Hi there,
Mini, forgive the nurse in me, but I just couldn’t stop laughing at this typo
‘new roof, new wiring, new piles‘.[
][][] I know I’m just being juvinile and I know my spelling is atrocious, but that has got to be the funniest typo yet!!! [][][]
You Go Girl!!! [:0)] You made my day!!!Big Hugs from
Sooshie [:X]“Giving is a Blessing, receiving is the bonus”
Mini I need to clarify something! You say you do little research on your properties. So what do you research before you purchase. Oh and ps I do get a pest building report on my properties, but I don’t want the stress of trying to get a builder, plumber etc to fix something on a property that is 1,000km away when I have no control over what gets fixed. I can’t get someone to do a half decent job on my own home.
I have been thinking of buying in central and north Qld and even Tasmania so I am not adverse to buying in other areas of Australia. Just I refuse to buy unless I can see the area at least.
davo70
I don’t intend to sound negative, but I think that there is a place for caution and risk management in any investment, especially when prices are running hot and everyone and his dog are getting into the market.
I remember the tech crash in the late 90’s (not least because I nearly lost my shirt in it) – and David is right in that respect – people were crazily buying stocks without doing any research – it was a good buy just because everyone else was buying it, and it was a good price just because everyone else was prepared to pay that much. Foolish me included. I call that lemming behaviour. See what happened.
The funny thing is, I know people who told me that they either didn’t really get affected by the tech crash, or they actually made money in spite of it! In all these cases, they did their research and bought only those stocks which were solid companies with real businesses, and resisted the urge to follow the crowd and pay what they felt was way too much for other stocks. Mind you, it wasn’t necessarily because they thought those other stocks were in dodgy companies – they simply did their research and concluded that the asking price was way above fair value. Others bought options to put a limit on their exposure to loss. And when the crash came, they simply sat tight, weathered the storm, and came out on top!
I think we can learn a bit from these wise investors for property investing. Do your research, make sure that you’re paying a fair price (or below what you think is a fair price), and limit your losses (ie take out landlord’s insurance, building insurance etc). That’s what I try to do. Everytime I think about buying a particular property, I do a historical price-check on that property and other similar properties in the area, to see what the most recent selling price was, and compare that to what the seller is asking for. If it’s way too much, I resist the urge to buy and walk away. Sure, I may be missing out on potential capital growth, but I’m also protecting my backside.
Does anyone else have any other risk-minimisation tips?
Cheers
Mhi there,
brownwombat, if you are buying in the gold coast you are probably paying 10 times more for one property than I am.
but you will have cap gain there..
so it’s a different situation for a different person…
Like I said…I am starting out…I am at the bottom of the bottome of the market…where I found little baby cheap deals that work for what i want to do (build CF+ base) is in rural NZ…I am from there so comfortable with what it’s like, and know the towns well enough to be able to visualise them…>Mini I need to clarify something! You say you do little research >on your properties.
did I? I meant, i don’t necessarily know the value of every block in the town like reno kings advise knowing.>So what do you research before you purchase.
price versus yield (the numbers) is what makes me look at a place further. Condition, location, land, rentability makes me make an offer. Photos tell me enough to make an offer. Builder’s report gives me an out if it’s in bad condition. Builder’s report person can often quote and do repairs, that you might want to do before you hand it over to a property manager.
I make a lot of calls and ask many questions before I make an offer.
>Oh and ps I do get a pest building report on my properties, but >I don’t want the stress of trying to get a builder, plumber etc >to fix something on a property that is 1,000km away when I >have no control over what gets fixed.
Well you do need someone to oversee that, to make sure you are not paying too much or that the job has been done properly. Let’s say there has been painting done but the place needs a clean-up. Most property managers have a handyman type person that can do that. They just charge you. It’s a lot cheaper over there. The nationwide labourer rate is (for example) 10 bucks an hour, from fruit-picking to section clearing.
>I can’t get someone to do a half decent job on my own home.
even when you are there….so that proves it doesn’t make any difference, right?Small things, the property manager can do (fix dripping taps, etc) big things such as fix roof, fireplace, paint, repairs by a builder or handyman, floor sanding, need project management.
I was lucky to find a good project manager in Taumarunui who has been worth his absolute weight in gold – has saved me much $$$ just because he is a local. He can get the tradesmen to prioritise my job, etc etc like when there is 2 months waiting list for a plumber, we got one that week>Just I refuse to buy unless I can see the area at least.
That’s fine though, it works for you. true for most people, probably. It’s like discussing different chess strategies. there are many and they all work and have plusses and minuses.elysium –
>Do your research, make sure that you’re paying a fair price >(or below what you think is a fair price), and limit your losses >(ie take out landlord’s insurance, building insurance etc).i agree with and do all of this.
>I do a historical price-check on that property and other similar >properties in the area, to see what the most recent selling >price was, and compare that to what the seller is asking for. >If it’s way too much, I resist the urge to buy and walk away.
I absolutely do this, but I do it on GV versus actual sales price, rather than list price, calculating a GV-to-sales price for that area. My areas have been selling for 80-90 percent of GV.
i.e. 23 K list price, GV 20, ratio for the area 80 percent, should get it for 16, so offer is 14, vendor counters 19, I say 17, vendor says 17, I say no, and get place for 16 (which is fair market value according to my research.) and a huge discount off the original list price – nearly 33 percent off.
but i can be authoritative with my offers because i have research to back it up.
I actually virtually ignore the list price – !!!
In fact my first phone call is to the agent – ‘I know what the list price is, but c’mon, what’s the real price?’ to which the agent says ‘ I know the vendor wants at least XYZ for it’ which is often an instant discount. You then use that figure as your new “list price”…hehei find resisting the urge and walking away a whole lot easier if i haven’t seen the house, and therefore haven’t ‘bonded’ with it – only bonded with the numbers!
Having said that, i still react to pictures as anyone would, ‘ooh this one looks nice, polished floor boards and fireplace, bathroom and kitchen look retro, but in good condition, agent says nothing to do, it’s a good area – confirmed by other agent, price is right, we could paint the outside and do a little landscaping at some stage if we ever want to, let’s see what the builder’s report says’….
cheers-
MiniSooshie baby!!
re new piles –
that was no typo – and i didn’t mean the sort you get up yer bum – it’s the NZ word for ‘stumps’!!!love Mini
Hey minimogul,
Thanks for your post – that was quite interesting.
I just had a question though – what did you mean by “GV”?
Cheers
MGV is government value.
NZ is quite intersting in that the Govt values the property asa whole rather than how we Australians value just the land worth. This is alled the GV or Government Value.
Hey Mini we gotta catch up…..
Enjoy
AD [:0)]
(Andrew)“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
“Mogi”[
]I swear girl, Steve is watching, he is going to whip you up onto that stage on Saturday and have you doing a segment on NZ. And if not that he is going to do a whole new seminar that I’ll pay another thousand bucks for, called M&M in NZ![
]That was a fabulous post (not the one about your piles!) and I for one want to have a good chat over a cuppa on Saturday. Oh are you going to be there?
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Hi Enjo,
I dithered too long, and now it’s sold out.
Dithering – because my reasons for wanting to go were pretty much purely social -as I don’t think I want to do wraps. (however it would be great to know how, anyway…!)I just wanted to go to hang out with everyone!!!
AD….yeah I’ve been waiting…..your turn to tell us something….
seeing as y’all know my property investing life-history….
tell, tell….cheers-
MiniThanks MiniMogul. GVs in WA seem to be substantially lower than the actual sales price for properties. But I’ll keep that under my hat for when I look at the next property. [
]I just had a quiet giggle reading this thread. I read the comment about “piles” and “GV” without giving it too much thought. Then I read that Aussies have no idea what these things are! So many local terms that we don’t even realise are local…
(Kiwi, living in Aus)
Hi Mini,
Oops! I bet you had a giggle! I did. Laughter is the best medicine… I’ll have more thanks! [
]
Louise is right about different words for different places! Why can’t New Zealander’s just call them stumps!!! [:0)] Well I’m glad I didn’t need to talk to a builder, I’d probably blush [] if I had to ask about ‘piles’. []Actually this reminds me of the Chinese word for ‘thank you’ …the meaning ‘she-she’ or ‘zhe-zhe’ mean two completely different things, one is ‘thank you’ and the other is a complaint of a common bodily function (you fill in the blanks). When I was in China doing my Acupuncture in the hospitals, I pronounced ‘zhe-zhe’ wrongly and although I can assure you I ment ‘thank you’ my ‘thank you’ made everyone giggle behind their hands (the local Chinese cover their mouths when they laugh). My translator (G-d Bless you David), David Wu, explained quickly with some on the spot immediate speech training.
Dong on Sooshie’s head!!! [:0)][:0)][:0)]Duh Sooshie!!!
Cheerio
Moi []“Giving is a Blessing, receiving is the bonus”
minimogul.
Ok I will make you deal I am now pondering what you said and I have looked at what others are saying and I have decided I run the same risks whether I buy here in Brissy or in Tasmania or Victoria or NZ. So if I make the leap can I get you to give me a brief how to guide. Just I am use to running my own properties and letting someone else do it for me makes me very nervous. So thats where I am coming from I suppose.
My partner is yelling out control freak! Maybe I am but at least I am the only one to blame if things go wrong.
Anyway my partner agrees with you and as this is a joint venture I need to take other ideas on board. So anyone got advice on Tassy properties and Victoria towns like Traralgon, Euchua etc.
davo70
hiya davo!!!!
>Ok I will make you deal
cool!
> I am now pondering what you said and I have looked at what >others are saying and I have decided I run the same risks >whether I buy here in Brissy or in Tasmania or Victoria or NZ.
I’d say different only because you might get cap gain in both brissie and tasmania more quickly than NZ rural.>So if I make the leap can I get you to give me a brief how to >guide.
seeing as I seem to spend my entire life posting on this forum (i’ll chill sometime soon, honest!) I don’t think there’s anything I could say that i haven’t already said in as much detail as my little fingers can muster. have a looks through previous posts/threads.>Just I am use to running my own properties and letting >someone else do it for me makes me very nervous. So thats >where I am coming from I suppose.
although I don’t have a nervous kinda disposition I have certainly gone through all the what ifs i could possibly think of
and I’m Ok with it, but I can relate. I guess the more you spend on a property the more scary it is. (is it?)>My partner is yelling out control freak!
hehe!!!
>Maybe I am but at least I am the only one to blame if things go >wrong.
I am probably never going to manage my own properties, even if they are next door or underneath! I’m just not interested.
I figure, I’m good at what I do all day and property managers must get pretty good at doing what they do all day?Good luck with everything Davo!!
And check the new thread I am about to start, in a few minutes………………..cheers-
MiniMini Mogul,
Can you tell me how you find out the government values? Is the information listed in NZ? Does anyone know if this is the case n Aus as well?
Thank you
AHi
Just a note of caution about using GV as a proxy for the market (real) value.
GV’s are basically government valuations carried out by local councils every 3-4 years by use of an almost ‘adhoc kerbside’ methodology.
They are also known as CVs (Capital Values). Capital Values = Land Value + Value of Improvements to the land (ie the building itself).
Please note CV/GVs represent the ‘property value’ at a point in time; ie at the valuation date
What you will find is that the banks pay NO regard to GV/CV and will lend based on a RV (Registered Valuation) which will reflect the current market value.
Currently in the hot Auckland market, properties are selling at DOUBLE their CV/GV.
In other less popular areas (ie rural) you will find properties selling at 50% of their GV/CV. These are by general consensus ‘depressed’ areas; ie ‘values’ have effectively halved.
The danger for a newbie (especially a non-Kiwi)buying in NZ is that they can take CV/GV as a proxy for real market value and purchase on that basis. This approach is fraught with danger and can get the newbie investor burnt in a major way!!!.
This is particularly dangerous when paying cash for properties with the intent of obtaining finance down the track… one may be in for an unpleasant surprise when the REAL valuation (RV)comes in…
The best place to obtain recent and comparable sales is http://www.qvonline.co.nz
For example, you pay approx $25 ish to get a report on a particular property which comes with approx 10 recent COMPARABLE sales.
This is invaluable and I use this before even thinking about buying. This assists me becoming an expert in a market in which I am a relative newbie in.
I hope this helps
Regards
David U
B’day David U.,
The thing that worries me about your LEMMINGS
post is that I might be one of them!!!
It’s always in the back of your mind when you’re in the last throngs of completing a property transaction.
My safety first action is to have my LOC account
cleared, and ready for that unexpected event.
To cover no rent etc. I’m ready for another interest rate drop, them I’ll be locking in on fixed interest rates.
Bruce G.
G’day David U.,
The thing that worries me about your LEMMINGS
post is that I might be one of them!!!
It’s always in the back of your mind when you’re in the last throngs of completing a property transaction.
My safety first action is to have my LOC account
cleared, and ready for that unexpected event.
To cover no rent etc. I’m ready for another interest rate drop, them I’ll be locking in on fixed interest rates.
Bruce G.Bruce… Lemming…? I doubt it… I can confidently say that you’re ONE of a kind.
My strategies for reducing risk are as follows:
i)All my loans have now been reverted to p & i
ii)I have 3 months worth of cash in the bank to cover absolutely worst case scenario of having all my properties empty.
iii) The combined LVR of all my properties is less than 70%
iv) Buying correctly upfront, so if I had to sell in a hurry, I don’t incur any loss
v) Also, having a balance of properties CF + properties supporting/funding higher growth properties to capture both income and real wealth.
Cheers
David U
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The topic ‘Migration patterns of a lemming… Sound familiar?’ is closed to new replies.
