My partner and I have read the book, and have spent the last couple of weeks searching for a property… however have yet to find anything that seems to fit all the criteria, especially the 11 second solution…
Are we doing something wrong?[blush2]
Hi Wonga,
You are not doing anything wrong – the consensus of the forum seems to be that property meeting the 11 sec rule (in sustainable localities) is becoming scarce in Australia – a bit like a needle in a haystack scare level.
Having said that those who have developed good networks are still finding them and others are moving (have moved to NZ).
Having said that the 11 sec rule is only one of many selection criteria that should be used when seeking positively geared property. There are many more important attributes a property should have such as employment levels in the area, infrastructure, transport and so on.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
OK, I admit, I’m a NZ property bore! But in time, the +ve CF properties will pop back up in Australia. Interest rates high, rents rising, property prices, errm, ‘flattening’, time passing, people going off properties, more sellers than buyers- when those conditions start to dig in you will find the deals again. You’ll also find 90 percent of people advising you against them. basically when the prevailing wind is against property, that will be the time to start buying!!!
slowly that will change again and then you will have already bought and be poised (complete with CF+ve properties) for the next boom.
According to folklore property cycles are 7-8 years and might be longer if the boom has been longer. So by my reckoning that buying phase might be any time in the next 3 or 4 years.
meanwhile, check out NZ!
cheers-
Minijoy to the world
Originally posted by MiniMogul:Interest rates high, rents rising, property prices, errm, ‘flattening’, time passing, people going off properties, more sellers than buyers- when those conditions start to dig in you will find the deals again.
Nice try Mini, and ideally, one would hope so. However, all these factors, albeit they occur, do not happen simultaneously, property is only one player in the larger scheme of things.
Why would anyone who is fortunate enough to have a property which is returning more than it costs to maintain, put it up for sale??? Sure, some will be forced to sell for various reasons, however on the whole, most people who have such “cashcows” will IMO be reluctant to part with them. And if they do, I personally would be questioning their worth!!! And when (not if) the market changes (as the pendulum eventually swings back) in the opposite direction, this is even more reason not to offload the goose that lays your golden eggs, is it not???
Of course property will loose flavour, it is already happening or haven’t you noticed??? The herd mentality is alive and well, the flock are taking to the hills (or NZ) looking for alternatives – shares, cash and anything else aside from bricks and mortar!!!
The only way to obtain CF+ properties ATM, and for some considerable time to come, would be to create the situation, through properties currently owned.
People such as yourself have put yourself in an admirable position Mini; you were lucky enough and smart enough to buy well, and your time will come to gain even more from your investments. However, sadly for the others looking to our shores here in Oz, the boat hasn’t totally disappeared, but it is so distant that one risks drowning to reach it!!!
Therefore in terms of CF+ deals, IMO NZ is and will remain the better option for quite a few years yet!!!
Cheers, [biggrin]
Jo
Hi all,
Jo, you’ve often said you’ve been active in 3 cycles… what were your experiences in them… how did they differ/what were the similarities? How long did it take the wheel to turn for yields to catch up with prices? Was the most recent boom longer/shorter in your experience? (I’ve heard differing views) Interested to hear your thoughts.
Cheers
RHi Richmond,
Actually it was 4 cycles, although the first is a bit of a blurr only because it was the first one for me, and I was just too “gun hoe” (sp) to really pay too much attention to what the market was doing!!!
True, there are mixed reactions, and people’s memories sometimes fail them, self included!!! [blink] However, generally the cycles have been IMO fairly consistent in their turn-around timeframes, that is, generally speaking between 5-7 years.
There have been similiarities, however, other factors have influenced the markets, and by this, I am not just referring to the property market. One example, is the governments abolishment of negative gearing back in the 80’s which had almost catastrophic effect on the rental yields virtually overnight!!! The infamous “Pyramid” crash had a huge impact, as did the high interest rates at 17/18% etc etc etc; all of this had a bearing on ALL the markets respectively.
Although I cannot predict with certainty, after all, if the analysts can’t pin it, I will have buckleys!!! But IMO, the pendulum will swing back eventually, once the correction has been made. Furthermore, what WILL determine the length of time it takes before the change happens, IMO, is the herd. Aside from inflation, goverment policies etc, it will be the herd mentality that will ultimately determine how long it will be before things really move.
I believe this correction period, is similar to those before it, and the reduction in property prices is nowhere near as bad as it was in bygone cycles. It just seems that way, because we are living through it right now!!!
FWIW I hope this helps.[biggrin]
Jo
Well, there is a possibility of proices become CF+, I suppose. I’ve put a post about negative growth in the General Property section. There are some areas that are losing value- not merely maintaining. API mag doesn’t show regional and rural areas, but there’s a possibility that these areas will LOSE value too- not just maintain. Hence, if properties in some areas lose 10%, and rents remain stable (or even increase) then CF+ properties will start to show.
CF+ properties are just as vulnerable to losing value as more expensive properties are. Some people will keep “downscaling” to be able to afford any property, so the cheaper ones will always have a market, but it’s unlikely that the cheaper places will continue to rise in value whilst others lose value- it’s just unlikely at this stage of the market (in Australia).
wonga, you say you haven’t found any CF+ places, but a quick way to look for them (given they don’t usually show rental prices on realestate.com.au, for example (or the place might not currently be being rented), is to find a place with cheap properties, and then to go to the realestate.com.au rental pages, and then to type in that place. It will give you a pretty exact measure of how much you can rent for. I’ve just started using the rent pages myself (hehe- after all this time!) and it’s good to see how much you can really get- as opposed to RE agent’s valuations for rentals- which are often inflated when they’re trying to sell you a property.
kay henry
> Why would anyone who is fortunate enough to have a property which is returning
> more than it costs to maintain, put it up for sale???i don’t so much think it will be the positive cashflow people putting things up for sale unless they believe they are selling at the top of a boom for CG. Most of the investors I know who sold CF+ve properties in Aus. have already sold like months or a year ago.
>Sure, some will be
> forced to sell for various reasons,Yes, and I believe the ‘some’ are going to be the ones who own negatively geared properties (apparently 90 percent of properties in Aus are neg. geared). the reason you hold neg geared properties is OK partly to minimise tax etc but also for capital gains. I think if people see prices going down or even just not going anywhere, they are going to re-evaluate the wisdom of holding such properties and the cost of holding them for a few years until we might get into another rising market.I think many will decide to cut their losses and move their money out and into other things or markets – i.e. sell.
>however on the whole, most people who have
> such “cashcows” will IMO be reluctant to part with them.
totally.>And if they do, I
> personally would be questioning their worth!!! And when (not if) the market
> changes (as the pendulum eventually swings back) in the opposite direction,
> this is even more reason not to offload the goose that lays your golden eggs,
> is it not???Totally.
> Of course property will loose flavour, it is already happening or haven’t you
> noticed???Of course I had noticed – hence my post. To be even more specific, rental yields in Sydney have been 2-3 percent since forever, but rents seem to be rising, and prices have fallen. There are a couple of what I would call A-grade properties that I have seen for sale with 5 percent yields on purchase price. This has been unheard of for ages. And I think this might rise another couple of percent. i don’t think that Sydney will ever have every single property returning 10 percent but I am sure it will go up to 6 percent yields for certain properties.
> The herd mentality is alive and well, the flock are taking to the
> hills (or NZ) looking for alternatives – shares, cash and anything else aside
> from bricks and mortar!!!Yes EXACTLY, it seems you do get my point, so they are moving money out of negatively geared non-growth assets that lose them money and into better investments. However the more people that decide to do that all at once, the more on the market, the less buyers…I think we are already moving into that trend.
> The only way to obtain CF+ properties ATM, and for some considerable time to
> come, would be to create the situation, through properties currently owned.
Correct. Let’s say you bought a 5 percent yield in Sydney and converted it to two flats and maybe did a quick makeover (nothing structural or Smeg) you could create a pretty close kind of CF+ve yield.
If not today then soon!I know exactly how I am going to create a CF+ve property in Sydney and live in it to boot. It will have to have 5 bedrooms though. I am working my way up to being able to do this idea in about a year’s time.
> People such as yourself have put yourself in an admirable position Mini; you
> were lucky enoughOOh, you pressed a button here. It was not LUCK!
it was planned and I got the outcome I expected. I knew exactly what I was looking for, found it, mitigated my risk, consulted my mentor who had done it in spades and whose system I was following. I have lived through a year of 90 percent of people thinking I am crazy, and I realise that with that paradigm the only way it works for those people to rationalise what I did was to call me ‘lucky’. But in the end what they think is their business and not my concern because i know what I did and why and what I expected to happen and why I expected it to happen and what happened etc and that it was not luck!> and smart enough to buy well,
yeah that’s more like it…!!!>and your time will come to
> gain even more from your investments.
totally….
>However, sadly for the others looking to
> our shores here in Oz, the boat hasn’t totally disappeared, but it is so
> distant that one risks drowning to reach it!!!Not that I am deliberately missing your metaphor, but ‘distant’ does make me think of something I want to say –
NZ is less distant than perth or darwin from where the bulk of Aussies live.
It’s aheck of a lot cheaper to fly to NZ than to fly to Perth. $99 each way on virgin last time I went over the other month. Sydney to perth I think is $500-600 return if you’re lucky! I travel a lot including interstate, and honestly I go overseas on a plane more often than I visit the suburbs of the city I live in (sydney).I don’t have any problem with the logistics of owning an investment property in NZ that I would consider to be any different to owning an IP in Queensland or Perth. Or the US or the UK, for that matter!
It’s hard to manage a property yourself where you don’t live, but no harder whether it be 500k away or 1500k away.
I don’t manage any of my properties myself, they are all professionally managed, and I don’t intend this to ever change even if I one day end up owning around the corner.> Therefore in terms of CF+ deals, IMO NZ is and will remain the better option
> for quite a few years yet!!!That may be true, but keep an eye on the Aus market – I certainly am.
cheers-
Minijoy to the world
Mini, I recently bought an almost new (3 year old) apartment in sydney with a >6% return- they’re out there.
kay henry
I’m not going even try and disagree Mini/Kay; there are deals, some good, some not so, but all in all, property will always be a good thing!!!!
Cheers, [biggrin]
Jo
I recently bought a positive geared IP, the vendor was getting nervous and wanted to settle real fast, I asked and found out that she was using the money to buy a 4WD.
Yes, she sold an appreciating, high yield property (that put approximately $90 p/w into her pocket) for a gas guzzling car that deprecates and costs money in repairs and maintenance.
The fact tht she could of got a loan on the car and the property would of paid for it was totally lost on her.
So thats why people sell positive IPs (and of course divorce and the occasional murder – don’t ask!).
Rgds.
Lucifer_auIt’s amazing the number of people around who want to get into investing but set themselves up with a car loan!!
You cannot tell them though. They have to work it out for themselves [confused2]
Shawn
Hi Mini,
Just a quick point, I meant no disrespect (let alone any button pushing) in my reference to “luck” nor do I have a problem with people (who regardless of whether they know the facts) correlate it to my own personal set of circumstances. In all honesty, as far as what people think, it is not even secondary to the truth, for as long as I know what really transpired, people’s understanding of same is IMO immaterial, and of very little interest to say the least!!!
Cheers, [biggrin]
Jo
Hi Kay,
CAn you detail rent vs purchase price to arrive at your 6%+ yield ?
It doesn’t have to be the property you purchased….just curious how you get your yield.For my part, I have a place in Perth that rents for $250pw and cost me $205,000 but has a market value of $305,000
That equates to a yield of 6.34% on cost and 4.2% on market price.
ie…pretty poor yield !!So am curious how you manage 6%+ in Sydney when prices there are supposed to be the highest in Oz
Cheers
KPkp,
I get my yield based upon purchase (cost) price. It’s not hard to find properties with this sort of yield. I wouldn’t use market value or possible resale price in any of my calculations, and I don’t use CoCR- I find that an artificial method.
kay henry
Cheers Kay
Well I’m selling a +cf property next month (A block of 4 flats in country NSW) so I can use the equity to buy a fishing boat. And boats lose value very quickly. How’s that for a silly investment decision.
Scotthi mini,
i agree the times when +cf properties in australia are off in the distance, but i still believe they exist they always do, simply because most property investors are idiots. Wheneve someone gets into financial trouble there house, or investment house sale is usually the best way to get out again. in these desperate times money is not as big an issue, as not goin bankrupt, hence prices fall and an oppurtunity arises.
why do ppl sell +cf properties? i dont know either, i think perhaps its to ‘trade up in life’ and they trade there assets for liabilities, like boats, a bigger residence. Also a +cf property is possible for 1 person and not for another, largely depending on how big there loan is! if someone has the money to purchase a rental property outright its + straight away, i know for most people they wanna use OPM and its more effective at the start but i merely wanted to illustrate this point.but yes… thats my 2 cents worth
on a more personal note, im looking for some more exotic strategies, do things like tax liens exist in australia, id love to learn more about wraps, and any other investment strategies not normally looked at… even off sure investment strategies (like flipping in america) cause australias tax laws are just crap, also with capital gains in australia is it possible to defer them if you buy another investment property like american tax code 1031???????? much appreciated
depreciator,
I don’t think it’s silly at all. I think we make money to do what we want to do- like have a better life. And if a fishing boat is what you want, then I think you’re “successful” because you’ve used RE to get what you want.
Enjoy the boat :o)
kay henry
Yea Big D,
Come to Hedland the fishings very good, and just to make sure that you catch fish I’ll put aside the things I want to do and be your giude and help you fish. Every-one knows that the more bait is in the water the more fish you atrackt (thats why they make burley!).
Just give me a call.Cheers
C@34
You must be logged in to reply to this topic. If you don't have an account, you can register here.
