Forum Replies Created
Hi Steve.
I just came across your question as we have offered on a property in Port Lincoln on large land, etc.
My partner has family over there so I have been watching the area off and on over the last 20+ years.
My feeling is that there is currently a sense of vitality in the town, with Coles and Woolworths doing
big expansions. The hospital has also been granted funds for a big upgrade. Previously the town was
known as having a very high income per capita, due to the fishing industry, but now seems to be
gaining from the good times farmers are recently experiencing. There is also the flow-on from
mining exploration further north, which is helping local businesses and employment, although Port
Lincoln seems keen to avoid any pollution from mining in the town.My opinion is that Port Lincoln has been more expensive in relation to Adelaide prices than it is now.
It seems as though outlying smaller towns such as Tumby Bay have had massive price growth but Port
Lincoln hasn't kept up (it was relatively higher, so they have definately caught up). I think there is room for
future growth there as things have been flat and then falling for the last 12 months. The population is
slowly growing.Personally I like the Kirton Point area, as opposed to the northern traditionally pricier section of the town
and the southern ritzy marina. Kirton Point is elevated, with lovely sea views everywhere, is heading toward
the marina and has enormous blocks that can be subdivided. Property managers told me there is a 0.5
rental vacancy, and realestate.com statistics mention a 4:1 ratio of people looking per ad.Although it is a bit remote for supervising, it has the benefit of being a beautiful sea-side location where people
would enjoy living. We are looking at it as a long term, buy/hold then subdivide strategy.Good luck,
GHi. I am glad you have found your way to Margaret Lomas' books. I have found them to be very practical for the average person.I am not sure how to go about sharing a barcode though. If you can tell me how to do it I'll share with you gladly.
Regards, G
PS Thanks Yannick, I just downloaded the book you mentioned above!!
Hi.
I could talk to the duty planning officer at the relevant council, to double-check that the size of block can fit the two units/homettes on it. A large surveying company can be useful, as they tend to know the council rules, plus can advise about sewerage connections/levels etc. which can be an issue on some sites. Also determine the council's rules relating to open space and its size, e.g. where we have done something similar a couple of times, we need a 5 x 5 m free and clear area (this is a new rule, so they do change. First time it was 25 squ.m for each bedroom). The width of the block/the shape of the block can be a deciding factor in relation to what you can build, and whether it is possible to have the parking needs fulfilled.
Take your time, there are lots of opportunities like this. Good luck,
GHi Novice,
I think your daughter is very lucky to have a parent like you who is keen to set her on a profitable path. Another benefit of property is that your daughter probably won't be as tempted to tap into her inheritance, as say, a share portfolio.
I agree with others who've warned against serviced apartments, for all the reasons mentioned, but I think 'ordinary' units over 50 squ. metres, are fine, and as you say, would have less maintenance issues if you are not close by to supervise. I don't know where you live, but there may be some outer coastal or regional areas with good growth prospects that have affordable houses or units, or you could target somewhere like Cairns, which has had a period of weak demand, and pick up a unit that would be covering its costs, for under $150,000.
I also think it would be good to see an accountant first, in case there are any negative aspects of the plan none of us have foreseen.
Regards,
G
Hi Lesia,
I think you will definately need a sense of humor and perspective, as things are bound to go wrong. Its human nature that some tradespeople will go off the rails when you are not around – they do that to you when you are right there in the same city. I think regular trips down, and possibly bonus payments for work completed to date could be very important!
G
I'd agree you definately need to see the banks/mortgage brokers to get your finances in place for the apartments.
Assuming you need twenty percent deposits on the completed valuation, you will need to set aside half your $400,000
for that purpose.That still leaves you with the other half. I agree you need to diversify, and it might be possible for you to put two or
more deposits on more properties. You could investigate newer suburbs with good growth prospects, rental return and obviously good deductions and low maintenance issues, or maybe you'd be interested in property with future subdivision potential, or renovation prospects that could increase your assets?You might find one of the major banks has a business banking wing that has someone who is property savvy who can
help give you reasonably unbiased advice, plus they will direct you toward estate protection, wills, trusts, etc.Good luck,
GHi Koiking.
It might be possible to buy just enough land from your neighbour, at a reasonable cost to you, by having the boundaries
realigned. Basically you would be buying some of the adjacent property, while both of you retain your titles. I'd enquire
with the local council before contacting the owners directly.Regards,
G
Hi all.
My humble dealings with TIC have been attending a few meetings, receiving their regular newsletter and getting a financial evaluation a couple of times. We also used one of their loans brokers to borrow money for an independent development project. (Wish we hadn't actually as Challenge Bank not that competitive at the moment).
I have a few thoughts which probably echo those of other contributors so far, and they are:
. The 'Club' promotes the image of people altruistically helping each other, but in actual fact there is a chain of command. I think there are limited volunteers working without reward.
. They heavily promote specific locations, in particular QLD, based on population projections. This has actually meant many growth areas have been overlooked by them, possibly because they don't have suitable developers there. I met a guy at one meeting who had TIC property, but had made a lot more money from property bought around Adelaide before the last price hike.
. They are great for motivating new investors and explaining the benefits of property investment, but as Dazzling notes, once you get the idea, you can find things yourself. As he/she rightly points out, it is the opportunity cost you must evaluate.
. Their newsletter is not aimed at a particularly sophisticated audience.
. The retirement scheme, which sounded great when I first heard about it, focuses on owning enough properties with equity in them that you can borrow from them in turn to live on, and capital gain and rental rises should cover the non-taxable redraw against the loan. However, I'm not sure the banks are very keen on this any more.
. Kevin Y. is held up as a cult-like, all knowing guru which I personally find a bit offensive. I think this appeals to people who don't want to put in much research themselves, and obviously you would expect to pay a bit more if you take this approach.
Hi.
I am sorry to hear about your situation, as you are obviously trying to be really sensible by offsetting costs with boarders,
but I know this can be a nightmare in reality! Well done though in having started so well as an independent young woman.Here are some options that sprang to mind:
1. Terminate boarders and start again with new ones.
2. Rent out your room as well, and move back home/in with relative or friend for a while so you can gather your thoughts.
3. Reassess your approach by taking a long term view. Could you save all the money from boarders as a deposit for another property just for you to live in, i.e. small flat? Would this goal motivate you to tolerate things as they are for a couple more years?
4. Would a compromise of one boarder only work?
5. Is it possible that your property has gone up in value enough for you to sell and regain a deposit for another home?
My reason for asking is that you may be able to find another property that has a granny flat. This could enable you
to repeat the process, whilst having more independence living in the flat. Sometimes granny flat homes are around
the same price as ones without. Alternatively could you move a secondhand one into your current backyard, with council approval, and rent your former room to cover the cost, again so you are not in the house?!I personally think moving out and renting at this stage would put more strain on yourself with shortfall in the mortgage to
pay as well as rent. This would obviously slow you down in your investment plans too.Good luck, I hope you can work something out.
G
Hi all.
This is a great line of discussion as I can remember wondering the same thing, about twenty years ago, and if I had
looked through a crystal ball and seen where I'd be in that twenty years ahead, I think I would have been very pleased. My advice is to buy something you can afford and that has potential of some sort (renovate, subdivide, dual occupancy etc.) This will gain you equity. Don't try to live in as good a home as your parents or friends, or in as nice an area. Look for upcoming locations. Every few years (say 2-7?), upgrade into something else by selling your improved property and moving up towards your goal taking a step at a time,repeating the process. You should be able to invest at the same time if you have established equity in your home. ( In fact, one way some people have bought their dream home is by 'cashing in' equity from an investment property purchased before a previous price rise).G
Re. the superannuation contributions,
It is essential to bear in mind what $745,000 will be worth in 15 years – not what it is worth now obviously.
For example, looking back to 1995, you could buy my previous house in Mount Hurtle, Woodcroft, Adelaide for
about $130,000, but now it is worth around $450,000. Hence the spending power of $750,000 wouldn't
be the answer for your retirement, in my opinion.Regards,
GHi Chris.
I'm not familiar with the area, but I'd check the population trends (should be stable, but better to be growing) and talk to a couple of property managers to see if there is 1. good rental demand, 2. a reasonable type of tenant, and 3. double check the rent you have been quoted to make sure it is achievable. The nearest council website or real estate.com are also sources of interesting statistics for the area, such as employment, infrastructure plans, demographics.
Bye, G
Tips –
1.. It the goal is to BE rich, you can't afford to be focusing on LOOKING rich.
2.. Treat tenants as YOU would like to be treated.
3.. Buy in areas that have more than one type of appeal – e.g. beach-side living, retirement destination.
4.. Build/buy properties that target smaller families – its the future.
5.. Its the land that ultimately has the value, so buy well located or larger blocks.
6.. Our best buys come from watching what hasn't sold, and making a lower offer before the price is reduced.
7.. Be willing to add value. This can give 'instant' equity, or your deposit, so you can go on to buy more.
8.. Look for areas that seem too cheap compared to nearby locations – they probably are!
9.. Ring local property managers before buying. They are a mine of information and generally helpful.
10. Don't discuss property with family or others who are not investing. Find people who are already doing it.
Hi Daniko.
I have thought about large houses which could be used as student accommodation, but realized I would need to put in a lot of time to manage it. This leads me to think that you could actually approach property owners with a business proposition. Show them how much more they could get if you were running it for them as a student boarding house. Sell your skills to them! You could offer to do weekly cleaning, garden maintenance, etc. and rent collection in exchange for your accommodation and x amount. You'd have to be willing to share the profits with them, as they are taking out increased insurance and wear and tear, internet connections for the bedrooms etc.
Good luck,
GHi there.
Dwolfe has given you some good tips. I will try to add a little from my own investigations (we've all looked into this type of investment!). Basically as mentioned, they are managed by an organisation (hotel group, retirement village, university accommodation company, etc. etc.) and they take their profit before you get paid. This is probably fine when all goes well, but I have found some that haven't been doing so well due to the GFC, specifically holiday units. There is nothing much you can do when you own one, but sell. You can't renovate or control the rent as with other property.
That leads to the issue of who will buy. It is always better to have something that will attract a range of buyers, e.g. different types of people who might want to live there, invest, etc. These types of things attract investors so you are locked out of a lot of the buying market. Then there is the size. They can be quite small. This and the fact they are usually classed as a commercial type property in the eyes of the bank means they require a bigger deposit from you.
One particular investment we looked into comes to mind, Unihouse, in Adelaide. About ten years ago they were selling for $114-$130 and they are only attracting about $50,000 more now. Not a good result compared to other properties.
Having said all this I know some people buy them because of their cash flow.
Good luck researching,
G
Hi Losty.
If you think you might need support to get on, and keep on the path, you could investigate Margaret Lomas's company Destiny Financial Solutions. I am not a member myself, but did look into it. Basically she believes in lower priced, positively geared property which will need less of a financial commitment from you, and could (with budgeting help) enable you to pay down your own loan. I believe you pay them a fee and they provide financial guidance and ongoing support. You could try one of her seminars that are pretty cheap, to see what you think. Or buy her books. Basically I agree with the advice so far that says you are on a very good income and should be able to do really well. We are on less than half your income and have managed to do OK, but it does require a bit of determination.
G
Hi Andrew.
In answer to your question about any up side to interest rate rises, my understanding is that any foreclosures that
result from mortgage stress will mean more people renting. Also more people tend to hold off buying when rates
are higher (creating that pent up demand you hear about when the government introduces help for first home buyers).
Again, they are more likely to rent, so that's upward pressure on rents. None of these things are a certainty though.As to when to put up rents, I tend to think most people hope for good long term tenants, and in those cases rises
are usually annual and not huge i.e. in line with inflation. Otherwise its probably easiest to do it when your tenant moves
out.All the best,
G
Oops,
I meant buyers market, sorry!
G
Hi there fellow Adelaidian?
I've actually found agents frequently post property on realestate.com.au before they are in the paper. A quick
morning search is needed there as well as the time to dash down there a.s.a.p. Otherwise I know the individual agencies will send you weekly emails as well as notifying when individual new properties are listed. For maximum effectiveness I think you need to contact the agents in the area where you are looking and ask them what they have coming up, and to specifically notify you if something comes up. I have found they rarely do this however. I don't think there is a shortcut around this unfortunately unless its a sellers' market and the agents are really having to work to find buyers! In the one area where we own several houses the agency we once bought from and also property manages one house is very good to us as I assume they see us as a future source of sales and rent.G
G
Hi Toyah.
I like the advice above. We are currently one one wage too and I've outlined a strategy for us that involves selling one half of property we previously developed to enable us to leapfrog on to the next development project. I don't want to sell either but I think divide to multiply can be the best strategy at times to improve cash flow and pay down loans, whilst still maintaining and increasing existing number of investments in the short term.
Regards,
G
