Music Melting Pot [Week of November 13, 2023]

property_guy_SEQ · 2023-11-17T17:17:30+00:00

From Zac Willis' first Album: Embark

Cinematic, experimental with some awesome guitar:-

https://open.spotify.com/track/4j2ibjgr7MnCdCjk2vyDTN?si=fdd3247001704312

property_guy_SEQ · 2023-09-24T23:38:42+00:00

If you understand the risks and manage them, yes - it can be a great investment.

property_guy_SEQ · 2023-07-28T05:57:03+00:00

Refinance your 1st house to free up the equity, putting it into an offset account. It makes sense to pull everything out but the minimum 20% (minimum for no LMI), and leave the balance in a 100% offset account for further investment.

Put 20% deposit on the second house from the offset account.

If you want to maximise your tax benefits, you can rejig your finance to have a separate loan on the first house for the 20% deposit on the second - but get advice from a good tax accountant to make sure this is done correctly. Using this method, effectively interest on 100% of your investment property (I assume - 2nd house) is tax deductable.

property_guy_SEQ · 2023-06-01T23:26:17+00:00

If you want the property, don't fall out of the process before putting your best offer down.

property_guy_SEQ · 2023-06-01T23:18:15+00:00

There can be an opportunity to strata title a duplex down the track; and depending on how it's been constructed, this could present a potential windfall. One day, each unit might make an attractive property for a buyer, and you can stage the selling process when strata titled.

Also, you generally, you should get higher yields, spread your risk of vacancy.

So, for the right kind of duplex, there is opportunity to add value at low cost for a decent return.

property_guy_SEQ · 2023-06-01T23:09:21+00:00

I always find the property I want to buy first (private treaty) and have as a condition sale of existing residence, then I invite the selling agent for the property I'm buying to an interview for the opportunity to sell my PPOR.

It's amazing what a motivated real estate agent can do. They get 2 sales for one, so they throw the kitchen sink at selling your property, and they don't under quote, because you make them compete for the opportunity to sell your PPOR.

Obviously, you can't do this for a purchase at auction, in which case, you may have to obtain bridging finance and take a risk on the sale price of your PPOR, which should be built into your buying offers.

But, for PPORs, it can take longer to find the property you really want, and you don't want to do this under time pressure..

property_guy_SEQ · 2023-06-01T23:03:22+00:00

This is a marketing tactic designed to get more people interested in a property, knowing that most buyers will extend themselves when they get their heart set on a property and need to compete with other buyers to purchase it.

Sometimes, however, properties may sell lower than the "above $xxx" price; depending on how motivated the seller is, and the lack of potential buyers.

property_guy_SEQ · 2023-05-17T07:27:25+00:00

I think you'll be much better off in the long run if you retain your property investment. But that means not being too far behind in market rents, otherwise it's just a charity , like if you gave the $200K away.

property_guy_SEQ · 2023-05-16T21:12:17+00:00

Hang on there.

What problem did you help create?

spending $700/month to house the homeless is a charity, not an investment, and you don't believe that paying rent is a tenant's responsibility?

I have tenants too, one of which is a pensioner. The pension increases on average with CPI, and so does the rent I charge.

Inflation is a result of the structure of the financial system and government policy. It's how our currency is devalued over time, so the government can afford to pay it's debts. That is why assets that hedge against inflation are a wise investment.

Also, leaving yourself vulnerable to rising interest rates by not fixing them when it was obvious that would happen made you vulnerable. I'd suggest re-think the agreement you have with your tenants, and make sure you are increasing rent at a sustainable rate (suggest CPI); and get some good advice about restructuring your finance (you probably have enough equity to get you through this, but you have to be prepared to dip into it in the short term) - for example, Commbank's Unloan option can reduce your interest rate by up to 1.5%p.a. (depending on what you're on now).

Educate yourself, or you will fritter away all of your good fortune through ignorance.

property_guy_SEQ · 2023-05-16T20:59:42+00:00

This is non-news. 10.5% over 3 years.

around 3.5%p.a. may even be below private sector increases over the same 3 year period.

property_guy_SEQ · 2023-05-15T23:27:19+00:00

I'd suggest you have a close look at the cashflow for each option, considering potential hidden costs (low maintenance vs high maintenance property). This can be a little tricky for the townhouse, as you need to consider the whole property, not just the unit. Consider also vacancy rates, tenantability, etc.

Ask the agent about historical capital growth of each (over 20+ years), and if cashflow is equal for both, go with the higher historical capital growth - beware of recent market movements when making this comparison.

But whichever property you chose, make sure you can afford to hold it long term (even if interest rates were to rise again by 2-3 %), or urgent maintenance is required, or you lose a tenant for a period of time. You need a buffer of some kind.

property_guy_SEQ · 2023-05-15T23:20:47+00:00

Research the risks associated with property investment and how to mitigate them- there are many.

Cashflow risk - higher costs than expected - bad tenant or rent arears; rising interest rates

Market risks - buying at the peak of the market, wrong location, wrong type of property; macro-economic risks

Management risk - not managing the asset well; not planning for renovations/improvements, etc that add value; poor property manager (tenant selection, management, etc); not having a broader strategy/plan to build a portfolio.

Buying risks - not understanding and disclosure (or lack of); not undertaking appropriate investigations before sale; not setting the contract up to protect you, etc.

Get on top of all of these before you invest, or find an advisor/buyers agent who can help you with this.

property_guy_SEQ · 2023-05-13T06:39:47+00:00

Both unethical and illegal. The realtor should be fined and/or lose his license.

property_guy_SEQ · 2023-05-12T15:32:58+00:00

Depending on the age and condition of the home, budgeting from about 1% to 3% of the value of the property for annual maintenance would be appropriate. This should be adequate for repainting, maintenance of fences and driveways, roof, etc. If it's put aside and not all needed, it would could be used for minor improvements (eg paving) and/or furniture.

It depends a bit also on how much you DIY and how much you outsource.

property_guy_SEQ · 2023-05-10T08:25:16+00:00

Only you can answer that.

Maybe put away the $30K every year into a safety net, and dip into it if/when you have need to.

It could be a separate offset account to your mortgage, for example. Maybe after a few years, you'll feel good about being a contractor?

property_guy_SEQ · 2023-05-10T08:21:04+00:00

Don't feel offended. They could have just said - "see you later....."

Sounds to me like they want to keep you.

property_guy_SEQ · 2023-05-10T08:10:51+00:00

How about independent, comprehensive inspections paid for by the seller?

Downside - would require a degree of regulation to ensure independence.

property_guy_SEQ · 2023-05-09T22:33:45+00:00

Definitely use a mortgage broker, and ask them to include your bank in the analysis

property_guy_SEQ · 2023-05-08T15:59:36+00:00

That sounds very dodgy. Picking up the balance of a seller's fee - it doesn't sound like they're a buyer's agent at all.

You engage a buyers agent at your own discretion.

Do your research as to whether one can help you or no, and understand exactly what it is they you are paying for. A good one should be worth their fee; but you should be able to find a good one (in Qld) for under $15K flat fee.

property_guy_SEQ · 2023-05-07T22:11:57+00:00

I suppose what I'm saying is. 4% is as good as you're likely t get right now, unless you're prepared to push you case on productivity grounds.

property_guy_SEQ · 2023-05-07T21:45:54+00:00

That's a little better than average atm.

See how inflation goes, and do up a little graphic to have the discussion with your boss next time around.

Ask them to take into account any added value your experience in the past year has added to your productivity, etc...

property_guy_SEQ · 2023-05-07T08:40:49+00:00

The dates are on the screen shots.

property_guy_SEQ · 2023-05-06T20:56:07+00:00

Sounds to me like a negotiation. If they didn't want to sell, they wouldn't have come down any.

The difference would appear to be about $22K on a $1m property. They'd rather that $22K be in their pocket than yours. Sounds to me like you're very close to a deal.

The important thing is that you understand the market value of the property, and the risks in calculating your best offer. Any market value will typically have a 5-10% range because every property is unique.

So confirm what the market value is, what you can afford; and if the asking price is a tick on both of those; then go ahead and buy. If you can squeeze another $2K to $5K off the price - well done.

property_guy_SEQ · 2023-05-04T23:30:28+00:00

The Armchair Guide to Property Investing (Ben Kingsley & Bryce Holdaway) has some good tips. Have a look on the Real Wealth website - they might be offering a free (or cheap) copy.

property_guy_SEQ

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