Did anyone see Alan Kohler on ABC TV news tonight quoting the Demograpia Housing Affordability Rankings?
http://www.demographia.com/dhi-rank200502.htm

I would be cautious about the independence of the Demographia site.

Its sponsors are Wendell Cox. Wendell Cox is not an independent research organisation.

Rather…[Read more]

my thought was that a property worth $150K would not get a rental income of $250 per week, and I wondered if maybe the RE had inflated the rent to make it more attractive to buyers.

This can happen (read up on GEHA leases), but the figures Mant gives are reasonable for the regional city that I’m pretty sure it’s…[Read more]

positive cashflow
positive gearing
negative gearing
+ve gearing
-ve gearing
wraps
wrapping
vendor finance
11 second solution
bird-dog
success comes from doing things differently
due diligence
buyer beware
wrap pack
asset protection
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Rgds, Peter

I still don’t know why people equate “cheaper” or “country” properties with “backwater”… there are many bustling cities in Australia with populations of 30, 40, 50 thousand that have a solid diversity of industry and are good places to invest.

If you were on a modest salary had reasonable deposits and could get…[Read more]

A just built 3br semi-detached on half a block (but very little backyard) attracted no bidders at opening of $470k, with only vendor bids up to $500k before being passed in.

Surely if you’re going to pay $500k,…[Read more]

From the Real Estate section of the paper in WA
Secret Harbour 558% CG
Iluka 551% CG
Landsdale, Success and Leda 400%+

I have two points:

1. Many property authors (eg Monique Wakelin) consistently say ‘always buy within 10km of the CBD for max capital growth’.

However NOT ONE of those suburbs fits this…[Read more]

As for Norseman, I’ve seen houses there for $15k, so $45k is a bit much – you’d probably get something in a slightly better town (eg Merredin) for that. Not that I advocate Merredin, but it would have to be better than Norseman, and less…[Read more]

Just as a quick response, and so you can help me do some number crunching……

Property Value – $109,000 Neg
Rent – Currently $210 per week until 12/10/05
Council Rates – $922.14 per year
Water Rates – $149.50 per year
Stata Levy – $97.14 per quarter
Unit is 8 years old and in a secure complex of 21 units. It has 1…[Read more]

Peter

>I remember buying a block in WAIKIKI in 94..

My mum’s only foray into property investment was buying a block a few streets back from Warnbro beach in 1979 for $9000. Was forced to sell in 1984 for $7000 Imagine its value now!

But the proceeds were used to buy a PPOR down south so with two booms in…[Read more]

Most houses were built in the 70s and 80s, and I remember walking through many half-built houses in the…[Read more]

A friend of mine bought a property on 5% deposit and paid $8000 LMI. A complete waste of money, I think. Her property has not gained substantially, and now she has to pay back that 8k. OPM is fine… if people gain equity, but if not, it’s like having a maxed out 8k credit card.

I used LMI when I bought my…[Read more]

Agreed 110% Derek!

A lot of stuff in books that advocate -ve gearing (eg due diligence, choosing a property manager, selecting an…[Read more]

By following your approach you can work out an estimate of what the rent should be , there is quite a bit of work involved to keep the data up to date.
Wouldn’t it be easier to take the advice of the PM , which is an estimate & if there is no takers drop the rent ???

Yes it can be a bit of work, but it’s all…[Read more]

My IPs were all bought since March 03.

Of these:

No 1 is cf+ before tax with a gross yield of 10.2%.

My spreadsheet shows it…[Read more]

Possibly losing $10pw (and having a stable tenant) is heaps better than losing $100-200pw by having a vacant IP.

I have followed Domo’s approach in looking at rents.

I looked at online to let ads and rental…[Read more]

This is investor-speak, not REA speak. If the agent was smart, he/she’d know investor-speak.

But if you can find a dumb agent (who even tells you why the vendor is selling and that they think they’d take $x less than the asking price) then you wouldn’t want to alienate him/her…[Read more]

Depends on what you want.

The big flaw in Lomas’ book is that she relies too heavily on tax deductions. Many people on average wages would run out of tax deductions after they buy 3 or 4 properties.

This is not quite enough even for a modest income (you really need to own at least 4-6 outright, and maybe 2 or 3 extra to provide…[Read more]

For this reason, I drew the line at Kalgoorlie, and this for only part of my porfolio. I’d be wary about Kambalda, even though it offers…[Read more]

As for Launceston and other country parts of Tassie, these have experienced enormous…[Read more]

No one can predict whether values will grow or not. But there has been growth in the last 18 mths or so.

I bought my first in March 03. The yield was 9% but I knew the rent was a little below market value (its now returning 10.2%). An identical property next door sold for 13% more than I paid for mine in…[Read more]

I have IPs in Kalgoorlie and offer the following:

$260pw rent would probably be for a fully furnished place. Sure you’d get depreciation benefits, but there’s the risk of shorter term tenants, more wear and tear AND much higher management costs.

I think I know the area and it’s not easy walking distance (maybe 30 min) to much at…[Read more]

I’ve found BMT are very good.

If your IP is in a remote area and they can’t go there, they will send you forms to fill in and request you take photos of each room. Cost is $440 per property.

Rgds, Peter

Hi Deanna – if you meant to say ‘the largest city in outback (or inland) Australia’ I think I know the one!

As others have pointed out, there are considerable risks there.…[Read more]

the big problem is that access to public transport is pretty crappy. the mitcham-frankston freeway due to open in 3-5 years will be a big plus though and you shld be able to drive to the cbd in 30 mins….

Wantirna, Rowville, etc has the worst public transport in Melbourne, with large areas lacking service…[Read more]

That is until the unemployed REAs join the laid off bank managers and the dotcom refugees and become mortgate brokers.

Then there’ll be more…[Read more]

Neither would have been cashflow positive. At the time yields in ‘good’ areas like were commonly around 6-7% and maybe 8-9% in Rangeway or Spalding. Thus…[Read more]

Also, (and correct me if Im wrong) but I think the banks have a lower LVR here (60 – 70%)

I had no probs getting 80% LVR there (in Sept 2003).

According to my PM the main rental demand at the moment is good quality family homes. These will not be cf+ as Geraldton is a low rent town. You’d be doing well to get…[Read more]

2. For a regional coastal city (pop >20 000): 8% (pre-85 building acceptable if well-located)

3. Capital city: 7-8%

4. Small country town: 10%+++

Note that I haven’t purchased in 3 & 4 and won’t do so unless yields are right and/or it’s undervalued…[Read more]

The reason I would prefer to do it this way, is that I know that I would never be able to save close to $46K by the end of this year. I fin…[Read more]

In the 4 Crn’s story they interview a Gentlemen who purchased a new home in the then new sub-division of Mt Druitt, he paid 10k for the property, his gross income was 8.5K!!!!

What would be the situation today? Mt Druitt 3 bedda 320k income 35k……wow simple but effective.

IIRC, the $10k/$8.5k example was…[Read more]

One could easily have taken the same attitude during the cold war – everyone will die through nuclear war, so why invest?

Should nuclear war occur, you’d have nothing. Should it not occur, you’d still have nothing. So on balance it’s better to invest even though the future…[Read more]

1. risk
2. consequences

If the risks are high and/or the consequences are severe then it’s worth insuring. If the risk is very low and/or you can handle the consequences, then it’s not worth insuring.

Re self-insurance, let’s say it’s a retail chain with many stores. Even the complete loss of one store might…[Read more]

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The first four are fine. The last two equate quantity with quality, which is not always so.

Thus for the last two I would suggest:

Very…[Read more]

It wasn’t much but was a sign of better things. So continued to save and bought shares, managed funds, more term deposits, etc. And kept…[Read more]

Poor thing! In WA, I’m used to paying either $500 or $1000 deposit (they request $1000 but the last two times, $500 has been fine).

See the section in 0-130…[Read more]

Regards, Peter

Apologies if it’s a silly question, but have you checked the hotel’s opening hours?

Regards, Peter

By doing one or…[Read more]

If they advertise ‘high cashflow’ places in WA you can bet your bottom dollar they will be in Kalgoorlie. The rents claimed could be achieveable, but would normally be for fully furnished places, which would bring additional problems (as well as higher management fees). Take out the…[Read more]

Julie – two words: OPPORTUNITY COST

To overcome that $58k worry work things out on paper.

Consider:

1. Buying your own PPOR, saving the $280pw but exposing y…[Read more]

To quote Steve on page 321, ‘keep looking’!

The main problem is not so much that 10% yields don’t exist in WA, but that there is a high likelihood that the…[Read more]

However you might just be able to get something in Sunshine, Moe or Morwell for that.

Around the eastern suburbs of Melbourne, you’re doing well to find a 1br flat for…[Read more]

As they say, when one door closes, another opens.

Ravensthorpe might be worth investigating, due to the proposed nickel mine.

Peter

I agree that at least in the major cities immigration is a…[Read more]

Hi Steve – none of us will tell you where to invest as something OK for one…[Read more]

just got a few questions after reading an article titled “rich switch from property” by Fiona Tyndall in AFR.

“‘They are now exiting that market, if they haven’t already.’ Macquarie bank’s associate director of wealth management, Doug Webber, said there had been evidence that people in the top income brackets…[Read more]

That’s a really good post- thankyou :o)

Thanks Kay

>In a geographical area such as Geraldton, there >will be good and less good areas in which to >buy.

My experience was the opposite. When I arrived there in Sept 03 the recent buying activity was cheap houses in the cheapest suburbs – eastern states…[Read more]

1. My experience:

I spent 2wks there in Sept 2003 where I picked up a 2br b/t duplex in Bluff Pt (already with tenant). The price and rental would be similar to a house in Rangeway/Spalding. All the PMs and my own reserch revealed that Bluff Pt was a popular area and had low vacancies. And 7 min walk from the beach…[Read more]