Hi all,
I am new to the game and have been a keen believer in the wealth power of property however, with the property cycle in a boom and premium prices being paid for property i am not sure if i should get into property at the moment. My thoughts are reinforced with lots of talk of the cycle ending and the prospect of finding many bargin properties when the downturn occurs. I am interested in what people think if i should bide my time and wait for the down cycle or get in regardless of what cycle the industry is in??Hey there Dave,
Welcome.
I guess you have to feel comfortable buying whatever the cycle. I know I am still comfortable buying, but only when the numbers work. I picked up a house last week for $55K which rents for $120/week. I could resell the house for $65-70K tomorrow but why would you with a cash positive deal. A lot of people are paying top dollar for property and may find their prices being rather stagnant for a while or maybe the market will continue to trundle along. Either way there are still deals out there and they just have to be found. I know I personally ignore most commentators on property as they are merely that, commentators. I look at every deal and see if it justifies it’s own purchase. If that is the case then I might buy it. Reality is deals are in evry stage of the cycle, they are just harder to find in some cycles. Whatever happens don’t end up being like the people who are waiting for the perfect time to buy. There is no such thing but there are opportunies all around us. I hope this helps and most of all enjoy your experiences.Enjoy
ADA great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithThanks for the advice, I guess you got to get in there and go for it (as long as the numbers work). My next question is and I suppose what everyone wants to know is how do you find that deal. I have been looking and there are no places in Perth that you can buy for $55k, the cheapest I have ever seen was $85k and it wasn’t going to generate a positive cashflow. I always hear people saying the deals are out there you just have to look, where else can I look??
Dave
We have just started out in the property game and after attending Steve’s Melbourne seminar we came back to the country and thought the same thing, where are these properties.
We are a long way from Melbourne. We were determined to get started though, and have now found a good area where the numbers do add up well. The catch for us is that this town we found to wrap in is a six hours each way drive away. We didn’t let it stop us though and we now have 5 wraps in the process of settling.
I guess what I’m trying to say is that just because you live in Perth and can’t find properties in Perth doesn’t mean that the game is over for you.
Good hunting
Carolynne
Dave
I am with AD & Carolynne here.
During the Sydney Seminar a lot of folks asked me where we bought properties.
I deliberately did not answer with “this” or “that” town as that response really misses the point. WHERE you buy is a function of WHY you buy, not the other way round !!
So after thinking a lot about it, my best (and I believe the most useful) words were:
“Try and find something that you can drive to, so you can keep an eye on it and solve any problems that come up. Later, when you have your system together, you can do things that are more remote”So, why not go for a good long drive around this weekend and just see what turns up within a few hours of home ??
cheerio (and “break a leg”)
the Bruce [
]Hi there Dave,
There are people who will let you be their money partner and will do the work for you, but of course you don’t get all the profits. This may be an option for you depending on how much time, money and stress you have. This way you don’t have to look for properties and make sure they work, ’cause someone has done the homework for you.
Knowing nothing about Perth I’m not sure whats there, but remember ‘There are no problems, only solutions’ and I’m sure there is a property with your name on it out there!Oops! I forgot to sign off
Sooshie [
]There are no problems, only solutions!
Edited by – [email protected] on 22/11/2002 10:13:06 PM
G’day Dave
I have recently joined property investing and read your note about finding property. I have been looking for a couple of years in the wrong places! I too couldn’t find a suitable positively geared property. I have recently purchased in a country town (SA)near family, which has a high demand for rental properites for under $60 000. Rent approx $120 / week. There is not huge capital gain but the 2 bedroom house is a great renter.
Good luckMonty %)
Thanks everyone, I guess what I learnt was that the property dosn’t have to be next door it could be anywhere in the state or Australia as long as the price is low and attracts the right rent. Correct me if Im wrong, but is it immposible to have a property with capital growth and with positive cashflow or is there a trade-off between the 2?
Thanxs for your replies they have helped me broaden my horizons and live outside the square i live in!Hey Dave,
Great question. The common belief is that one is mutually exclusive to the other….in saying that though of the 6 properties we have bought so far 5 have gone up over the last 3-6 months with the lowest gain of around 15%. The best has gained 30%+ from my purchase price. Here is an example. Bought one for 55K and rents for 120-25/week, current resale value would be at least $72K (more likely $75K but I am conservative).The upside of this one is I only bought it last week and won’t settle for another 50ish days. I have others I have bought early on in my journey (6 months ago) which have all gone up nicely.
So the answer is in my opinion and extremely limited experience …… maybe. I guess it depends where you are buying and what is happening in the area to encourage price growth. If you buy correctly you may get both but the question you have to ask yourself is what do I really want…growth or +ve cashflow. The end you have in mind should determine your strategy. I am looking at providing a cashflow that will pay off the properties I own such that I can choose to retire in 5-10 years. For me then at this stage cashflow is king.
Hope this helps Dave, it is only my opnion and I am still somewhat of a newbie.Enjoy
ADA great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithYes there are plenty of properties out there but finding the right one that suit your circumstance is the trick,you basically have too look and look and alocate a certain number of hours a week into searching. as you become property friendly you start to systemise your time and it goes on from here,do you want to know where properties can be snatched up for $60k with a $135-$140 rental return,if i told you,it means that i have done your research and this is not going to benefit you,put in the time and the returns will come.
Hi all,
I’m not sure how you will take this, but I’ve always believed that if you buy for lets say a house worth 80K and wrapped it for 30% mark up at 104K, well to me that IS considered a Capital growth..albeit an inflated and manipulated capital growth price for the area (probably), but you’ve essentially fixed in that price for a number of reasons.
1) You want the repayments on the property that the wrappee pays to be greater than your repayments on the mortage itself and
2) Lets say the wrappee doesn’t pay you out for 5 years…well in that time the property should have risen in value and basically by putting a 30% mark up margin on it when wrapping it, you are accounting for some of the capital growth you’ve lost by wrapping it before the natural capital growth occurs.Am I mistaken here? if I am please let me know.
Another thing I’ve noticed and I will give Traralgon as an example, is that a couple years ago you could purchase a decent wrap house for 40K, now looking for the same house is 60-80K. I’ve found that when there is strong growth for houses, even if it is wrap investors purchasing them, the growth in that area increases. When wrappers leave that area and go elsewhere, that new area will follow the same trend etc… Anyone agree?
Cheers
Sooshie [
]There are no problems, only solutions!
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