Forums / Property Investing / Help Needed! / Is this normal?

Viewing 15 posts - 1 through 15 (of 15 total)
  • Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    Hi

    i purchased a property 8 years ago for 245000,  originally lived in it for 2 years and then it became a rental.  Last year however i changed the loan from principal + interest to interest only. I had about 20k principal paid off but i have left that slowly reduce to zero while i put spare cash into an offset. The offset has about 20k. 

    I had the house valued today at 280k. Which is dissapointing! I just feel that i would be far better off not even buying a property at all.  Have prob paid about 100k  just in interest. 

    What am i doing wrong?

    Profile photo of xdrewxdrew
    Participant
    @xdrew
    Join Date: 2010
    Post Count: 479

    Congratulations in holding on so long !

    Property goes through a property clock cycle. Sometimes its good to purchase and you'll make quick profits depending on what you paid.

    Other times you sit through an extended period first of all waiting for your initial price to return .. and finally look for a profit.

    It depends on when you bought in .. how much you paid .. what interest rate you paid and what economic circumstances affect your investment climate itself.

    What were you doing wrong? If you wanted an investment that wasnt going to go anywhere much .. you probably did everything right !

    So to answer the failiure question, I'll prime it with a couple of honest questions designed to invoke the right response.

    (1) Did you do your investigation into the property in the first place or did you just rush in getting SOMETHING in the market?

    (2) Did you purchase on what you could afford or what you thought was going to be actual value?

    (3) Did you assess where your property is likely to sit in the market within 5 years time?

    (4) Did you purchase on the demand of the property, the scarcity of the property or the inherant ongoing value of the property?

    (5) Are you assessing RIGHT NOW where your investment property sits in the current market .. and where on the property clock we are in relation to market mood?

    (6) Are you assessing where your property sits in YOUR existing market portfolio?

    Any or all of these questions should be asked every time you even approach the investment property.

    The answers will give you a better insight for yourself how you want to work on creating value in your property portfolio.

    The only person who will make the right or wrong judgement calls on your property .. is you.

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    Thankyou xdrew for your detailed response. I dont know the answers to these questions :(

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Sounds like you are relying on luck. Probably the wrong property in the wrong area. Is it regional?

    You would have actually lost money on this property considering the interest and other payments and inflation.

    What sort of rent return?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Craig,

    Your experience is not normal – at the same time you are not the only one who could relate a similar experience.

    You have two options now.

    1. Put your tail between your legs, sell the property and go and look for the next best thing or………….

    2. Get some answers to Andrew's excellent questions and make adjustments.

    If you run away – yes you have wasted the last 8 years. If you learn from the experience and use the new knowledge to improve what you did then the eight years hasn't been wasted.

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    That why were you buy is so important.

    In my view it means you need to do a lot of due diligence. The first thing is to research what has been the average growth over the late 10 years. 

    What is the infrastructure like, is it near shops and public transport. 

    These things are important. We are building a 17 unit apartment building in Melbourne across the road from a Coles Supermarket. and coffee shops a park at the end of the street and a tram stop to the city and its just a 5 minute drive to the freeway entrance to the city and airport. Because of this we know that will be easy to sell and rent

    When you are buying an investment you must consider why a tenant would rent the property and have a check list with things such as shops and public transport at the top

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Craig

    As you have so much invested in this property it may be time to make it pay its way, i.e. lock in a fixed capital gain on the proerty and turn it from negative to positive cash flow (if that's the current cash flow position).  We use a technique we call negative2positive to turn around our 'dog' IP's.  It involves selling the property with vendor finance and more information on how this is done is available at  http://www.negative2positive.com.au

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    The property is in Thornton NSW, 20 min drive to the coast of Newcastle, very neat smallish 3 bed brick home, carport, newish bathroom & kitchen on a 650 square block. You can walk to shops in 5 mins, walk to parks, fields etc. in 5 min, drive or ride a bike to train station in 5-10 mins. Bus stop is around the corner. Easy access to freeway. In the last 10 years and still continuing are huge housing developments about 1 kilometre away. This area the house is in is the "older area" Its a nice, quiet, plenty of trees :) in a friendly family oriented suburb.

    To me I see it an a good investment, at the time it was felt that paying 245K was a very good buy. Knowing of the talk about how much Thornton will grow in the next 10 years. Since then it really has grown quite a lot.

    Rental return 310 a week, i get about 2.5 – 3K return each year at tax time.

    Thanks all for your replies, very much appreciated

    Craig

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Can you someone how develop the property? Renovate? Add a Granny Flat? 

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    I dont think it needs anything done to it,  and i dont know if investing another 15/20k on a granny flat will be worth it

    Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 27

    Any professionals able to look into my situation, i am willing to pay

    thanks

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Craig

    I live in the area and my local general operating area is between Newcastle through to Rutherford, so I know Thornton well.  Please feel free to PM me or give me a call.

    Cheers, Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Craig

    Who valued the property ?

    If it was your Bank have you thought about getting a separate valuation from another lender.

    Had one last week for a forum member which came up by $80,000 on a second valuation compared to his own lenders figure.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    granny flat would cost your closer to 60-80k then 10-20k

    but if you imagine the rent on a 2 bed granny flat to be 200 bucks a week then your getting a gross return of 13% a year on your granny flat.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    craig123 wrote:
    Any professionals able to look into my situation, i am willing to pay

    thanks

    Hi Craig

    What service is it that you're after exactly?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

Viewing 15 posts - 1 through 15 (of 15 total)

You must be logged in to reply to this topic.