hi there,
I want to share the bad as well as the good with everybody –
and perhaps it will balance the picture a little….!As of today I have three vacant properties and zero tenanted ones!
what, me worry? no way! …..not yet, anyway!!
Property No. 1.
The tenants gave 2 weeks notice today. Shame as they were nice share-milkers and originally said they loved the house and wanted the house for three years.they found a better house, I heard. This property is in a town of about 3500, and was the first one i bought. When it went up for rent there were only two places for rent in the town, mine was the nicer of the two, being a well-maintained 100 year old villa on a lovely nice corner section. beautiful section with nice huge old palm trees, verandah, a bit grandmotherish in the ol’ decor, but very tidy. I am expecting to have another tenant without too much delay. When it was rented the first time, there were several bites but the property manager wanted to hold out for some ‘really good tenants’ for me which I’m sure these people were, only they left!
Property number two. Worst house in worst st in a middle of nowhere town that I have become rather attached to!!
bought for a super bargain, have done it up beautifully and fixed it up totally in order to last for many years – me, my boyfriend and some handy local yokels) – and it hasn’t rented yet. it’s been 2 weeks. Some good feedback – however I know it is too expensive for the market and that if I drop it 10 or 20 dollars a week it should rent. I just wanted to try it out at the higher price first to see what happened. (nothing!!!)My return if i drop the rent from 120 to 110 will then ‘only’ be 22.8 percent…so still OK….it’s all part of learning the different between greedy and realistic…!
I know there is still demand for rentals in the area – when i bought, the rental manager had zero properties for rent and two people a day looking. I even had the ‘competition’ property managers track me down here in Australia the other day and ask if they could have it for rent because they didn’t have any
either.Property number three probably doesn’t really count because it hasn’t gone unconditional yet let alone settled, but that one’s empty. I know it used to rent for what was a 27 percent return so again there is room for that one to be put down a bit if i can’t get what the previous landlord used to get for it.
So just know that all your properties might be empty all at the same time and that you need to be fine with it and be able to weather it if it happens.
I am Ok with it and I am still smiling, and I don’t think it’s a grimace either. i will let you know what happens!Anyway, I am going to do some creative visualising tonight and see if that helps!!
cheers-
MiniHi Mini. Sorry to read about your situation, but as you said, you still have options (decreasing rent etc). I’m sure things will pick up for you, you sound like a glass half full type of person (as opposed to half empty). Hang in there and think positive.
All the best
MartyMin[
]Well I guess we don’t want you as the guest speaker anymore!!![
][] (how cheeky)I wasn’t surprised to hear you say that you learnt something about greed and reality, however like all of us at some time finding the fine line between the two is something we have to do.
I know you will come up with something really creative (thats what you do) and all your properties will be rockin again!
Cheers
Leigh KPS: If you all didn’t know minimogul is a famous songwriter.
Read, learn, grow but most of all just do it.
Mini,
I’m appreciated that you shares the bad and good news with us. Investing in property there are always bad and good news which come and go.
I had similar problems late last month and early this month. Here are the problems that I would like to shares with you and the forum:
Property No. 1
Mid of June the tenant gave 2 weeks notice to vacant the property. It was rented at $240PW. The rental market is not looking good. The property vacant for 1.5 weeks. I decided to reduce rent to $220PW and within week it was rent out.Property No. 2
The tenant did not pay rent since May. I am getting a bit worry and ask the management agent to inpect the unit and found it empty. The tenant has ran away. Luckily there no damage to the property, but the tenant run away with keys and remote security control. Everything need to be organise and clean up as quick as possible to put the property on the market again and it was rented out last week. Thanks god.Property No. 3
This is our PPOR and we decide to move out late last month and rented out. Within week it was rented out. Good news. Currently I am renting and hopefully find my dream home soon.Property No. 4
The least supposibly 1 years, but the tenant give a notice of breaking the least in mid june and move out because he has heart condition and need to stay in hospital for at least 3 months. The property put for least and within 2 weeks it was least out.Property No. 5
Good news. The property not even settle yet, but the management agent do direct credit all rent to my account. I contacted the management agent and sent them back the amount, but the next statement arrive and they direct credit my cheque into my account again.Property No. 6
This is the property that I think have a lot of potential. The building and pest inspections was organise and the result is not good at all. So I decided to let it go and move on to the next one.Now I am feeling tired and want to take some rest before I look for the next IP.
All this problems happens in late June and early July. It is the most busy time of the year for me and it is my birthday as well. What a mess.
It was over.
I am relaxing at home/work…..
thanks mini for your post. i really think this helps provide some perspective. it took some courage. although with the returns you were mentioning sounds like your on a sure thing anyway.
please let us know how you go
Happy Birthday Chandara. I hope you had a great day.
Rest energise and go out there and make a fortune!
davo
Hi MiniMogul,
Sorry to hear the bad news. Things will get better…
Anyway I wanted to mention something VERY important.
I have seen people get “stuck” on rent and holding out for their figure, when this is NOT RATIONAL!!!! (exept for commercial properties.)OK Let me show you the numbers (I must admit that this took me a while to digest at first too.)
OK let’s say you want to rent a property for $120 a week. This means that you will get 120*52 = $6,240 a year.
Now if you miss FOUR weeks you get 120*48 = $5,760
Now If you had rented it at $110 straight away you would get 110*52 = $5,720
SO IF YOU MISS MORE THAN 4 WEEKS YOU WOULD HAVE BEEN BETTER OFF RENTING IT AT $110.
The difference is not that great with low rents (below $170) but whith higher rents (around the $300 pw mark) there is no point holding on. You are better of taking off $10 or $20 and renting it fast. (WITH HIGHER RENTS YOU ARE WORST OFF IF YOU ONLY MISS ONE (or two) WEEK(s)!
I know someone that wanted $350 pw and waited 6 months to finally rent it at $310. If they had rented it form the start at $300 they would have had no problems renting it straight away.
Lets look at the figures for this.350*26 = $9,100
300*52 = $15,600
Yes, that’s right! they would have been $6,500 better off if they had rented it at the lower rent right at the beginning!
Hope this will be of some help (Just do the calculations for your situation)…[
]Cheers
*************
Australian Property Software
APIM: http://www.apim.com.au
APDM: http://www.apim.com.au/apdm.htm
*************Hi Mini
I noticed that this morning’s Ruapehu Press had only one house To Let in Taumarunui and it was at $125 per week. So things may be looking up.
Also someone wants a 3 bedroom house for long term
rent email [email protected].[8D]Hi mini
thanks for sharing the good with the bad
I am feeling so postive of the market that I am going over there in Auguset 10th – 17th to get 5 IP
in the lower end of the market, north is.
I will be in NZ for one week so only going to the north is
I would like to have the name of you accountant and legal person also your insurance broker
if that is OK
If you want me to check anything out while I am over
let me know
my email address is [email protected]
I have full confidene that all will be rented out for you before I leave for NZ
goodluck
over t
hi there,
I want to share the bad as well as the good with everybody –
and perhaps it will balance the picture a little….!As of today I have three vacant properties and zero tenanted ones!
what, me worry? no way! …..not yet, anyway!!
Property No. 1.
The tenants gave 2 weeks notice today. Shame as they were nice share-milkers and originally said they loved the house and wanted the house for three years.they found a better house, I heard. This property is in a town of about 3500, and was the first one i bought. When it went up for rent there were only two places for rent in the town, mine was the nicer of the two, being a well-maintained 100 year old villa on a lovely nice corner section. beautiful section with nice huge old palm trees, verandah, a bit grandmotherish in the ol’ decor, but very tidy. I am expecting to have another tenant without too much delay. When it was rented the first time, there were several bites but the property manager wanted to hold out for some ‘really good tenants’ for me which I’m sure these people were, only they left!
Property number two. Worst house in worst st in a middle of nowhere town that I have become rather attached to!!
bought for a super bargain, have done it up beautifully and fixed it up totally in order to last for many years – me, my boyfriend and some handy local yokels) – and it hasn’t rented yet. it’s been 2 weeks. Some good feedback – however I know it is too expensive for the market and that if I drop it 10 or 20 dollars a week it should rent. I just wanted to try it out at the higher price first to see what happened. (nothing!!!)My return if i drop the rent from 120 to 110 will then ‘only’ be 22.8 percent…so still OK….it’s all part of learning the different between greedy and realistic…!
I know there is still demand for rentals in the area – when i bought, the rental manager had zero properties for rent and two people a day looking. I even had the ‘competition’ property managers track me down here in Australia the other day and ask if they could have it for rent because they didn’t have any
either.Property number three probably doesn’t really count because it hasn’t gone unconditional yet let alone settled, but that one’s empty. I know it used to rent for what was a 27 percent return so again there is room for that one to be put down a bit if i can’t get what the previous landlord used to get for it.
So just know that all your properties might be empty all at the same time and that you need to be fine with it and be able to weather it if it happens.
I am Ok with it and I am still smiling, and I don’t think it’s a grimace either. i will let you know what happens!Anyway, I am going to do some creative visualising tonight and see if that helps!!
cheers-
Miniyes I accepted the second offer of $235 from the tenant and did not insist on $240. This assured me of a near instant tenant as soon as I settled on my new IP. Piece of mind, time saved and the ability to move on and re-focus on the next challenge is worth $10 a week o me at least.
Hi everyone,
Reading MiniMogul has given me food for thought…what confuses me is the statement “will then ‘only’ be 22.8 percent.” To me only 22.8 percent sounds like heaps so what I am asking is am I doing this wrong. I’m about to try and purchase my 1st investment property at around $100K.(it the most i could get from the bank based on my income and equity) The repayments with a loan at the current rates would be either:
interest only……… $115.40 wk or
principle/interest…. $148.60 wkThe most I could get in rent for this area is $160 but realistically I’d get $150. At this rate i’d be getting at best 7.8%. If 22.8 percent is classed as ‘only” am I going down the wrong path?
Have I got this all wrong or is my investment scenario a bad idea? I’d like to hear what you thinkCheers
Ms Elvis
[]g’day ms elvis – i think minis returns are not quite the norm – good on her there seems to be good deals in nz. yours sounds about right.
keep rockin
Thanks aussierogue (that was a quick response [
])Are you (or anyone )familiar with purchasing IPs using interest only loans? Seems I will pay more interest but at least I will be able to service the loan especially in times of extended vacancies or the added extras like rates, taxes etc. I have little extra cash on my moderate/low income. Is there a better way to do this or would an IO loan be best?
Cheers
Ms Elvisg’day ms elvis. its up to you. many people like interest only loans. however in the current climate (hot hot hot) alot of people reckon P&i the best way to go as better of building some equity. depends on your penchant for risk.
Hi again,
I’d definitely would much rather go for a PI loan but i feel it could leave me out of pocket. Not a good idea while my income/outgoings is low. I just wondered if IO loans were considered foolish. I can’t see another option tho for my situation.
Thanks for your input
cheers
Ms Elvis
[]hi ms elvis – if youre in a hurry then yes interest only seems to fit your purpose. my only advise is that even though a p&i loan will affect your servicability and therefore your ability to purchase more properties sooner, there is also the issue of what is the best strategy in the current climate. i know sometimes i want everything ‘now’ and have to stop myself from making investment decisions purely on the basis of having my cake as quickly as possible. i only started investing recently and have resigned myself to the fact that it will probably take me a few years longer to reach my goals than those who were lucky enough to invest in property 5 years ago. theres nothing i can do about the cyclical nature of the market w/out taking too many risks. this is my opinion only and maybe you have a better way of managing your risk. im sure there are heaps of othersw on the forum who would only use take out an interest only loan
ill get back in my box now
cheers
wow, this has really been fantastic reading everyone’s response, thank you to all who replied.
thanks maximus –
*sips at half-full glass delicately and savours the vintage wine, in order to get maximum enjoyment from the heady bouquet and the nice weighty feel of the crystal*
cheers!enjo – i will know when it’s not ‘greedy’ when i get a tenant!!
and re: famous, when I was 23 I had five minutes of it but i am sooo not famous these days though I do get to meet/work with ‘famous’ people (who never seem quite so famous when you know them!!!) I think I will leave the pressure of being in the public eye to those that thrive on it. i just help ’em write and record their songs, suits me. re: creativity, isn’t that one of the things we like about property, because you can apply creativity to it in so many ways to get results that you couldn’t with many other investments.chandara, thanks so much for sharing, I salute you! don’t work too hard and happy b-day!
aussierogue, yeah there are risks, and it’s good to point them out, not to be negative but to point out that you do have to be able to live with your worst case scenario if it happens.
APIM, thanks and i totally agree.
muppet – THANK YOU so much!! I emailed Tohunga, even sent them a coupla pics!!! so who knows! Man, how cool is the internet, that you can be physically reading the Ruapehu times, and telling me about it in Sydney?
recovery – check your emails!
ms Elvis – yeah ‘only’ 22.8 percent is still pretty good which is why i put it in inverted commas. which is why i’m not worried yet, even if i had to go down further. However….you still only *get* that 22.8 percent if there’s a tenant paying it….hehe
thanks again everyone for being so nice
cheers-
MiniMUPPET~! guess what, they got back to me already, like, within 5 minutes of me sending the email and pics of house, and are gonna call the agent tomorrow!
will keep you posted – talk about direct marketing -thanks so much, this is incredible!
Hi Mini
Glad to be of help. I hope that it works out well.
Wife had a look through some houses in Tokoroa today. She is quite enthused about a couple of them. Just waiting for the mortgage broker to get back to me.
RegardsHi Muppet, and all,
the internet guy looked through the house, but didn’t take it, he is a cat breeder and … (quoting agent) “but found it was not suitable. The reason being that the shed was a bit small and too far from the house as he needs to keep his male breeding cats housed and heated. I also showed it to another possible but he has decided to stay put in his flat. Plus numerous others. So I am still trying for you and it will happen just don’t know when.” unquote agent.!
I am gonna drop the rent another 10 bucks. I know I will still get a tenant. I think it is too high for the area. I mean….it’s not Sydney…the average wage is like 13K P.a, or something.
cheers-
Barb
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