil the requirements of the current tenancy needs? If it does .. is there a ready market for your property in the near future? DONT ASSUME THIS – INVESTIGATE IT. It can be that the market for a certain type of property just stops being wanted or relevant without modification.
simple wrote:“Right now is not a time to be buying real estate in Australia," Mr Wirsz said. "The market has slowed substantially but residential prices are likely to fall up to 60 per cent, possibly even more, within five years." The outlook is even grimmer for land investments, which Mr Wirsz said are more speculative and will plummet by as much as 80 and 90 per cent in value. Commercial property will also take a hit in line with the residential sector shedding at least 50 per cent of its value. Mr Wirsz pointed to artificially low interest rates, high loan-to-value lending practices, overinflated property prices, unrealistic vendor expectations and Australia's large number of second mortgages.http://www.ripoffreport.com/mortgage-companies/jordan-wirsz/jordan-wirsz-diamond-bay-mortg-aa3f4.htm
Beware of a guy named Jordan Wirsz. He started a hard money lending company in Las Vegas, NV that went out of business in 2009. That company was Diamond Bay Mortgage. His investors, who were generally elderly and gullible, lost millions of dollars. When the going got tough, he folded his tent, leaving his investors holding loans that were largely or totally worthless. My unsuspecting mother was one of those investors.
He has recently tried to reinvent himself as a motivational guru and coach, and has even started writing books to bolster his credibility. He is a sharp guy and impressive on the surface. Approach with caution.
2 min Google search would tend to put a big question mark on your 'authorities' for a drop. He's a big time wheeler and dealer who has no interest in keeping to facts. He runs from one situation to the next.
If you got original features .. keep them.
I just did up a place in North Melbourne .. beautiful older style 1890s place .. and because of the way it had been allowed to run down, it had boards on the floor you could polish. Thing is .. some of the boards were flimsy and dissected and needed to be removed ………. What to do???
Problem was solved by going to the wrecking yards and piece matching the timbers to similar. Never going to get exact but you dont want it to stand out then either.
So .. having replaced the missing floor timbers with similar .. the whole thing got a sanding and a stain (to keep all timbers a consistant color). Result after three coats? MARVELLOUS !
Lets put it another way .. the missus turned to me when the carpets came up and said .. lets remove them all. I'm more creative than that .. and having a real wood floor thats nearly half an inch thick … is wonderful. The extra coats after the staining makes it look like a ballroom floor .. and the protection to the timbers from the extra coats means i can almost park a car on it without damaging the timbers.
Unless you can totally match a kitchen though .. try to renovate to an acceptable standard of 21st century. Most people HATE older style kitchens to work in unless they were good to start with.
I should also comment that i stained the timbers because they were DRY. When you sand back dry timbers you get a flaky old looking result which is very gray. I needed the timbers to show a lot more life in them as well as color match them. If you have a natural color you want to keep .. get a clear coat for them.
