Forum Replies Created
Hi Jason
I am trying understand that term actually.
For example, let’s say a normal single dwelling house in an area on average sells for 500k, then does that mean:
1. Dual Occupancy house in that same area automatically sells for less than 500k due to smaller buyer pool on the basis of less buyers = less competition = lower selling price?
2. Or do they still get sold at 500K as well in that area, but only they take longer to sell due they attract specific buyers rather than “general public”, but those specific buyers still see the values in them?
Hello Benny
Regarding to Moreyfield, that property has already been sold. I do get somewhat an itching feeling that I probably could have bought it.
Basically that property is one of those off-the-plan projects, where a dual-occupancy 4 bedroom houses is built on a land roughly around some 450 sqm. The cost of the property (the completed end product) is 480K. The Agent that I spoke to actually had a 1 hour meeting with me about 1 week ago, with a broker who did a quite detailed analysis for me, and it goes something like that:
1. Moreyfield has quite a large population of over 20K, with average age of 32, so mostly young couples or young families
2. It is between Brisbane and Gold Coast (roughly 1 hour from each), but it is near railway line so transportation in and out of capital cities are easy.
3. The area is also well established with shopping centers and facilities.
4. The off-the-plan project will be contracted in 2 phases. a) phase 1 is to settle the land only and costs close to 200k but not quite reached 200K yet, and I will pay stamp duty on that only. b) once the land is settled, then construction will begin and the construction loan will be written off in 5 years.
5. Broker believes he can pull 140k equity out of my Principle Home, and because that is my Principle Home, so the interest rate would be 3.9% (this is the interest rate ANZ charges me on my Principle Home Loan), while the remaining loan will be 4.4% (he said it may not be 4.4% exactly, but he will aim for that figure), but for sake of being conservative, he is using 4.4% to calculate all 480K rather than 140K * 3.9% interest rate + 340K * 4.4% interest rate.
6. The total rental income would be between 520-560 per week, but he is using 520 to perform the calculation.
7. Add in legal fee, water fee, council rates and insurance, then factor in loan repayments, depreciation values, inflation, etc…. he calculated a figure of roughly around 4K positive cash flow per year after doing a tax return. It may not be much, but it sounds OK.
8. The projected capital growth is 5%, and the agent admits it is not very high compare to properties with capital growth of say 10% or more. Also, agent did mention that 5% is a projected value generated by Big Data, so the actual value when taking into human factors can fluctuate too, but Big Data can give us some basic indications so Agent trusts that Big Data.
9. The vacancy rate in Moreyfield is very low, they showed me a SQM vacancy rate for that are, which says 1.3%. Agent said they stay away from areas where vacancy rate is more than 3%, but since vacancy rate here is very low, they believe if I purchase that, I should have no trouble having tenants for that property.So all in all, I had some interest in that property, just that off-the-plan part made me hesitate for a bit. Then yesterday, I took another look at that property thinking maybe it wasn’t a bad deal and put an expression of Interest, but it was already sold.
As per Jaxon’s advise, he thinks it is not a “wonderful buy” but still a “fine buy” on the assumption that the information I obtained from the agent can be trusted. Although if I can find some “wonderful buy” like he did, then that’s even better.
P.S. Yes, I have read Rich Dad and Poor Dad, it is very enlightening for me. My wife at the other hand, thinks I am being possessed by some demoniac senseless ideas that won’t work out, and she’s very skeptical of me attending all those seminars, etc… (she works in marketing department of a very well reputed company so she thinks based on her marketing knowledge and experience, the information I gathered from seminars are “evil”).
Hi Jaxon
I was going to quote your post, but accidentally clicked on “report”. I apologize for that. So I will quote you a bit differently:
esearched literally all of australia, studied suburbs when I found properties that stood out,
So you mean you looked at literally and indiscriminately every single suburb in 1 state and repeated the whole process for all 7 states in Australia? How long does it take you to accomplish that?
looked at the SQM area reports
That looks like a paid service. I can’t imagine you paying every time you want to look at a suburb though…Also, when researching an area (for example, let’s say you are researching into something in Gold Coast), what information or data did you use as a “source of truth”, and what aspect of the information did you particularly look out for? Some I can think on top of my head include: is population raising, are there nearby infrastructure and facilities, whether that area has more home owners or more renters, whether it is close to a train line, if that area has good public schools… anything else?
Hello Benny
The thing is, if you me a question that goes “what is your strategy to reach your goal”. Rather than getting an answer, you are more likely to get a question from me: “what strategy works best according to my situation, because that’s what I don’t have a very good idea with”.
The one thing that is clear in my head is that I want to have the ability to lose my job and still be able to live on comfortable terms, and I give myself 10 years to reach that goal.
This will probably make myself sounding like I am facing a mid-life crisis, but here is the situation.
My current job income is 100K by myself and if add in my wife, that’s 180K for my family (before tax that is). While the income may appear to be good income to many people but there are lots of problems with that. Both of us feel pretty burnt out by your jobs and we are not even 40 years old yet. Add the fact that by the time we retire, the retirement age would be 70 year old at minimum, so what happens if I lose my job at age of 60 and I can no longer compete with young graduates in the job market? Will I become happy being unemployed? Not unless I have enough income to sustain myself. And the average pension for retired Australians is just a bit over 20k for single and a bit over 30k for couples, there is no way I want to live my retired life on that level of income.
So that’s the end goal I have in my mind.
Now question is which strategy is the best for me to reach that goal? I currently don’t have an answer because I am still fairly new to this and thus do not have the experience to determine the best.
To make the matter worse, I have been to different seminars, webinars, talked to different investors, etc… and the amount of information I am getting is making me more confused rather than making a clear picture for me.
For example, investor A (who has already achieve financial freedom) says: Don’t always buy negatively geared properties, because while they may have good capital growth, but they are sucking money from you every month. You are already burned out now and you have to fork out more money to fill the black hole that the bank created, you will only become more frustrated. While investor B (who also achieved financial freedom) says “even if you get positive cash flow, how could you expand your portfolio if your property has no capital growth? Don’t listen to those positive cash flow advises!”. So you see, both investors suggestions are valid as both of them are financially free already, but their advises directly contradict each other. As for me? I just end up getting lost in this whole thing…
Add to that, property market isn’t something I can “sit back and wait” either. Opportunities come and go, and there will only be that much time and that many opportunities that will present themselves before the market heats up and price becomes unbearable.
Is yours an off-the-plan project with 400-500 sqm land too or is it a proper 600-800 sqm land property?
How did you find such low prices? When you say “do your own research”, what method did you use to find such properties?
Just a few moments ago, I typed quite a lengthy reply to someone else about how I think research using data that are easily accessible to general public is not consider a good idea in my opinion.
My exact wording was:
—————- snip —————-
My primary concern is that I am not really a fan of “competing against public”, because that would mean too much competition.What I mean is that for example, imagine you are applying for a job, you can go to SEEK. The problem with that approach is that you can go to SEEK, so can I, and so can anybody who is applying for a job. So more often than not, those jobs on SEEK attract so many applicants that chances are you CV ends up in HR’s rubbish bin without being read properly. But if the job application is fulfilled by internal referrals, then the candidate faces far less competition and is in a much better position to negotiate salary than if the company has 10+ candidates to cherry pick from.
While the situation with Realestate is different applying for a job, but the concept more or less still applies. If you can find a good deal in “for sale ads” section of a paper, then so can anybody who reads that same section. Likewise, if you see a good deal on domain.com or realestate.com.au, then so can everybody who visits those websites. When everybody fights for this good deal, then this good deal quickly turns into a bad deal due to everybody is attracted by that deal.
So to me, looking at information and deals that are easily accessible to general public is a big no no. I want to learn how to fish out those “hidden deals”…
—————- snip —————-So did you somehow fished that deal under the tip of the iceburg? Or was the information regarding to that deal easily accessible by general pubic but everybody else chose to ignore it while you saw the potential in it? I am very much interested in what method did you use to fish that deal out of the dark if you purchased it “off the market”.
P.S. I live in Melbourne, so hard for me to get local deals in QLD.
Actually…
Just an update on that… that property in Morayfield was sold already….
But still, what’s your opinion on that property based on my description?
Hi Jaxon
I have been approached with a property in Morayfield, but 2 factors are kind of putting me off a little bit:
1. It is an off-the-plan project, with projection of 5% capital growth. Kind of crappy statistics to me from a capital growth point of view, but the projected cash flow is positive. The property itself is more than 450k, but less than 500K, and rental income based on 2 different agency review is between 520 – 560 per week. So it doesn’t increase in capital values a lot, but I was given a very detailed calculation which suggests it is positive cash flow of 4K per year, which is not bad. Just the Off-the-plan part really puts me off.
2. It is dual occupancy, and while the projected rental income per week is between 520-560, but in reality it is actually 300+220 ~ 320+240, so there might be a chance that not both dwellings are occupied at once, thus only 50% of the income are available. Add to that, the land size is rather small, only 450 sqm so it is very hard to develop further…
Hi Jaxon
In this instance, I am talking about a single property with a wall in the middle, effectively dividing the property into two.
For example, a 4 bedroom, 3 bathroom and 2 garage house, with a wall in the middle. At left hand side of the wall is 3 bedrooms, 2 bathrooms and 1 garage while there is also 1 bedroom, 1 bathroom and 1 garage at the other side of the wall.
I have been asking the same question to my local real estate agents, and most of them shake their heads when I draw a floor plan for them. They all believe most people would much prefer to buy a “normal single dwelling house” rather than a “dual occupancy” house. They all believe that while Dual occupancy house may be good for rental incomes, but they increase capital growth at a much slower pace than a normal single dwelling house.
But I would like the opinion of mature investors to confirm, are dual occupancy really bad for capital growth compare to normal houses?
Hi Benny
I have a few specific questions regarding to your suggestions.
1. Which paper do you normally read to get those sales ads? I admit this may sound like a very silly questions, but ever since I started using Internet to read news, I just haven’t touched an actual paper for years already. I recall some 10-20 years ago, my home letter boxes would be stuffed with all sorts of papers, but it just doesn’t happen now days either.
2. What would be the scope of the paper you are referring to? If we are talking about local papers that only displays properties in my local area, then that’s not very useful for me, because the area I live in happens to be a quite expensive area. While capital growth is quite good in my area and nearby area, but the rental return simply just doesn’t catch up. For example, 4 bedroom house with 600 sqm land are sold for well over 1 million, but rental income is barely over 500 per week and in some cases, not even 500, and that is definitely negatively geared. So even if I do somehow miraculously find a property that is sold below market value, I am still looking at feeding the bank black hole with my own money rather than making an income.
3. Now, onto “read paper and find for sale ads” part. My primary concern is that I am not really a fan of “competing against public”, because that would mean too much competition.
What I mean is that for example, imagine you are applying for a job, you can go to SEEK. The problem with that approach is that you can go to SEEK, so can I, and so can anybody who is applying for a job. So more often than not, those jobs on SEEK attract so many applicants that chances are you CV ends up in HR’s rubbish bin without being read properly. But if the job application is fulfilled by internal referrals, then the candidate faces far less competition and is in a much better position to negotiate salary than if the company has 10+ candidates to cherry pick from.
While the situation with Realestate is different applying for a job, but the concept more or less still applies. If you can find a good deal in “for sale ads” section of a paper, then so can anybody who reads that same section. Likewise, if you see a good deal on domain.com or realestate.com.au, then so can everybody who visits those websites. When everybody fights for this good deal, then this good deal quickly turns into a bad deal due to everybody is attracted by that deal.
So to me, looking at information and deals that are easily accessible to general public is a big no no. I want to learn how to fish out those “hidden deals”, which brings me to my next point.
4. I cannot fish out those hidden deals on my own, because from my understanding, property investment is not a individual game, but rather a team game. I can’t go very far if I go solo, I need to become part of a greater team, and I need to be able to work together with those has “existing credentials and connections and relationships” with hidden deal market.
Fair enough – suffice to say there were other (non-financial) reasons to purchase the unit, and maybe those same reasons will have you keep that one. Your call in the end.
The next one then probably needs to be for Income (not growth so much) and you may not be wanting one that is a reno opportunity. But you can still do well – I think the main thing is to take the time to decide what kind of property will work best for you, and continue to read to see how others do it. See, though one of us might “give you a fish”, it is actually way better that we “teach you to fish” so you might feed yourself for a lifetime rather than just for a day.
With regards to the first one, I am actually keen to get rid of that investment property as my family will be relocating our to that zone that is close enough to that public school as we obtained a new home there. I will just need to get my wife to agree on that.
As for “you may not be wanting one that is a reno opportunity” and “the main thing is to take the time to decide what kind of property will work best for you”. —- do you have any guidelines on what type of properties would be one that is “not a reno opportunity” but at the same time “allow more income rather than growth”?
I am a bit of at a toss right now, as I can’t really get a very good picture as what type of property would fit into that kind of category. Old properties would require a lot of reno work, but new properties generally speaking are sold at premium price, so I kind of feel like I am stuck in a go-no situation.
Thanks Benny for the lengthy reply. I totally agree with you, that it is much better for me to learn to fish rather than be given a fish, which is why I am learning those. The only problem is that there is such a wealth information out there, and sometimes I get lost in all those information, and other times I see conflict advise from both point of view and both advise appears to “sound logical” and “make sense” and that causes me indecision.
Perhaps you can show me a very specific example of the ad that you looked at and illustrate how the number struck you and made sense? That might be much easier for me to understand rather than talking about theories?
You mentioned my next property may be better for income rather than for growth, in your opinion, what type of properties would fit the best into that category?
————————————————————–
With regards to House and Land package, I really appreciate the suggestions and questions that you provided me in one of your previous replies, and I think they are very helpful. However, allow me to explain why I feel indecision to H&L packages.
While what you said made complete sense, but in Victoria, there are a few places where H&L properties enjoyed very good capital growth, and they are mainly areas where Chinese migrants are living. (no, in this instance I am not talking about Box Hill, but rather an example would be Point Cook).
1. Point Cook is roughly some 20-25 KM from Melbourne CBD, roughly the same distance as how far Pallara is from Brisbane CBD. It takes roughly 30 minute to drive from Point Cook to Melbourne CBD and public transport would take over 1 hour even in non-peak hours.
2. A few years ago, Point Cook was not very well known to the Chinese community. However, a group of Chinese investors for some reasons decided Point Cook would become the next Chinese suburb or at least a suburb with significant Chinese migrants, so they started purchasing land at a massive scale and sub-divided them into H&L packages.
3. They then bombarded local Chinese newspaper with “home opportunities + investment opportunities in Point Cook”.
4. They bombarded the same via Chinese mobile app called “WeChat”, which is similar to WhatApp but with added functionalities such as “sharing a news article” much the same way as how facebook allows you to share news articles.
5. So within a very short amount of time, those H&L packages were sold at an incredible rate. A few years ago, it would something like “200 such packages were developed, and 150 of them would be sold before tomorrow while the remaining 50 ends up on the market such as domain.com or realestate.com.au”
6. And no, they were not sold to overseas Chinese investors, but they were sold to local Chinese migrants who are allowed to buy properties in Australia legally.
7. With enough Chinese migrants willing to relocate to Point Cook, this suburb quickly gained reputation within the Chinese migrants community, to the point where existing migrants are willing to relocate to Point Cook, as well as newly arrived Chinese migrants are willing to settle in Point Cook, and the reason is very simple: a) Easy access to Chinese gorecries and supermarkets, b) their neighbours are likely to be Chinese migrants too, c) shcool’s choice of Language Other than English becomes Chinese, and d) lastly, local Chinese migrants and Chinese Australians prefer to band together. So all of those are attractive factors to Chinese migrants or Chinese Australians.
8. So despite the factor that H&L packages are usually somewhat a poor choice, but in the case of Point Cook, they shined. In fact if I go to Point Cook today now, it is actually impossible to find 600-700sqm land properties any more, as such 600-700sqm land properties are almost extinct in Point Cook.
9. Those first wave of buyers who purchased in Point Cook, even though what they purchased was H&L package, but they are laughing today because both huge capital growth they enjoyed as well as positive cash flow for the past a few years.
10. Those who are buying today are still said to enjoy good capital growth for a few more years, but they can no longer enjoy positive cash flow any more because the price of Point Cook is already becoming very hot.
11. And we are still seeing additional Chinese Australians flooding into Point Cook, creating a supply/demand imbalance.
———————–
So I guess question that I have in my mind would be:
1. Now that both Melbourne and Sydney property market are becoming too hot but QLD market is enter a “start of recovery phase”, many Chinese buyers are turning their attention to QLD properties too. My friend seems to confirm that we recently there is surge in QLD property prices, especially in Brisbane capital.
2. So can the Chinese buyer replicate their success of Point Cook in QLD? Can there be a QLD version of Point Cook on the horizon very soon? If so, what suburb is likely to take up that reputation?
————————-
Again, I am not trying to say H&L packages are a good idea. In fact I very much agree with you that under most circumstances, they are a poor choice to invest in.
But at the other hand, there also seem to be quite a few examples and theories that suggest under the right circumstances, H&L can shine just as much as 600-700sqm land can, and it is the wealth of information and what appears to be the validity of both examples for and against the same type of properties that is causing me indecision and I am not too sure where to go from there….
Hi Benny.
No, it wasn’t a House and Land package. It was an established unit near a pretty good public school and fairly well established shopping area, but problem is the area itself is an expensive area, which means the value of the property itself was high when my family bought it, and it was back at a time our investment knowledge was very lacking, and part of the reason why we bought it is also due to we want our kid to attend that school when the time comes and we live quite a distance away from that zone.
Now days, I have been reading and studying much about property investing and I know much more than before, but I still consider myself to be a very time-poor person and my knowledge is far from sufficient.
Also, I don’t have a very good idea as where to source such “problematic properties” that fits within my budget either… certainly not in Victoria or anywhere close to my proximity.
Hi Benny
One more question if you don’t mind.
Another agent approached me checking if anything pops up in Pallara, whether I would consider. No pressure in buying though.
I checked a few places and here is what I am able to obtain so far:
1. It is only 19KM away from Brisbane
2. Google map shows there doesn’t appear to be any public transport that can go to Brisbane CBD, but car drive is only 30 minutes away.
3. I also looked at realestate.com.au and looks like there is a huge number of new properties coming up. So would you think this is the same story as those a few yukky places such as Park Ridge that you warned me about? Or is Pallara a different story?
4. The agent mentioned Pallara has been rezoned from Industrial to Residential
5. I was also presented with some CoreLogic data which seems to suggest capital growth will be promising but I am not sure if I should believe in it or not.On the surface, it looks like Queensland’s version of Victorian’s Cranbourne, but that’s only a initial feeling. More research need to be performed to verify that.
By the way, my mortgage broker calculated that I can pull about 140K equity from my Principle of Residence, and he thinks I can afford between 400-500K investment property…
I am trying to find out what next would be the best for me, based on my indication of ultimate goal.
Or do you agree with Originalsinner that maybe Beeleigh or Canungra are better picks?
Hi Originalsinner
I will do some research into those 2 areas you suggested.
But based on your knowledge (you are much more familiar with those areas than I do), say Beenleigh, apart from being close to the train line, what else can you tell me about that area that makes it attractive to investors?
Also what about the demographics there?
What type of properties are more popular in that area?
What sort of yields can be expected and the level of capital growth if any?
Sorry for throwing down so many questions…
Cheers
StevenHi Benny
Thank you very much for your detailed explanation and suggestions.
To answer your first question, my ultimate goal is to be able to survive on comfortable terms even if I get fired by my boss and I am unable to find another suitable job (Imagine if I get fired when I am at age 60 and its another 10 long years before I can retire, there is no way I am going to be able to compete with young professionals in the job market).
So yes, you heard me, I work full time and I am time-poor and nor do is Real Estate my primary profession, thus I need to rely a lot on finding reliable team mates to ensure I invest correctly to achieve my ultimate goal.
As for my strategy, I bought my first investment property in Victoria, but I think it is not a very good buy, as it is both negatively geared and it didn’t seem to grow in terms of capital value. So it was a crappy buy on my part.
I am not into buying today and selling tomorrow style as I won’t be able to expand my portfolio this way, nor can I achieve my ultimate goal.
I need a balance between capital growth and positive cash flow. You see the thing is, in Melbourne and Sydney, both market are too hot and while some areas do have good capital growth, but most of them are too negatively geared for my liking. So even though properties in those areas may have good capital growth, but the rental income simply can’t catch up, which means even if I do manage to get equity released from those properties, I would eventually run out of money when I buy the next property or two as that would just push me deeper into the “negative gear hole”. So from that point of view, I can’t really buy properties that are too negatively geared (even if their capital growth look promising).
At the other hand, while having positive cash flow is good, if the property has no capital growth, then this means it is hard to get equity out of it and thus prevents me from being able to invest further down the track.
So I need a balance of both, but all in all, I am not looking to “buy and sell”, but rather “buy and grow”.
I live in Melbourne, so I have been primarily looking in Melbourne area in the past, but Melbourne market is current too hot and properties are too negatively geared to allow me to expand my portfolio.
The reason I am looking at interstate (QLD in this case) is I looked at data presented by the likes of CoreLogic, RPData, Residex and information referenced by Herron Todd White, as well as interviews and news articles on The Age, Realestate.com.au, etc… which all seem to indicate that while Sydney and Melbourne markets are too hot at the moment, QLD appears to have reached the bottom of the market and are entering “start of recovery” phase of the property cycle, which is the whole reason why I am taking QLD into consideration at first place.
The logic that I was presented when I was doing my research is that when the property market has a “boom factor”, such as to a new shopping centre being built and opening soon, or a railway line being constructed, or an industrial zone recently got re-zoned into a residential zone and thus will start to attract general residents, it makes more sense to enter the market while the boom is “on the horizon” rather than “wait for a few years for market to jump up and then enter” because by then the market may already become too hot and price is already too high to invest safely. An example of such is Cranbourne in Victoria, where people are buying despite it being too far away from CBD and transport is very inconvenient, simply because any closer to Melbourne CBD is just ridiculously expensive, and that pushed a huge number of buyers (especially first home buyers) into Cranbourne despite massive inconveniences. Experts are arguing Cranbourne market will raise on that basis. Maybe not tomorrow, but it won’t be long before it will raise.
Unfortunately, as Real Estate is not my primary profession, so my knowledge in this regard is somewhat limited, which is why I am asking questions here and there when I am doing my research.
I am not 100% sure what sort of demographic would fit the best into my criteria (a balance between capital growth and positive cash flow).
Thanks Originalsinner.
A bit wary of mining towns. They get good when the miming is happening and become worthless when miming closes… So, if the town has nothing else to offer aside from mining, I get a bit scared, but I will do some research into that.
Do you have any comments in Morayfield by any chance?
Thanks Benny for the reply.
Actually, I pulled out year 2016 Census Data and it shows the area as of 2016 has 2500 population with median age 58, so not THAT much different from the year 2011 data.
Also, with regards to the 10% capital growth, it is from Residex, which to me looks more like a computer generated figure rather than a figure with human input in it. To be honest, figures generated by Big Data alone without human assessment always makes me feel skeptical to some degree.
Anyhow, compare to capital growth, my primary concern is how difficult is it to get a tenant if I were to buy an investment property (regardless of location really). While having good capital growth sounds good, but if I can’t get tenant and have to feed it with my own $$$ all the time, then that’s bad to me.
So which areas in QLD do you reckon is worth investing in?
How about Morayfield? I was some advertizing going around in that section called “Edge Creek”…
Cheers
StevenFurther to that, when I went to some “default real estate” sites such as domain or realestata.com.au, it looks like there are lots of new constructions in that area.
So with a population of a bit over 2300 (median age 54 as of year 2011) and yet so many new constructions happening, wouldn’t that create a over supply of properties than the population/demand?
Hey.
Since you have been voicing very strong opinions against them, are you able to share exactly what your bad experience is?
Instead of just saying a one liner such as “I made a deal with them and I would avoid them at all cost”, can you please specify exactly where things went wrong? Perhaps some details such as:
1. Where was the property
2. What year did you buy it
3. What price did you buy at the time of the purchase
4. Was the property vacant most of the time or was it occupied? If occupied, what rental were you promised but in reality what rental did you end up collecting?
5. Where else were there trouble?
6. Did you get bad legal advise from lawyers they referred to you?
7. Did you run into finance issues with their financial advisor service?
8. Was there a particular mentor who you strongly detest?
9. Was the properties in bad condition? delayed? etc…?A bit of details will help rest of the community understand your issue and learn from the mistakes, and it would certainly be easier to convince them to listen to you instead of just make a generic claim such as “stay away from them” without any details for people to understand the situation.
I don’t know, but by reading the posts here as well as speaking to them myself (I speak to both sides so I can hear both sides of the story), I get the impression that they may not be THAT much different to a “standard” agent.
I mean, come to think about it, the complains here are mostly categories into the following a few:
1. Complains about they charge buyers — The person I spoke to admitted that it used to be the case a few years ago, but not any more. Basically I was told you pay $1000 to sign up, but when you buy a property they recommend, that $1000 gets refunded to you. They also write they a strategy for those who sign up and that’s without any additional charges. Likewise, when you do buy any properties they recommend, there is no charge from them to you. I was told they are in touch with developers directly and refer those properties from developers to buyers and they charge a commission towards the developer, but they won’t charge buyers. To me, that’s almost like what a “standard agent” do in real estate. (except for the $1000 being charged and then subsequently being refunded upon buying back part). The person I speak to admitted they used to charge buyer something like 2% as well, but has since abandoned this practice. So unless that’ a flat out lie, otherwise anybody who still claims them to “charge buyers” can be considered as spreading mis-information.
2. Once they have something from developers, they sell it without going to market first. To me, this can be both a plus and a minus, depending on which perspective you come from.
If you really think about it, it is like applying for a job. Once a job gets advertised on SEEK, you see it, I see it, everybody sees it and as a result competition becomes fierce and chances are your CV ends up in the rubbish bin without being read properly. A lot of jobs are fulfilled without ever going onto SEEK via referrals.
I would think same goes with properties. To me, any properties that end up in realestate.com.au will end up being sold above market price. So being able to have an agent that gets properties directly from developers can have its pluses.
At the other hand, the reason why I say it can be a minus is you need to do your own due diligence check and not everybody has the time and effort to do that (especially those with full time jobs), so if you do decide to go with CFC, then do due diligence check on THEM first. If you don’t think you can trust them, then don’t go with them.
3. Complains about the lawyers/financial advisor referred by them are useless — well, if the property itself is good, but the service offered by the lawyers / finance advisors are bad…. then you don’t have to use those they referred if you don’t think they are good. You can always use the lawyers / finance guys that you trust. I would imagine you would have to pay for the services offered by lawyers or finance guys that you trust. So to me, if those services referred by CFC don’t cost me anything, that’s OK… if they do cost me money, then to me it is more like comparing services networked by CFC against the same services that I find on my own, which choose the better one out of two.
4. Complains about CFC tries to avoid responsibilities once a property has been purchased — Again, I don’t see how that’s any different to any “standard” agent is doing. I mean imagine this, I want to sell my house and I get Ray White involved, and someone buys the property from me. Once the contract is signed, unless the contract clearly stats that Ray White is obligated or responsible for any disputes between me and the buyer, otherwise isn’t this a contract between me and the buyer? If there are any issues, shouldn’t it be resolved between me and the buyer (or rather, my conveyance and the buyer’s conveyance?). Especially considering in a standard contract, both me and the buyer would write down our conveyance’s contact details, so if there are any problems such as water service is broken or settlement date needs to be pushed out etc…. shouldn’t it be resolved between us rather than demanding Ray White to resolve this matter for us (even though Ray White may have made a referral to the conveyance)?
So at the day, to me, it looks more like CFC is just another “Standard” agent who speaks with developers directly and refer those properties to buyers (primarily investors) rather than letting them go onto market.
