Forum Replies Created
Thanks for you comments. I’m at a stage where I’ve done well with 2 x IP’s purchased 2001 and 2003, and now have the equity to go another one or two.
I’m currently torn between ‘it’s time in the market, not timing’ and how badly the figures do stack up right now. I’m sure that over a 10-15 year period another property should perform well however if I were to experience 3-5 years of flat I’m not sure what I’d be thinking/doing then.
Property has been the only thing that I’ve ever tried (I’m 26) and it’s worked very well for me although I know the good times won’t last forever and I’m yet to experience a bust first hand. I guess for me I can’t help but view it as the ‘one true path’. I feel I should really educate myself in what other options are available.
AusProp -> I’m reffering to Victoria. It’s a bonus from the State Government, making it a total of $12k. Given a leveraging ability of 95%, 12k can make a big difference to the amount someone can borrow (ignoring DSR).
Originally posted by foundation:Why would rents go up? Presumably these first time buyers are already renting, so their innability to buy will not increase demand for rental properties, especially given that there is an oversupply of rental property in many areas.
I would have thought that there would be pressure on rents as whilst these first time buyers are staying longer in the rental market those entering the rental market (i.e. kids moving out of home) will remain constant (or maybe they’ll stay at home even longer?). Overall this means an increase in the rental population – perhaps this is matched with the additional properities available for rent due to the recent investor boom??
You seem to suggest that the value of these properties will remain high because such houses will not sell? Given that people value their houses by asking “how much could I sell it for if I was forced to sell now†in a rising market, surely the same valuation method should apply in a falling market?I’m unsure about this. I think the question is more like ‘how much could we get for our house (under a regular sales process – rather than a fire sale)”.
I don’t feel there are a huge amount of people who are ‘forced’ to sell, however I do know a few people who ‘would like’ to sell but are not willing to drop there prices, as Joe Smith across the street got $xxxk for his place just last year. My parents first got into ‘property investing’ by accident when we had a house that we couldn’t sell. We just rented it out and held as an investment.
A small number of people will always be forced to sell for whatever reason. However, if sellers have purhcased more than 2 years ago chances are they have a very low LVR, which puts them in a less desparate situation especially with more and more creative financing options (LoC’s etc).
“Creative†= Desperate & Reckless.
100+% Loan = Instant Negative Equity.I Agree 100%! Instant gratification comes at such a huge cost…
My thoughts? We are headed for a period of rising unemployment, falling company profits, rising interest rates, falling house prices, falling US dollar value (and/or substantial US rate hikes forcing more local rate hikes), devalued AUD….
Oh, and record bankruptcies!Overall I agree. I think we are up for some interesting times ahead.
So, I take it you are holding out on your property investing or are you looking for CF+ deals?
I’ve investigated these and it’s been my experience that this high yield is built into the purchase price and definatley not worth it.
The ones I looked at had high 8-9% yields for a year or two, but you were paying about $50k above what you should have for the place itself.
Some of these deals might be OK, but the ones I saw weren’t. I recommend that you do a comparision with house and land packages these people have for sale if possible, or at least try to get a vacant block price plus a building cost.
Thanks for your comments. I do realise it’s up to me. I still need to decide exactly what will suit my current situation best and will now leave you all in peace as I do this [blush2]. I guess I just wanted to spark a bit of discussion regarding this selection.
Thank you Rick for bringing me back to the ‘key principle’. I had been getting to tied up in the details and was bogged down thinking about cashflow and the like.
I’ve recently been reminded of how it truly is the land that appreciates (and I’m a 26 year old investor!).
House and Land packages in Narre Warren South, Victoria:
2001 – Land price – $66k
2001 – House price – $113k2003 – Land price – $85k
2003 – House price – $120k2005 – Land price – $135k
2005 – House price – $126kThe above is a real example I wanted to share with the forum of my sisters house she built in 2001, my IP #2 I built in 2003 and the prices I found enquiring about them today.
Given I’m an a decent wicket and am still young, maybe I’ll go for the house in the nicer part and aim for capital growth (cheers Rick!).
It was John’s book (7 Steps) that first got me into property (4.5 years ago). From what I learned from his book and his book alone (5 years ago there wasn’t the wide variety of books we have today) I took the plunge and have since done pretty well.
I feel it’s a great overall book, and his concepts are still very valid today. It’s also very easy to read, and good to ‘get your toes wet’.
I also attended one of his seminars (a free one), and it was my experience that nothing was ‘pushed’ onto me other than an invitation to talk to ‘Custodian Wealth Builders’, which are basically Investment Property Advisors (‘hand holders’). I liked the seminar, it was informative (most stuff being in the book anyway), and I didn’t feel it was a ‘hard’ sell (which would have turned me off right away).
I also have his ‘Success From Scratch’ pack. Overall it’s also pretty good, although it does cost $300. It outlines more ‘active’ wealth building techniques over the ‘passive’ buy and hold strategy.
From his website and his books you do learn that he is a property developer, although his developments are houses in suburbs rather than high rise. No doubt this property is pushed through Custodian Wealth Builders – not that I feel that this is unethical or wrong in any way. New property is great, I built my second IP and have great depreciation, paid no stamp duty (Vic) and have good cashflow.
I used his Investment Loan Broker service (Investloan) for my second IP, although I’m not convinced I got a ‘great’ deal through then and am now going through ProSolution for my 3rd and 4th (my experience with them so far is excellent).
I know Jenman ‘bagged’ him a bit in a recent article but overall my impression on John is positive. This was in relation to a comment he made about his Success from Scratch product. John outlined a creative method to earn some quick money in real estate, and while it was a bit risky and would require a set of steel ones, the theory sounded good.
Put me down as another one who shares a similar problem. Mine is slightly different though, as I’m 26 and she is my girlfriend (i.e. we are not married).
I’ve done quite well, have 2 IP’s (2001 & 2002) and just about to acquire some more, and would like to see a little bit of the world with the money I have made. My girlfriend hasn’t got $500 to her name.
I don’t feel like going by myself nor can I afford to pay for us both… also, if I did pay for us both what precendence does that set for our future? It looks like I’ll be the one who’ll have to pay for our first deposit when we get a house of our own, it’s mortgage, any holidays we wish to do, etc, sigh…
In relation to the above comments about Frankston North: I unsure if this suburb will experience the same ‘high level’ of change as inner suburbs (such as Richmond and the like) have over the next 5-10 years. This low socio-economic group has already been ‘pushed out’ to the edges of Greater Melbourne. Where else are they going to go without ‘going country’ and still having semi decent public transport access to the city? It does make sense though that some growth should be experienced. Then again, if it’s cashflow you are after it is the place…
Just my 2c
No one has, this is more of a hypothetical question. I’ve been lead to believe that this does happen and have seen people talk about this in some forum posts.
I was just wondering if it would be a case of just going to another inspection group (if not all of them do this), if there is some other way to negate this or if this is just ‘how it is’.
From what I can tell this formula simply looks for properties that have a rental yield of around 10%.
No need for a ‘secret formula’, just year 7 maths.
