Forum Replies Created
Hi
I tend to agree with jenman. The battlers/wrapees are not protected.
Hi
I always inspect the night before settlement. I too take out building insurance once the offer has been accepted.
In future, I may even have a clause in the contract that the dishwasher, oven and hotplates work. On my PPOR, none of these worked and only 2 of the 4 hotplates worked.
I even had a building inspection done prior to my offer. We were a little pissed when these did not work. We heard the dishwasher making noise and assumed it was working. In fact thats all it did was make a noise. So we had to advance our kitchen renovation.
If there is a tenant in there, I ususally assume things are generally ok, as they would not continue to rent unless things were ok. I also keep the same rental agency, so they can sort problems out for me after settlement. I also ask the agent, if there are any problems with the house.
Anyway, just my thoughts.
Hi
I am thinking about looking all day and night at realestate.com.au and realestateview.com.au and raywhite.com.au etc for positive cashflow properties all over Australia.
Then listing them on my web site, then asking for a spotters fee if you buy.
Worth my while you reckon?
Hi Lucinda
I just recently had a property on the rental market for 6-8 weeks. Yes, its a little out dated and I probably should upgrade the kitchen, paint it, fix some doors, even the garden etc.
This property was only 15 mins drive away. I spent the past 6 weeks wondering what I could do to improve the place. The agent gives a few comments BIG DEAL. I put in some curtains, new light fittings and even started the process of doing a renovation ie. new kitchen.
I got quotes and was about to sign for the new kitchen. Now I have two applications for the property.
I dont know about you, but I cannot imagine doing this if the property is 4 hrs drive or a flight away. I dont do the maintenance either but I am responsible for it. Its no good to me if the place is unoccupied.
I still want to sleep at night.
Cheers
Andrew
Hi
You sound like my wife and I were like about 5 years ago. We now have two kids under 5. This is what we did.
1. We too had a 2 bed unit (Parkdale). We sold that and put the money/equity in our PPOR (house Aspendale) – principal place of residence. To reduce non tax deductible debt.
2. We then went to bank and borrowed 100% for a similar 2 bed unit. That way the whole loan is tax deductible. The bank just linked the two titles.
3. As we could afford it, we then purchased a few more units about 3-4 years later.
4. The only regret i have to date is that I should have bought houses not units.
I hope this helps a little. We are on the one income (mine) and I believe doing ok.
Houses Only
<<<The extent of the bust and the timing are the only things up for debate really.>>>>
What do you expect interest rates to be during this bust. Thats my largest exposure as with most people.
Do you expect rates to fall to stop the slide? In comparison to rates now, do you expect them to fall or be higher?
I am of the belief that interest rates are the driver of property. If we can maintain similar low interest rates over the medium to long term, then there is no reason why we cannot maintain a soft landing.
Cheers
Andrew
Kay
I dont think you understand the concept of investing in property for growth.
Property values in Queenstown do not grow at a rate worth investing. In my opinion save for a while till you can afford a quality property.
Say you buy 5 proerties in Queenstown for $50k. and end up with $2k postive cash flow on each. In 10 years as there is little or no growth you still have the same properties returning similar amount $10k.
If you bought a quality property, after 10 years it would have doubled in value and be positive geared as there would be regular rental increases. As that property increases you could purchase more quality properties.
Yes you do need some income to supplement this.
Cheers
Andrew
Hi
I totally agree with mortgage hunter. I would focus on a house or a few houses in growth areas.
Land is what appreciates. I look forward to tax time to get my tax refund. I have some properties that were negative geared and one that currently is. The tax refund is like an enforced savings and I look forward to doing my tax.
With an income of $125k and only assets of $40k, thats the problem with many people. They spend all their time focused on work, and not trying to understand investing. An income like that should be financing growth assets. You could almost buy about $600k worth of assets on that.
Cheers
Andrew
Hi
Everywhere in Australia has doubled in the past few years. Even Orbost has doubled. But that does not mean its going to double again soon.
So why even consider a place like that. Steve made his money at the right time and decided to now write a book of his experiences. Now many people have read the book and think they can emulate this. His timing has been great as he has got capital gains and positive cash flow.
Now its very difficult to do this. I am not going to waste my time looking for rural properties. I dont want the rental management hassles. The long drives to sort difficult repairs.
I want a property in a growth area, in a capital city that i know will grow over the long term.
I am not totally against rural properties. Its just at this stage of my life, with a good job and two young children its just not worth my time.
Cheers
Andrew
Hi
Well said Michael and endorsed by Property Guru.
This should be the intention. I should have bought houses with subdividable backyards. That way after 5 years with the equity in each property you could put a unit in.
There are many other ways as well. Do a complete renovation of a unit and use the extra rent and equity to buy the next. There is no doubt that things can COMPOUND quickly once you have owned growth properties.
I still think people fail to grasp that negative geared growth properties are HEAPS better than positive geared rural properties in the LONG TERM.
To be a property investor – you need to be in it for the long term. Buy, hold dont sell.
Cheers
Andrew
Hi
I agree totally with what you say Rowan. As Jan Somers advocates and I agree – its not about timing the market, its about investing when you can afford too. Thats why when I purchase a property its interest only fixed for 5 yrs. I even purchased one about 4 yrs ago – fixed for 10 years through NAB. Its already doubled but at least i knew what my largest expense eas.
All I am really saying to all those newbies (sorry – if this term is demeaning, thats not my intention) is that you are better of buying a negative geared well located property in a growth area than surfing the web looking for rural properties with positive cash flow of say $1-2k a year.
A well located property thats worth $250k today will (if history repeats – and there is no reason why not) will be worth close to $450k in 10 yrs time (i am being conservative). Thats about $20k a year. Your rural property will not generate anything like that. except say $2k times 10 yrs and lets double it $40. Its not worth the effort to me. There are not much in the way of capital gains in rural areas.
If you cannot afford a property in a growth area, focus on your PPOR. Once you have some equity use it to purchase a well located investment property in a growth area (capital city).
As Rowan says ‘now many not be the time.’ But use this time to study property, get to learn about areas. Ok – you can even buy a rural property. No matter what I say – the experience alone will educate you and I bet a few years later you will decide never to invest in a rural area again.
I cannot believe all the messages I see about people wanting to put their hard earned money in Queenstown, Tassie. I hope they enjoy the management hassles and 20 yr waiting period before any new growth occurs.
Cheers
Andrew
Hi Chan
Yes. Over time you will have a combination of all three types of properties (negative geared, neutral and positive geared). The properties that started out as negative geared become positive geared and support the new negative geared properties.
My main point is that you have to start somewhere. I believe you are better of in the LONG TERM starting with a negative geared property in a growth area (a state capital city) than buying several positive geared properties in a rural area.
Holding rural properties for several years with no growth but some extra cash is not investing in my mind.
Cheers
Andrew
Hi
I have a 2 bed and study property in Frankston (bayside Melb) and I cant get $160 per week. Sure it needs some work though.
I would check the rent appraisal if I was you. Sounds dodgy to me – but i have never been as far nth as townsville.
Cheers
Andrew
Hi Richmond
For what its worth Houses are better. But from a servicability perspective I did limit myself to units. If I had my time again I would have bought houses a few surburbs further down the bay.
Cheers
Andrew
Hi lymeng
Yes you can. I like Mentone and Frankston. Both on the Bay. Mentone is about 24 kms from city and Frankston is 45kms. Melburnians are only now apreciating the beach.
I grew up in Mentone and its is near beach, train station and some great schools. Mentone Boys and Girls Grammar (Shane Warne), St Bedes (Brad Hodge), Kilbreda and Mentone girls high. You can buy a two bed unit 2 mins walk to station, 5 mins to beach and 5 mins to all those schools for $250k. Rent is $195 a week.
Frankston is going to be good too. Its just before Mt Eliza and on the other side Seaford is booming. I used to lock the car as I drove through Seaford. Ok – its not that bad. Frankston has a new marina proposed still in planning and about $100m worth of other projects eg. new pictures, shopping centres. etc.
My advice is dont look at rural. Get one good investment property in similar surburbs in your city. Be patient. The turtle wins not the hare.
Cheers
Andrew
Hi
I am not talking inner city. I am talking suburbs. I like near beach, schools and public transport.
In Mentone (surburb of Melb) you can still buy a 2 bed unit for $250k. It will be worth $300 to $350k in 10 years if history repeats itself. I am being conservative.
You cannot loose there.
I am sure there are other similar surburbs in Sydney, Brisbane etc,
Cheers
Andrew
Hi
I read an article in the Herald Sun (Melb) and it expects that the average wage will increase this year by $2k (i think 3-4%).
I love it when i read these articles. This means as people get higher wages they can afford to pay more rent. I also love it when the price of goods say bread rolls goes up. That means it costs us more to live and we then ask for higher wages.
Why is this good. Well if you bought a property today as inflation goes up prices go up and the purchase price in 5 yrs seems so small. How many times have you heard someone say ‘Gee if only I kept that house its now worth double’
It also means that i have the possiblility of a higher wage which can be used to finance the same mortgage payment. It also means rent goes up so it will be EASIER to finance the property. This is my long term view.
Also rents are usually as a rule of thumb generally 1-2% below the current interest rate. If interest rates go up, then rents too will go up.
Cheers
Andrew
Hi
Why invest in an area that has properties that have returned growth of $2k on a 10 year property worth $70k.
I dont understand. Lets say you buy 3 properties. Thats $210k. Come back in 10 yrs and it worth the bloody same. No time value of money no growth.
Buy a $210k unit now in Melbourne. Yes you can. Come back in 10 years its worth say $350k. I am being conservative.
Only one property to manage. Its gone up in value. I dont understand why you would even consider Rockie.
We are not playing monoply. We are not in the business to own the most properties. We are in the business to own the best properties with max. return
Cheers
Andrew
Hi
The way I see it. Historically the yield on property is usually 1-2% below the current interest rate.
In the past in areas like Frankston and Dandenong you always got a yield 1 to 2% higher than the current interest rate.
Thats not the case now, so be aware of that. Those that got into property 10-15 yrs ago will be circling those that over extend.
As an example – Frankston unit bought 1998 $95k with rent of $130 a week 7% yield. NOW worth $200k rent $160 4% yield.
To get to a more historical balanced market, something must give. Will rents increase (too much supply of rentals), Will incomes increase (maybe but then so to will interest rates) If interest rates start rising then the guy who bought at a yield of 4% will start to struggle while the guy with a yield of 7% is in a better position.
I suppose what I am saying is Dont overextend
