Buying existing house

Hi Jaya,
That almost sounds like “How long is a piece of rope?”

If you can share what you are wanting from this house, and any/all constraints, like – is it for investment or “own home”, any particular location, return required, can renovate or not, etc it should allow us to give a more meaningful answer.

Don’t forget, we don’t know you – so unless you tell us more about WHAT you are wanting in a house, we really can’t help.

Benny

Hi Jaya,
When buying an existing house, I would always get a building inspector to take a look. Maybe a plumber too, if you have a special concern with plumbing.

Re the land – I always like older homes that have big land – especially if the Council is about to re-zone. Going from 17.5 to 30 is nearly doubling the number of houses in an area. It means you are allowed to build on a smaller block than before. Jason wrote a very good article here about that :-

https://www.propertyinvesting.com/r-zoning-codes-for-western-australia/

I presume you are looking in Western Australia, but you didn’t say – they use that type of code though, so I hope Jason’s article is of help to you.

So, if you buy an older house on larger land, AND they re-zone to R30, then you might have a block big enough to be able to build two more houses in the rear. Lots to check though, but it offers you the chance to make more money by building and selling two more houses and their land in the future.

I would always prefer an old house on big land with room at the rear, better than smaller land to build a new house at the rear. I hope that is a help,

Benny

Jaya I would lastly like to add, you get what you pay for.

Seek a really good Financial planner, or specialised real estate agent/broker that understands property investing.

They may cost but if they earn/save you tens if not hundreds of thosands then thats money well spent.

Good luck, Jaya! You got two experts in there. Whatever your final decision may be, just make sure it’s worth it and you’re happy with it. I agree with Jaxon though that we get what we pay for. :) Personally, I prefer new house with big land. :)

Not too sure if I am getting the wrong impression here, but I do somehow get the impression that you make it sound like you have a grudge against new properties or H&L packages.

Anyway, from the amount of information I studied and the numerous seminars and workshops that I come across… to me, whether we buy new properties or old… whether we buy those solution properties or problematic properties… it all comes down to circumstances and preferences.

An example may be that Chinese renters (especially young overseas students who come to Australia to study their uni degrees) simply prefer to live in new houses with little land rather than old houses that require constant maintenance. So if you are targeted at this particular market, then H&L package might just be the right property for you. Under other circumstances, probably stay away from H&L.

Another example would be in Melbourne and Sydney, Asian residents simply prefer to live in Townhouses that are close to big cities rather than houses that they consider to be “problematic”… a good example is I have friends from Taiwan who simply refuse to buy a property from someone who died in that property no matter how great that property is, because they consider is “Bad luck”. Another example would be the Chinese believe “a super cheap property in an area with no infrastructure or transport is not worth it no matter how big the land is” and they generally refuse properties that fit into those category. So your target audience will at some degree determine what property you will invest into as well.

Some investments are probably “fine investments” on their own or “good investments” given their unique circumstance… although they may pale in comparisons to “excellent investments”, but to call them “bad investments” is probably not fair either.

I guess you are right… though there can also be a lot of counter examples.

Not sure if you might have seen the topic I raised in relation to a suburb in Victoria called “Rowville”. Jaxon and I discussed about that in the thread.

Only a few years ago, this was one of the least popular areas. Nobody wanted to buy properties over there. People laughed at those who actually bought properties in that area.

Then for reasons I myself did manage to find out, Asian migrants just moved in there, and within a few years, they pushed up the academic schools that made the local school more popular, and then a lake was built there, and other facilities came up in no time.

The result is before we realize what happened, Rowville went from an unpopular area to an area where housing price shoot over the roof. And now, those who bought in Rowville only 5-6 years ago, they are all laughing.

In one of the seminars I attended, the instructor used a term called “the Push Factor”. Basically it means a previously unpopular suburb that is largely off the investor’s radar, happens to experience rapidly growth due to residents “push” into that suburb. The reason behind why residents “push” into a previously unpopular suburb can vary, but the point is the push factor is able to drive good growth.

Rowville is such an example of Push Factor. And the instructor believes a few suburbs in QLD will likely to experience such push factor too. Now, contrary to your suggestion, the instructor believes Morayfield will be one of those subrubs. I myself don’t know enough as I don’t reside in QLD so I won’t make a decision on that without doing more studying yet.

In the thread, Jaxon and I had a discussion about whether investing in Rowville a few years ago would have been considered as good investment. One of the things I commented is that “it appears that for many experienced investors, they may not like the idea of investing in Rowville a few years ago because there is always the possibility that ‘what if Asian migrants never push into that area'” and I also commented that one of the things from the seminar I heard is “investing in a new area before the area experienced growth” is considered as “speculating” rather than “investing”….. and to that Jaxon countered by saying “everything is technically speculating until they are implemented”.

I have a feeling that, a few years earlier, Rowville would probably be considered as a “green estate” in your opinion too.

So far, I am still weighing up my options, but I do like the idea of “if I know an area is going experience good growth, then I would like to get into that area before the growth happens, rather than getting in there after the numbers have already gone up”.

Hi Jaxon

Which part do you think is “semi-truth”?

a) buy H&L packages? Because I am not a big fan of H&L packages myself. All I said previously is there are certain unique circumstances where H&L package might just be the right for those circumstances, but otherwise stay away from H&L Packages.

b) The push factor? It is one thing I heard from one of the many seminars I attended. Seminar run by someone who is already financially free. I can’t really imagine this being a “terrible advise” unless the instructor at the seminar is not doing it himself/herself or is not financially free himself/herself

c) Move into an area that will experience good growth early rather than waiting until number already go up? I am a big believer in that.

An example is China, in 1970’s, China was still running a “planned economy” model, and that changed starting from 1978, where Chinese government tried to run a “free market economy” model instead of “planned economy” model.

The first batch of people who quited their “stable job / job that made themselves comfortable” as soon as the government announced such a transition all made a huge fortune. Those who followed suit 10 years later hardly found success.

Then came the digital age. Jack Ma was one of the first business man to go into eCommerce in China, he founded The Alibaba Group (think of that as a Chinese version of eBay or Amazon), and he made a fortune with that. Those who “waited for a few years for eCommerce to mature before acting”, either made crappy profit or went bankrupt shortly afterwards.

So I am a strong believer of “get into a market with good growth before the growth happens, rather than waiting until everybody knows about the market and there is already someone else who is dominating in that market”.

So with areas that are already “safe”, where the conventional method of “dig and and find something undervalue” might take too long or the process end up wearing me out… as such I *might* prefer the alternative of studying the areas and if there are sufficient and scientific evidence to suggest a particular area is about to experience good growth, then get in there early rather than after the growth already takes place.

As there is a saying in Chinese: every vegetable has a “hole”, find and secure a favorable hole early and grow big in that hole, rather than having to fight for a good hole later when good holes run out.

Which part do you think is “semi-truth”? a or b or c? or all of them?

With regards to “Gold is found in dirt, not in the town window.”

I agree with that… although I also think those who make big profit are those who take the initiative to find the gold before anybody else and be the first to dig up the gold… by the time everybody knows about gold in a certain area and a “gold rush” happens in that area, it is no longer so profitable.

Hi Benny

Your responses are useful and interesting.

Just some background info re: Dandenong vs Rowville.

Dandenong is not all in mountains. While there is a portion of Dandenong / nearby that are considered to be “Dandenong Mountains”, but the residential area are on a pretty flat ground.

Neither is Rowville in mountains and I don’t consider Rowville having overly good mountain views… though I am going by my memory of Rowville from some 10 years ago.

The question regarding to why Dandenong is cheaper than Rowville is an interesting one, so let’s see:

1. Rowville is currently very car dependent, it is much further from CBD than Dandenong is. My friends actually made a comment about Rowville housing price will probably go up further when a train line gets built, so I take that means currently there is no train stations and as such, while there may be some bus services locally, but getting in and out of CBD to Rowville means car is pretty much the only options.

2. Dandenong at the other hand, has a train station, which is also a big train station. Behind Dandenong, the train line braches further into 2 train lines, with one going to Cranbourne and the other going to Pakhanam.

3. Dandenong also has a very large shopping Plazza close to the train station, whereas Rowville, not so much. It still has local shopping areas, but the scale is likely to be not on the same level as Dandenong according to the description given by my friend.

4. However, Dandenong has its problems. The big problem I can think of is its reputation. APEX gang originated from Dandenong, and it may be that the area is also considered to be un-safe. I had high school friends who lived in Dandenong for a few years and then decide to move out because she thinks some of the residents who live there (and they mostly look like they come from certain parts of the globe, but I won’t name them to avoid controversy) look and behave scary, and she moved out thinking Dandenong is not a safe area.

5. I don’t know too much about Rowville in this regard, but I’d think if Rowville suffers from the same problem, then I’d hear about that from my friend by now.

So I am thinking the “safe” factor and the “academic” factor, together with more Chinese/Asian living in Rowville compare to Dandenong are likely to be some of the big reasons why Rowville is more expensive than Dandenong (it appears any suburbs that Chinese migrants go to tend to end up becoming expensive much more quickly than the rest suburbs).

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Anyway, I have another property that I got contacted with an agent, which I’d like to seek some opinion from you.

To summarize:

1. It is a duplex pair, on a 525 sqm land
2. The property specificatio is 6/4/2. Basically there is a wall in between, and each side of the wall makes up 3/2/1 and the floor plan is mirror image of each other.
3. The cost is approx. 610K
4. Rental appraise done by CBS property group (do you know much about them? do you think CBS does a good job doing valuation?) suggests if both side of the duplex pair are successfully rented out, then the rental income should be 700-730/week, so we are looking at 6% ROI. Not considered to be “excellent”, but not considered to be “crappy” either by the sound of it.
5. The expected capital growth is projected to be 6%.
6. Vacancy rate according to SQM report has been well below 2%, so sounds like the ability to find tenant should be fairly guaranteed.
7. Agent also advises that I can sell one and keep the other for rental income instead of keeping both if I need to, but agent did specify that most people would prefer to keep both in their opinion unless they have a very good reasons to sell one.

My concerns with this property:

1. It is not on a corner block, but I think this may be less of a concern.
2. It is brand new rather than second hand, and this is probably a bigger concern out of the two.

What’s you opinion on this?

So I had time and wanted to show you an actual E.g. based on whats on the market and why I have value over that deal

https://www.realestate.com.au/property-house-qld-redbank+plains-125216290
Get this for 250k, rents for 325 a week

https://www.realestate.com.au/property-house-vic-drouin-125842170
get this for 270k, rents for $320+ a week

thats already 520k for $625-$640 a week.
now lets say you add a higher risk property to make it
640k, thats an extra 240 a week which makes it

640k for $870 a week = 7% return, also this would give you a good spread for brisbane growth, east melb growth with AMAZON and a smart property.

Now in saying this, this is still a fairly avarage and crappy deal. I did that very quickly and you got to understand a 1% difference per year on 500k is $5000, thats massive when you think about how that sets your portfolio up. I think I can offer something you just wont find, far better than the above deals that I did in a heartbeat.

Kind regards

Jaxon Avery

Steven I think what you said is really a great view and shows how self reflective and honest you are, espically to yourself. Its good you want “balance”, that is so great to hear, I am the same in a lot of ways (even though everyones balance is different). I admire people who do far better than me, but I don’t choose the same sacrifies they do, But one thing regardless of if its myself or anyone, good advice is rarely free and its works out generally cheaper to know what your paying for.

In regards to the Vic property, I found that very quickly last night, its still on the market, you can offer $1 for it if you wanted, although I would assume the agent would laugh if not block your number.

The marked price in my eyes is there dream, my goal is to reshape their eyes to what I see it being worth and hoping if an agent is part of the deal they help me as much as their cleint.

Mate no comment on the property needing work, I havnt seen it, I have 0 idea but it looks very new and for the right price could be a good little buy (but once again I found this without any real effort).

I would like explain that I could source a deal and teach you for less than a deal you would “likely” find by yourself, Either way, once again wish you the best and happy to give advice when needed.

Kind regards

Jaxon Avery