I would really appreciate some advice…We are a couple in our early 40s with kidlets.. have been investing in real estate for 20 years now. We have generally done really well with our PPORs – buying worst house in best street and renovating and getting good CG. Our IPs have not always been the best investments however we have learnt lots of valuable lessons from them and now feel reasonably confident about not making the same mistakes twice!
I have read Steve's books and feel positive cashflow investing is the way to go.
Our current situation-
-We have recently moved interstate to Darwin.
-We are planning to be here for 2-5 years subject to my husband's company wishes.
-We sold our PPOR and are now sitting on $300K cash available for investing
-have an IP ,cost $515K to build, currently worth $400K (one of the lessons!- bought before reading 0-260+), owing $320K rented with good long term tenant (cashflow neg but with deductions neutral).
-We are currently paying rent in Darwin at $550 a week.We have a number of options available to us – I was really keen to use all our money to fund deposits for IPs and set about trying to find a financial advisor who could help us with our plan. We have consulted 2 now and come away with recommendations to
1 buy a PPOR in Darwin (at peak of market) and pay off as much as possible as quickly as possible to reduce non deductible debt before doing anything else. and pay more into super
2 If staying longer than 5 years buy principal residence and invest in direct share portfolio.
Obviously these guys are not up with positive cashflow property investing but I can see where they are coming from with their recommendations. I hate spending so much money on rent ( first time we have rented and kind of think of it as dead money) however our goal is to be financially independant in 5 years which I feel will have a big dent in if we spend on PPOR which prob won't gain much cap growth over 2-5 years.
So – my questions are –
does anyone know of a financial advisor in Darwin who IS up with positive cashflow PI?
does anyone have some pearls of wisdom to share to help us crystallize our action plan? please!Lisa J wrote:I would really appreciate some advice…We are a couple in our early 40s with kidlets.. have been investing in real estate for 20 years now. We have generally done really well with our PPORs – buying worst house in best street and renovating and getting good CG.Congratulations on all counts.
Lisa J wrote:does anyone know of a financial advisor in Darwin who IS up with positive cashflow PI?Financial planners, consultants & advisors mmmmmmmmmmm. It is very very difficult to find just one (I'm sure there must be) who actually recommends direct investment in property. They are mostly commission based and make their money from recommending managed funds. There is therefore no incentive for them to recommend property – no money in it for them.
Paying off your PPOR was dumb advice IMO, as was buying in Darwin (at the peak).Lisa J wrote:does anyone have some pearls of wisdom to share to help us crystallize our action plan? please!Afew perhaps:
1. Darwin is at the peak of its cycle. If your posting there is 2 – 5 years it may be better just to rent (even though the rent is high). Transaction costs going into and then out of property is high too. 2 years is definitely too short and 5 years would be the absolute minimum to hold any property anywhere. What you want in a PPOR is not necessarily what you'd look for in an IP in any event – if you had plans of turning a Darwin PPOR into an IP when you left.
2. Even thought I am a Sydney based Buyers Agent , I'd be buying in Sydney or Melbourne at present. Sydney has Australia's most unmet demand and is starting to move up after being flat for the last 6 years since 2003.
3. For a balanced portfolio you should have some shares. BUT before you do direct share investing you should know about shares, what you know now about property.
4. The conditions that existed when Steve did what he wrote about in 0-260+ have changed. You need to adapt the strategy for today. It is still possible to buy cash flow positive in major metro areas like Sydney, at the moment. You can do it too in larger regionals. We have found some gems lately for our clients in Newcastle.All the best with the relocation – I hope you & the kids all settle in for the duration. All the best with the investing too.
Thanks propertunity,
I had forgotten to factor in the stamp duty and agent's fees on purchase and sale of a PPOR so now it seems like our original idea of renting is the better bet.
It just shows how you can get sidetracked by "knowledgable" others when you are wanting to swim against the tide of popular opinion!
Regards
LJHI Lisa,
I Live and invest in Darwin and still believe it is a good market to buy in at the moment.
Although people say that Darwin is at the peak of the cycle, I only see the market going up here in the near future. Demand is high as you can see by the high rents and the market has risen by about 4% in the last quarter on median prices. Population is growing and we have some big infrastructure projects starting here in the near future, in fact the biggest ever in Australia being the Impex project. The goernment is trying to release new land as fast as it can and having to raffle the chance to buy blocks. We have four new suburbs at Palmeston planed for over the next few years. People can not get their hands on them quick enough. This has also risen the prices in the Northern suburbs and the city/costal areas as well. You could do a lot worse then investing your investment dollars here at the moment.
That said I think all house prices across Australia are in for a big rise in the near future as the past shows, the property market always leads the economy out of a recession, so I think where ever you buy would be good.
As far as positive cash flows go Darwin is full of them at the moment with the low interest rates. The IP I bought in the Northern Suburbs in December 08 was close to neutral at purchase and now just positive. If you are keen, go to the property rental specialist companies in Darwin or even realestate.com and get their lists of properties for rent and check out the rental prices, although there is a lack of stock on the market at the moment.
Then go to http://www.nthomes.com.au/public/nthomes.nsf/Homepage?Open where you can check out the latest actual prices the houses in that area have sold for, that might give you areas that supply best yields.Financial Advisors, I can't really give you any experts I have used, although Barry Pickering, who lives in Darwin now works from up here advising and is running free seminars at the moment. His seminar is free so maybe you could check it out, I gave them a call and they sound fairly helpful. I went to the seminar tonight and it was quiet good. We don't get many chances up here to go to any seminars let alone for free. Check out their website if you want to go to one of them. I have no connection with them, just went along to see what they were about. >> http://www.capitalmarkets.com.au/
I hope this helps and is only my personal opinion of course.
Any more questions, I will try to help
O…
Hi Obie
Thanks very much for those two links – I had picked up Barry Pickering's name from one of the other forums but could not find his contact details. Would you know of where I could get a longer term view of the Darwin market – cap growth rates, rental returns etc for last 10-20 years?
I have to agree with you that there are a lot of opportunities out there… just gotta grab the right ones!
Regards
LJLisa,
You could buy a copy of Australian Property Investor and My Property Investment magazines and check the stats in the back of each of them.
There is also a website that will tell you the last 15 or so sales in any street in the Territory along with recent sales in that suburb. http://www.nthomes.com.au give that site a go it is very helpful.
O…
I too live and invest in Darwin. As a previous poster has pointed ouit Darwin is powering ahead and not showing signs of slowing. Population is growing , shortage of housing and many large infrastructure projects in the offing and underway, Could you ask for more? If you are planning on staying here for a few years it is a no brainer. Cost of servicing a mortgage or paying rent is fairly similar so the only answer is buy. Forget about financial advisers for help in property investing. Never met a FA yet who wants to know about property – no commissions in it for them. Beware of property spruikers seminars too (not that we get many of them up here!) Best is to educate yourself by reading and mixing with other property investors and get to know a few good RE agents and buyers agents (Darwin only has one buyers agent at present) They should be able to give you some guidance. In my opinion, you would be hard pressed to find a better place to invest in resi property in Aus than Darwin at the moment .
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