Forum Replies Created
If your only needs are public schools and public transport, then get a map out and trace the train lines (queensland rail) and bus routes (brisbane city council) out 10 km.
You could also ask your employer and new fellow staff for their recommendations… presumably you want somewhere convenient to work.
If you want a bigger yard, use the sq metre limiter in realestate.com.au , in addition to your price limit.
Be informed that the north side of Bris was settled much earlier than most of the south, and is therefore older in layout and architecture. In general, the west side is a higher socioeconomic class, the north, south, and east mainly middle with patches of upper. If academic performance is anything to gauge what a good public school is, then have a squiz at this table of metro schools and academic success:
http://www.tekserv.com.au/bruce/QldSchoolsMetro.xlsThe top 20 state schools are highlighted in yellow. Note that 75% of them are on the northside of the Brisbane River.
Have a look at this thread at that great property forum Somersoft….and compare with the responses above….
http://www.somersoft.com/forums/showthread.php?t=22782&highlight=schoolsBruce
Mooloolaba, QldI worked at HB hospital a few years ago, and am familiar with the demographics and economy.
Like any other town, an investor should take their due diligence seriously. If they haven’t, they really need to ask themselves on what grounds they made the decision to buy.
Here’s some reasons I have never considered buying investment property in HB.
– the place subsists on welfare. i.e. it sucks up more govt handouts then it pays in taxes.
– the area exports nothing apart from highly seasonal tourism.
– population growth is fueled primarily by retirees, who seek to buy. They tie their money up in a property, and are then cash poor.
– employment and wages are amongst the lowest in Australia. So non retirees who move there tend to be those who are incredibly naive or are so unskilled or unfortunate as not to be able to make it in a capital city.
– there is no shortage of land to develop, and the HB council is right up there with the most small minded provinciales. It considers itself a business, and knows its income is propped up by approving more development. However, like all myopic small town mentality, this council is too stupid and immoral, to recognise the problem of baiting large numbers of non retirees to an area with minimal commerce.
– I think as part of due diligence, one might like to think about the medical services offered in towns outside capitals. If a place like Hervey Bay cannot attract and retain specialists and surgeons, and ends up the creek like Bundy and HB hospitals, I think it is fair to say the towns are are poor investment choices, especially if you require rental return.
Bruce
Mooloolaba, QldHi Daniel
Hmmmmmm….can you expand on why you think yields don’t indicate price realistically….From what you are saying so far, your logic seems to be that the definitive resource is the UCV, as that is what is taken seriously by valuers.
You also seem to be saying that asking prices are a reasonable guide of value.
Can I caution you to remember that the amount negotiated off an asking price varies considerably over time. During a boom, it is hard not to pay the asking price. During the recent slump, many report getting 15-20% discount off the asking price. And you managed to get 17% off.
I suppose good value depends on what your expectations are too. Personally, I expect IPs to pay for themselves and average growth >5%pa, as I can do that with Oz and US equities.
Anyway, you should do ok with time. Banyo’s got a lot of upside ahead of it. What street is it in?
Bruce
Mooloolaba, QldHi Captain,
Re Banyo, that’s a suburb I know very well. IMHO, today’s asking prices are equivalent or a little softer than November 2003. Which means values have fallen around 5% in real terms in less than 2 years. i.e. this house
http://www.realestate.com.au/cgi-bin/rsearch?a=o&s=qld&c=73700178&tm=1126225484&id=102535118&f=0&p=30&t=res&ty=&snf=rbs&ag=&cu=&fmt=&header=
was up for sale in 2003 for more than what the current vendor is asking. (I signed a contract on it in Nov 2003 but pulled out after post building inspection haggling.)Re your 2 bedder purchase, I note you may be out of pocket 199k+9k(for in costs)+12k(reno) = $220K.
If you get rent of $220 a week
(http://www.realestate.com.au/cgi-bin/rsearch?a=s&cu=&s=qld&ss=&ag=&t=ren&snf=rbs&tb=banyo&u=BANYO&is=1&pm=&px=&pme=any&pxe=any&minbed=&cat=House&p=30&o=p)
for this 2 bedder, that’s a gross ROI of 5%. For you to make money on the house, you’ll have to find a buyer who is happy to take it for much less than 5% yield. IMHO, that won’t be easy, as 5% yields are very easy to find all over Brisbane. I actually don’t look at anything with less potential than 7%. But then you might find a wood duck out there.Personally, I wouldn’t rely on UCVs to decide what’s a good deal. UCVs are contingent on the market, and can go backwards.
It is much more realistic to set value based on yields and market sentiment. Currently we are in a flat market, with no sign of that changing for some time. And shares and managed funds are easy to get >15% pa after tax returns when leveraged, and shares don’t have the high in and out costs.
NEvertheless, the one upside I see to your purchase is that you can get in and do your reno, then potentially get a bit of extra equity (if the valuer sees it), and the market doesn’t stay flat or soften, which is a real risk currently.
Good Luck
Bruce
Mooloolaba, QldThanks, this is the latest GUI.
Have ironed out some more bugs, and checked the accuracy of some calculations, such as NPV and IRR.
http://www.tekserv.com.au/bruce/IP1.gifBruce
Mooloolaba, QldI have now updated the spreadsheet’s simulator.
It looks like this:
http://www.tekserv.com.au/bruce/IP.gifBruce
Mooloolaba, QldP.S.
http://www.tekserv.com.au/bruce/Graph.gif
this is what the graphs should look like if they aren’t rendering properly on your version of Excel.Bruce
Mooloolaba, QldThx Gross.
Any input appreciated.
I am still editing for errors. Though I don’t expect to find too many more. Tonight I revised calculation of NPV. And have cross checked and it seems to be right now.Some of the stamp duty values are out of date for some of the states. NSW and Qld are ok though.
There’s a few accounting issues I could do with advice on. i.e. the consistent application of inflation to future values, esp when used in IRR and NPV calcs. And a realistic choice for the discount rate in NPV, that considers the illiquid nature of property, future risk of negative events, and inflation’s effect on future dollar value.
I have seen one formula for NPV discount rate:
Discount Rate = Cost of Capital.
The formula for the (Nominal) Discount Rate
= (1 + Inflation Rate) * (1 + Real Discount Rate) – 1Bruce
Mooloolaba, QldRichmond, it is blatantly sexist to pretend there aren’t sex differences with this topic, or within the ABC’s sloppy use of stereotypes.
We all know the ABC use the argument that they are justified in being pro left and pro ‘anti private sector special interest groups’, because the commercial media are the other way. This is why they are so vocal in trying to avoid independent monitoring of political bias currently.
I wouldn’t have a problem with the ABC if it also provided workable solutions on how to run the private sector more to their liking. However, they don’t. It is just a tired old left bashing of everything private, with no intelligent alternatives ever thrown up.
Further, isn’t it a little sinisterly paternalistic for a state sponsored media organization to be saying if you don’t like our spin, then go and listen to the commercial stations. It is supposed to be everyone’s ABC, not the Left’s. And the majority of everyone voted for the coalition last time, no matter how hard the left live in denial. In taking the stance you are re the ABC, you are encouraging state sponsored censorship.
Bruce
Mooloolaba, QldOriginally posted by kay henry:What is funny, Bruce? I don’t get your point… or is that funny too?
kay henry
Kay, It’s funny because the ABC pride themselves on being the most politically correct unbiased organization in Australia. This is despite there being no one on Radio National whose right wing views are as extreme as Philip Adams’ are left, let alone 5 days a week every week. Nor do the ABC have anyone with right wing associations as intimate with the left as are Maxine McKew’s, Kerry O’Brien’s, and Tony Jones’. Further, ABC tv’s appreciation of private commerce amounts to Alan Kohler’s 45 second quirky quips in the nightly news bulletin.
Therefore Kay, the humour lies in the paradox of the ABC’s philosophy of avoiding imbalance and unPC stereotypes and their decision to choose two females as victims of poor financial management, let alone flights of delusion. That’s difficult for me to reconcile, how about you?
However, it’s possible that due to the budget constraints the ABC works under, maybe they run out of time trying to find a male victim of surrendered financial responsibility in the time that it took them to find two female victims. Or maybe it was easier to find two female victims because females complain more to various agencies than males do.
Further, if you have an issue with your sex’s capacity to responsibly manage financially, I am sure your efforts would not go unnoticed wherever there is a poker machine. You could also approach Westfield and Coles Myer about the gross imbalance between floor space devoted to retailing of men’s apparel versus women’s. After all, if the shops weren’t there, then women wouldn’t spend so much on clothes, would they?
And I am not saying men don’t p*ss money up against the wall either. It’s just that they generally don’t go off blaming someone else when they do it.
Bruce
Mooloolaba, Qldwas that the program they interviewed the overweight blonde who divorced, set up her ow business (recruitment agency), couldn’t curb her consumption habits (cafe lattes, clothes, OS trips, horses for the kids), then went bankrupt? Then she blamed the credit cards. She wrote a letter to the bank asking them to stop her from spending on the credit card. i.e. she was absolving responsibility for when to spend something on credit. I bet her father spoilt her, and the most important thing to her was keeping up with the Joneses.
As for the poker machine addict, this is what happens when your don’t pay attention in year 10 maths class, and believe that someone giving you credit is the same as being given money, which she said on several occasions.
Funny how the show used two females to illustrate poor impulse control and a totally screwed up understanding of credit.
Bruce
Mooloolaba, QldI’ll have to get Dolf’s book out again. Off the top of my head, I remember the first of his 101 tips were adding a carport if there was no under cover storage, and turning an existing carport into a garage.
Bruce
Mooloolaba, QldAcey, have you checked out renting a house from your own trust rigorously with your acct? Seems like something the ATO wouldn’t look favourably on. How long have you been doing that for?
Bruce
Mooloolaba, QldAcey, I meant to say nice strategy with your kids at the supermarket. Giving them that goal would certainly preoccupy their minds as they wheeled past the coke cookies and confectionary.
And I also try to stick to fruit and vege and avoid processed foods myself.I think childrens’ minds probably provide a more powerful analogy of the value of goal setting. I can think of so many occasions where a child, without anything to occupy their time and attention, run amok. Give them a task, and they focus and feel a great sense of accomplishment and self confidence after completing it. I am sure the same applies to adults.
nevertheless, I resonate with Kay and others that life should be spontaneous as well. It is all a matter of getting a healthy considered balance for each various personality within their circumstances. Seems the pendulum has swung too far away from serious preparation for the future these days for many of us. Hence the high household debt and consumerist mindset. This newsgroup is a welcome relief in that it is an opportunity to exchange ideas with those who are trying to plan for the future.
Bruce
Mooloolaba, QldKay, from other comments you have made on the forum, I accept that our politics and lifestyles are different. I don’t accept that I have a superior view on all and sundry, hence why I am open to let others live lives based on well considered principles or morals different to my own.
I wish there was just more open intelligent debate about these things, instead of PC and intellectual elites and interest groups trying to all antagonistically bury each other’s POV. These issues really are too critical to what Australia might become.
BTW, I have an issue with the term ‘asylum seeker’. I complained to the ABC about their ad hoc choice of this term, as well as several govt depts. The line I received back is that anyone who arrives in Australia, whether gun runner, drug smuggler, eccentric English sailor, psychotic American millionaire, who doesn’t possess a valid visa to enter the country, and claims they are in danger of persecution in their home country, can automatically claim asylum seeker status. I for one don’t buy it. Afghanis don’t need political asylum once they enter Pakistan- they automatically get it there. They didn’t have to travel at extreme cost over 8 countries (3 of them Muslim) to gain political asylum. I think the term economic opportunism needs a little more press these days. Nevertheless, locking up economic opportunists for a year or three at significant cost (when old Australians are underserviced in nursing homes) isn’t the most sensible thing either.
Bruce
Mooloolaba, QldThanks Sibo,
I agree with you on the culture thing too. I often ask myself about the saying “to stand for everything is to stand for nothing”. I like to walk a middle ground between being tolerant, but aware of the benefits of a well considered morality. To me, there are many loud voices pushing open slather, extreme lefties often condemn traditional morality and values, and extreme righties want less intervention of govt to protect consumers.
I think of road rage, tailgaters, speeders, people not using indicators, people going slow in the inside lane, etc. I think of service industry staff who just don’t understand service. I think of how parents let their kids get away with bad behaviour in public places, and I know that is the sort of culture I don’t want to be a part of.
It would be good for Australia to have more open public debate about how to foster desirable values and culture.
Bruce
Mooloolaba, QldAcey, interesting topic. I used to work in advertising. And became very aware of no matter who we are, we are either being influenced by the world outside our minds, or our own constructs and desires. So often I have well educated ppl argue against the power of advertising to influence them. I just tell them to go and open their fridge or pantry and look at all the brand names.
I have the same view towards goals and values. If we drift along without a reasonable sense of where we are going, then the external world finds it easier to whip up impulse and appetite. i.e. if you are on your way home hungry and walk past a pizza shop, and have no idea of what you will cook for dinner, then it is so much easier to buy that pizza. So, for me, goals and planning at least serve to make me less vulnerable to impulse, impulse whipped up by a world often not interested in my wellbeing, just my money.
Further, if one wants to control or lose weight, then one does well to be more conscious of what they are eating, how many Calories approx they are putting in their mouths. One of the strongest ways to attain this is to have a meal plan for a week, esp when you have to feed kids. The same applies to things financial. When you have a plan for what you are going to do with your money (or time to make money), it is less likely to be spent impulsively on immediate gratification, because you are more conscious of longer term gratification.
Bruce
Mooloolaba, QldThere’s an old saying”
“equity is the most expensive form of capital”.Applying this here means Fish is better borrowing against the land and using debt to finance new ventures; rather then selling equity to finance new ventures.
Nevertheless, all old sayings aren’t applicable all the time, esp after considering recent tax changes.
Personally, I feel he should improve the land with a leaseable structure. Unless one increases yields, capital gains aren’t going to be that great over the next 2 years, esp in NSW. But this is my opinion.
Bruce
Mooloolaba, Qldsounds good to me.
if the yield is a lot better than a house, I’d seriously consider it. Sometimes you find the general investor drives house prices up to an unreasonable differential with townhouses, because they shy away from the latter.Bruce
Mooloolaba, Qldthanks Simon.
Elspeth, I would also add that I don’t expect capital growth will be that strong in the next 5 years.
I also assumed being 19, your IP tax deductions may not be that solid, based on you not having a gigantic income.
Remember, the interest you pay out on an IP has to be recompensed via CG.
You might want to run a spreadsheet with varying levels of cg to compare PPOR and IP.
My advice would be to buy something you can value add to. This is probably the smartest thing to do when the market is flat and uncertain.
Bruce
Mooloolaba, Qld
