This is a bit long but I thought somebody out there might be interested in what I’ve been the last two days…
I took some action, hoped in the car took two days and drove thru country NSW to find some +ve geared B+H properties. I had a target town in mind – great growth in pop., franchises in town, low median house price. After going to every agent in town and spending the whole day looking at properties I learnt quite a bit. The market has jumped in the last 12mths, even more so in the last wk, about 10%, and in these areas it’s pratically impossible to find a property to rent – agents are turning away potential tentats cause there ain’t no properties avail. A $100k property would rent for about 130-150, so outside the 11sec solution. A religous group has also entered the market, buying LOTS of 200k+ houses with CASH. Anything under 100k that wasn’t El Dumpo was getting snapped up in a few days, and I thought I would need a pretty steep dicount and one hell of a motivated buyer to get something to gear +ve.
So, I thought I’d go look at the sateliette villages. One village/town looked okay and reckon I could easily get a 3bed to gear there. It was about 20-30mins from the main town and rental properties were also hard to find here. The town was also being expanded in this villages direction, so I thought that maybe that the price increase “wave” might extend to this one (the main town is expected to double in 10yrs).
However, most agents in the main town thought this place was boring, nothing really got sold there much, and most main-in-town locals said that there wasn’t much in this village going on. Also, most people live in this village work in this village (they dont go to the main town). The agent I used in the village did say, however, that business was moving… So, who to believe and what to do? Could this be a place where I could find a diamond in the rough? A place I could be first in before the bid move? GOT NO IDEA!
On the 2nd day I spent the whole time going southward and talked to atleast one agent in every town. Some south towns looked interesting – one in particular, good industry (no franchises tho – yet atleast), good rental market, some properties within the 11sec solution. BUT, a lot where really old so I wasn’t sure about the maintance cost in holding them.
GENERAL OBSERVATIONS: the closer the town to Sydney the more a town’s market is moving. A lot of investors comming from Syd. and retieries selling and picking up cheap properties with a bit left over to live in… Most 100k houses you could rent for 120-150, so you want to pick up the properties renting for this much around 60-70k. ACHIEVABLE, more so in places where the market hasn’t moved much. You can also get the general the feel for the commerical activity of a town by just driving down the main street.
SOME QUESTIONS: the satellite town – how can I find out if this is a good place or not?
– most properties that can be +ve are older – what are the maintance on such places? I was assuming 20% of rent – good idea or not???
– doubts!!! How to get rid of them? Coffee/drugs/stress pills?REASSURANCES: property is SO about people and solving their problems. While I didn’t put an offer on yet (will do tho soon), talking to some vendors and agents, if you can solve vendors problem you’ll get a cheap property.
Sorry about the length, but I’ve got heaps to say at the mo…
Rob.
Edited by – [email protected] on 12/02/2003 01:35:07 AM
Hi, Robert.
An answer on “doubts”………….sure have them, but, keep them in context………….and be aware that if anything does go wrong, you will be so much the wiser……..mistakes are hard to take, but they are absolutely normal…..and vital to your growth. I have found myself sorely disappointed by letting doubts translate into fear, then missing out on terrific deals. so do due diligence and jump!!!!!!!!!
]Rob,
quote:
SOME QUESTIONS: the satellite town – how can I find out if this is a good place or not?Look at the population to begin with. If it is more than 15,000 then it is likely to be a good possibility. Is it contracting or expanding?
quote:
– most properties that can be +ve are older – what are the maintance on such places? I was assuming 20% of rent – good idea or not???You need to determine this on a case by case basis. Ask the builder when you get an inspection.
quote:
doubts!!! How to get rid of them? Coffee/drugs/stress pills?It comes with confidence… but there will always be fear because you are moving out of a comfort zone. Growing pains is not just a phrase… it’s a reality.
Have you seen the movie Galaxy Quest? “Never Give Up, Never Surrender!” [
]Congrats on beginning your search, you are among the 1% of people doing something!
Have an absolutely outstanding day.
Bye
Steve McKnight
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Remember that success comes from doing things differently.
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Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
I had a similar experiance where I went around searching for some cheapish 11sec properties out of town. I was unsure of purchasing any properties as there were many on the market (most +ve geared) and most have been on the market for a significant amount of time (up to 2 years). Well, I closed my eyes, held my breath and took a plunge, purchasing the cheapest of the lots that were avaliable. This was about 3 months ago.
Within 3 weeks of purchasing it, all the other lots were sold and being snapped up for full asking price and more (I bought mine for a bargain) and the market in that area suddenly took off!
I was scared cause I was not fighting with everyone else to purchase the property. Everyone looks that the boomed towns and wish they were there a month or so before it boomed, however, if they were there like I was, they are afraid cause no-one else is buying in that town and they don’t know if it is a good town or not…
Anyways, that is my experiance and I just hope that it will give you the courage to do what you want to do. []#####################
Tomorrow, you might wish you started today.
#####################Hey guys,
Just a question on what the 11sec rule is you’re talking about.
I’m guessing it’s along the lines of – if a property costs $100k the rent will need to be approx $200/week for positive cash flow? Similar to how I look at properties but I’ve just never heard of it called the 11sec rule.
Cheers [
]Angie!_____________
Good on you !! Congratulations, that first one is sooooo hard to do. As a wonderful friend of mine said to me “you have moved through a lot of fear….”.
Leigh______________
11 Sec solution or rule is:
(weekly rent / 2) * 1,000 = Max buy priceIt gives a yield of around 10%, and yes, same numbers that you mentioned. It is a great filtering tool as the first of the many steps of due diligence.
A while ago I heard an agent tell me that he had all of these “out of town” buyers paying exactly the 11 sec solution price for houses, even when it was possible to negotiate lower !! It did occur to me that maybe the purchasers didn’t have the benefit of actually knowing WHY they needed to use that rule…. Mmmm…. maybe they overheard it at the pub ! [
]cheers
the B
ps : Robert, excellent analysis and I guess a huge learning curve ?
You know that you have done what some many people talk about but can not bring themselves to do; i.e. “shake the trees!” or “Get up off your a** and actually DO something”
congrats
the B [
]Bruce
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11 Sec solution or rule is:
(weekly rent / 2) * 1,000 = Max buy price
**********************************************Will it be more accurate to use the net rent
(ie. rent – expense) rather than rent ?111111
1+1+1+1+1+1 [
]Because this is a filtering techniques (read time saver for YOU) use gross rent figure as that is what you are told by an agent.
As your due diligence progresses you actually would look at net rent.
howzat?
Bruce
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