[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 28, 2008 - 2:46 am

Interesting sleuthing Trakka, well done. That's surprising but it makes some sense. Of course, if the application form states that information may be passed to the lessor for the purposes of evaluation, and the applicant agrees, then the ambiguity is removed.

Theoretically though, all information on an application form is necessary for me to make my decision isn't it? Otherwise, why is it being collected? If I was doing a thorough evaluation (which is apparently more than most do and more than is required), I'd be happy to have the application form without the names, as they're are probably the only things that might be irrelevant to the application.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 27, 2008 - 8:14 am

Hi Rabbitohs,

Well done on your investments so far.

This is a topic that interests me too. We sent a plant voucher to a couple of tenants. One lot SMS'd to say thanks, the other doesn't have our details. Ironically,the one who SMS'd is the one who is on welfare and is behind in their rent. They are now on an auto payment catchup plan, and they will be a long term tenant. The other was already a dream tenant, so it's hard to gather any useful data from the exercise so far.

I do think that it is good to send an out of the blue 'thanks for being a great tenant" something now and again. Could be anything – a hamper, bunch of flowers, DVD voucher etc. Maybe even an online gift voucher like a magazine subscription or something. I'm sure it keeps the maintenance costs down. It's the little things that make a big difference.

On the other hand, I think it's really important to strike swiftly if they get behind in rent (I've had to manage my PM on this sometimes). My approach is to show that I appreciate when they make my life easy, but also to show that I won't tolerate them making my life difficult.

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 27, 2008 - 7:43 am

Linar wrote:

The solicitor's interpretation of the RTA is bollocks.  The application for tenancy is, by its very nature, an authority for the customer's (tenant)  information to be supplied to the client (you).  You have instructed the PM to be your agent (agent being a person who acts for you), so if they are entitled to look at the information, of course you are also entitled to look at that information.

Exactly the expression that came to my mind. Good point about mortgage insurance. I've since delved further into the PM's assessment process, so I'm comfortable for the moment.

I'm somewhat surprised at the confidence placed in PM's. I'm currently using 4. One is great, one seems OK, one takes a lot of management, and the other is the subject of this thread – yet to be evaluated. We'll see I guess.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 25, 2008 - 10:07 am

Thank you. You make some good points Trakka, and I feel less concerned now as a result.

Maybe I'm being too much of a control freak

I'd be interested to know whether the majority of investors review the tenancy applications though. I wonder what happens with all those tenancy applications in investment books; i.e. do people really use them and do they get to see them if they use a PM?

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 25, 2008 - 8:30 am

That's a fair question. I guess I want to assess the application for myself, since the PM surely won't accept liability for an error of judgement.

I think that my uneasiness comes from a few things:
1) I've always been sent the applications in the past, so this just seems weird
2) The initial grounds for refusal were rubbish, and the subsequent grounds are (I think) a misinterpretation of the Code. It just doesn't give me much faith in the competence of the PM
3) If I was self managing I'd get to see the application, because I'm the lessor. The agent is acting on my behalf. There's a clause in the PAM20D which says that the client (me) "does not rely on the Agent to determine the financial or credit suitability of any prospective tenant". So if they don't, and I can't, who does? 

It does not seem that the agent is acting in my best interests, which is definitely in breach of the Code (section 9).

I appreciate your thoughts.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 16, 2008 - 7:35 am

I laid the Ikea glue together version through a kitchen, dining and living area about 8 years ago, and it's holding up extremely well. The installation was slow, but I'm quite pleased with the result – you can't kill the stuff. The glue-together stuff is less forgiving if you don't have a strong straight starting edge. I ended up with a few visible openings between some boards. It's more noticable because I chose a lighter colour – beech. Still looks good though,

About a year and a half ago I laid about the same area of the click together version. I would definitely go the click together version in future. It's qucker (about half the time) and I got a more even result. I went for a darker colour this time (Jarrah), and I'm very happy with it.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 6, 2008 - 12:06 am

Some of the challenges I've identified so far are:

• Most onsite vans/cabins for sale are for holiday use. This means you can only use them up to 150 days/year. But I haven't strayed too far from coastal areas.
• Few of the parks I've spoken to are interested in permanent residents. Where they have them, they use the park's vans.
• There is complexity around the nature of the leases. As SNM idenitified, you don't have much security. I sense that you would need to keep 'close' to the park management to increase your chances of success.
• I get the feeling that there is a bit of a taboo about a park allowing investors into their parks in this way – judging by the response to some of my early enquiries.

If your search the forum  with 'caravan' you'll find a lot of history on this topic.

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

February 4, 2008 - 7:31 am

Hey Glendafull,

Any news? I've been making some enquiries but have not had any luck as yet…

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 28, 2008 - 11:36 pm

I agree with your analysis. I wanted to see Tieri to see if the real thing matched my expectation – which it did.

Which Middlemount mine closed? An open pit or underground? I know there are works on 2 or 3 new ones – I'd assumed that they were new pits to replace a pit that had been mined out.

Have you been up there long?

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 28, 2008 - 9:24 pm

Dysart is a bigger town, and is more central. It services large mines to it's North and South, and accommodates people who work near Middlemount. As a town, it is less 'artificial' than Middlemount. It started life like Middlemount in the 80's, but the mining company has been selling off housing for a long time – so there is a much higher level of ownership by residents and investors. Dysart has grown beyond the Middlemount style, and feels like it's getting it's own momentum. It is still only supported by mining though – no agriculture etc…

The shopping facilities are almost on par with Middlemount – there's an IGA and a few small retail blocks. Middlemount's is better though, which seems strange at first because it's a smaller town. Makes sense when you consider that Capcoal invests to attract workers.

At least one of the mines near Dysart is opening a new pit, and the new project near middlemount means a surge in demand for accommodation. The mines are owned by different companies, so there is some diversification there. It's about 2.5 hours from Mackay, so not too far for a day at the coast.

Note that maintenance is expensive. This is due to a couple of factors including captive market and very high disposable incomes in these towns. This is the reason the rents are high, but it also means other costs are high as well.

For building and pest inspections you are best off to use people from Mackay. I can supply contacts that I've used.

DISCLAIMER: I have a property in Dysart which I bought sight unseen. Now I've seen it and the town I am not disappointed in either the house or the town. My tenant is a construction company, and the rent has been very reliable.

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 27, 2008 - 8:39 pm

Nebo is a funny one. There are a few mines nearby, but it doesn't have a boom feel to it. It is predominantly a cattle town.

At the moment there are a number of vacant and unsold houses. Some of these are actually leased though to one of the energy companies.

There is talk of Nebo being set up as an 'inland port'. I understand this to mean that they will set up heavy manufacturing and servicing here e.g. they will build and service rail rolling stock for use within the basin. The advantage this would have is that Nebo is already up on the tableland where the basin is. It's another hour or two down to Mackay, and so Nebo would save a lot of hauling up and down the hill. If this comes off, Nebo would change appreciably.

Nebo is close enough to the coast that workers in the local mines often just live in Mackay and drive or bus to work. Some work 5 days/5 days off, and this lets their families enjoy a coastal lifestyle. This would seem to be infinitely more interesting than living in Nebo, unless of course you were born and bred there maybe.

Really nice pub in Nebo though

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 27, 2008 - 4:50 am

Hi lou73,

The majority of houses in Middlemount are owned by one of the mining companies (Capcoal, off the top of my head). They have a couple of mines around the town, but there are also 2 other mining companies with working mines in the area.

Capcoal provides the housing to their workers. Since they own most of the town, if you don't work for them you have a hard time finding a house, either to buy or to rent. A lot of workers around middlemount live in Dysart and drive the hour or so each way to get to work.

Middlemount is a pretty nice town – the mining companies have invested in making it a nice place to live. Nice town centre, shopping centre (small), parks, child play areas etc. It's one of the nicest in the Bowen Basin.

Due to the shortage of supply, you would expect house prices AND rent to be high. This is borne out by the property that's on realestate.com.au at the moment http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104595446&emailsource=emailalert. In Dysart, this place would go for about 330-350K. This is the first existing property to go on sale in Middlemount for a couple of months at least, so you might have trouble getting a bank valuer to agree. Shortage of supply means you'll probably get a good sell price as well, but it's hard to see a 3BR highset appreciating rapidly from that $480K asking price.

There's a new development going on in the town, with prices in the 300's and expected yields of about 700pw. There are about 70 homes in the development, and it's feasible that this kind of return is possible. It's at stage 1, and you can buy off the plan at the moment.

Middlemount is quite remote, so maintenance and property management is quite expensive, so a newer place is probably a better bet. There is talk about improving the road to the northeast, which would make Mackay almost reachable for a day's shopping trip.

Hope that helps,

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 18, 2008 - 9:57 am

Hi,

The only lease agreements I've seen in this area are for 'annual' use i.e. holiday usage. However, with those there is little security. You can be evicted pretty easily. With some they'll remove your van and charge you the removal cost.

I don't know if this is different for permanents, but I suspect that you don't get much security for your site fees.

My other comment is that a verbal agreement generally isn't worth the paper it's printed on

I'd be interested in what you find out though…

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 16, 2008 - 6:35 am

propertyboy wrote:

^ no one was talking about the median house prices, your post makes no sense

 
Yeah, OK.

It's not actually about median prices though, it's about the information you're using to base your opinions on. Sorry if it was a bit abstract.

I'm trying to point out that you need to check your assumptions about why it's not possible to find CF+ IPs, since it clearly is possible. You can either continue to tell us how what we're actually doing doesn't work, or you can work out how to do it yourself.

It's up to you mate,

All the best.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 15, 2008 - 10:05 am

The problem with economic theory is that is must deal in statistical generalities. It discusses the behaviour of the market like 'the market' is a conscious entity. However, it isn't, it's an agregation of the behaviour of innumerable individuals.

This will lead you astray when researching for investments. e.g the median 3BR house in smithville is yyy, and the median rental for 3 BR house in smithville is zzz. Therefore the yield is 6.44% (or whatever) and this is below the average bank interest rate of 8% bla bla bla….therefore CF-.  The median is not a real value, it's the centre of a range of values. SO IT DOES NOT FOLLOW THAT EVERY HOUSE IN THAT SUBURB WILL GET 6.44%

So the market is not a real buyer/seller, and the median yield is not a real yield. How is this a basis for investment then?

The answer is that we, as investors, buy specific properties, not general properties.

Touching on a point made by SNM, buying specific properties opens opportunities where the rent could be way above the median, due to some unique feature that exists or can be made to exist, and the sale price is well below the median, for some other reason. E.g. rent might be good because of location, a feature (eg self contained granny flat), or because a cheap improvement can be made (like A/C or a carport). price might be low because the garden is overgrown or painted in really bad colours, or because the guy has just left his wife and wants to sell it quick to get her out.

A combination of these found me a property 8 months ago in suburban Hobart at a 35%  discount to asking price. This made it CF+. I've found 3 more since in other places, so they are out there. It seemed to take forever to find the first one though…

When you first get into this game, it seems that the only way to find properties is to get on realestate.com.au and look up the prices, then look up the rents and do the calculation. You may have lists of suburbs with the yields that you've collected. It's a good start, but it is only the start. You need to spread your wings and get imaginative.

One more thing: Just because you haven't worked it out yet doesn't mean that other people haven't. I don't know exactly how lasers work, but seem to have one in my DVD player that works.

Daedalus

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 15, 2008 - 9:21 am

I had a tenant request a new hot water system once, because the existing one kept going cold. A quick inspection of the shower head revealed that it was one of those big, never-had-water-restrictions type of shower head.

For about $30 I replaced it with a water saving head, and saved a LOT of money by not needing the hot water system. The tenants were great, and looked after a lot of minor things themselves after that.

Be responsive and fair. Treat tenants like people who are providing you an income stream – as long as that is what they are doing. If they are too difficult, find some others – it's a good market right now.

And get a decent PM.

Daedalus. 

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 11, 2008 - 7:55 pm

From the above posts, it seems that a landlord can set up as a CentrePay "Participant" i.e. you don't need to go through a property manager?

I've been trying to get one of my tenants onto CentrePay via the property manager, but the PM has been pretty slack about ensuring the paperwork is done. I'm thinking of just sacking the PM and setting up the CentrePay thing directly.

Any thoughts?

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 9, 2008 - 8:58 pm

crashy wrote:

dont use floating floor.

one drop of water and its ruined. Its noisy, looks crap, affects resale and warps in the sun.

We have clearly had very different experiences with floating floor. I've had floating floor in a kitchen for 8 years, and there is no water damage whatsoever. It also gets a LOT of sun and has not warped or faded. Not sure what you mean by noisy. If you mean that you hear footsteps, well you get that will floorboards too. I would argue that floating floor is quieter – especially for rooms below, because of the layer of insulation that gets put down. I can't imagine anything else that might cause noise apart from poor installation.

Whether it looks crap is a personal call. I don't think it does, and it looks THE SAME as it did the day it went in. You may not get that with polished floorboards. It certainly looks a hell of a lot better than the wear and tear on the polished floorboards in one of my other properties.

As for whether it affects resale, I don't know. I can't really see how. Unless of course I happened to be trying to sell to your good self

It's always dangerous to generalise

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 9, 2008 - 9:30 am

Depending (only to a small extent) on the 'quality' of the property, I'd go for the floating floor. The cost will be similar or significantly less – especially if you have to get funky with sanding off glue, filling nail holes etc. and you are guaranteed of the quality and consistency of finish.

It could all be over in a few days vs a few weeks as well. And you'll know exactly what it will cost you before you start.

I've laid 30m of floating floor in 2 days in the past. If you've got a helper, or professionals, it's even quicker.

Daedalus.

[DaedalusMember@daedalusJoin Date: 2007Post Count: 140]

January 9, 2008 - 9:11 am

The strategy was to go hard on CF neutral/slightly CF+ to build the asset base. I've got a fair amount of equity available, and I wanted to max it out then let capital appreciation do it's thing, with a revaluation each year and topping up the portfolio with the increased equity.

As it happens, my plan didn't consider that lenders would only take 70-80% of rental income into their servicability calcs, so I'm now approaching a limit on servicability, despite having enough surplus income to pay down loans by about $5K every month. Strange.

Just as I was pondering that one, the economy started to jitter, interest rate rises have begun to accelerate, so now I'm kind of glad of 2 things:
1. That I didn't get as far into my LVR as I could have
2. That I discovered this forum and have learnt so much so quickly from it.

So now, my investment criteria has swung towards a very CF+ focus – enough to buffer significant economic turbulence. I suspect that with such tight criteria, my next investment will be from a 'very motivated vendor', and since the cash flow will stack up, it will still be a good thing regardless of market sentiment (in fact, because of market sentiment).

I see it as similar to Warren Buffett's investing approach: work out what an investment is worth based on it's cash flows. If the price is below that valuation, buy it. If not, don't.

It may be some time before my next buy trigger, but so be it.

I've got some sharemarket and property trust investment in index funds through my super, but there's no point taking that out as I can't get at it for a looong time. So it can stay where it is and ride out the storm. I'll try to ignore the net worth impact, which doesn't really mean that much anyway

So for me 2008 will be the year that forced me to invest the way I should have been investing all along.

Should be an interesting time nonetheless…

Daedalus