Investment property

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Lyyynnnchy said:
No problems! If you have any other questions, feel free to ask though I might not be able to answer them all
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A few questions maybe you can help me with.

1. Are real estate agents trustworthy? Do they listen to you and try to help your best interests?

2. Mildura and Moe, would you say they are worthy areas to invest?

3. If no, where could I invest with the intention of spending 150,000 on a home and renting it out? Is that even the right way to go about it?

4. If not, what is?

Hahaha, sorry lyyynnnchy
 
TheUndertaker said:
A few questions maybe you can help me with.

1. Are real estate agents trustworthy? Do they listen to you and try to help your best interests?

2. Mildura and Moe, would you say they are worthy areas to invest?

3. If no, where could I invest with the intention of spending 150,000 on a home and renting it out? Is that even the right way to go about it?

4. If not, what is?

Hahaha, sorry lyyynnnchy
Click to expand...

Real estate agents have the sellers best interests in mind first and foremost. It is up to you to get a building inspection and pest inspection done as well as any other due dilligence you deem neccasary. Just think, they are there to get the highest price for the seller.

I dont know a whole lot about Mildura or Moe. Type both in the search field on Somersoft and there should be some discussion on both. Again though, especially in this climate I would avoid rural areas, some would have a different opinion. Other than that do your due dilligence using google. Look for good population growth, more than 3 industries, plenty of schools, pubs, tourism spots, public transport and government departments. If you find somewhere you like, call up the local council and see what projects they have planned for the future that might lend itself to a major population spike.

$150,000 wont get you much outside the small rural towns which I stay away from. Hard to get a property manager, can be hard to get a tenant, capital growth is not guaranteed, chance the town can go bust. Nathan Birch who I met through Somersoft specialises in this kind of property though http://nathanbirch.com.au/. He's an extremely successful investor who has recently started acting as a buyers agent. I highly recommend having a chat to him if you still think cheap property is the way to go.

My advice, save up more money or get a higher paying job so you can afford a property $250,000+

or if thats impossible

contact Nathan
 
If you can afford around the $250,000 to $270,000 mark, I would look for a property in Frankston on the beach side on the freeway/highway. Look for a property over 600sqm with the existing house right at the front or right at the back of the block. Put as much as you can in your offset account as quickly as possible and once you have $100,000 to $150,000 equity, build a new house at the front or back of the block. You now have 2 houses renting for $350 to $400 (existing house) and $400 to $450 a week (new house) for an outlay of around the $350,000 to $400,000 mark.

People look ay Frankston now and think "stay away" but it has all the infrastructure of an expensive coastal suburb. Train line, Freeway, beach, schools, up and coming cafes and pubs. No to low income earners are slowly starting to move inland and I guarantee you in 20 years Frankston will classed as an expensive Melbourne suburb.

You may have some average ternants that dont take the greatest care of the existing house but over the next few years as you build equity and then build a new house on the block those tenants will be replaces with young professionals and familys looking for that beach lifestyle
 

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I would stay away form Nhill TheUndertaker as Lynchy has said, i know some people who live there and they fear or know that industry is dying so that would place a big burden on you as an investor.

Otherwise i like your thoughts on low cost high yields investments
 
Lyyynnnchy said:
If you can afford around the $250,000 to $270,000 mark, I would look for a property in Frankston on the beach side on the freeway/highway. Look for a property over 600sqm with the existing house right at the front or right at the back of the block. Put as much as you can in your offset account as quickly as possible and once you have $100,000 to $150,000 equity, build a new house at the front or back of the block. You now have 2 houses renting for $350 to $400 (existing house) and $400 to $450 a week (new house) for an outlay of around the $350,000 to $400,000 mark.

People look ay Frankston now and think "stay away" but it has all the infrastructure of an expensive coastal suburb. Train line, Freeway, beach, schools, up and coming cafes and pubs. No to low income earners are slowly starting to move inland and I guarantee you in 20 years Frankston will classed as an expensive Melbourne suburb.

You may have some average ternants that dont take the greatest care of the existing house but over the next few years as you build equity and then build a new house on the block those tenants will be replaces with young professionals and familys looking for that beach lifestyle
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Those figures are a little off.

You wont be buying anything for 250-270k in Frankston that fits that description, other than a housing commission home in the Pines, you're about $100,000 off, especially houses with significant space in the front and the back.

And you wont be building anything other than a cubby house for $100,000, even $150k you are stretching it in terms of 2 bedroom units.

As for some of the other comments in this thread.

It's probably not as simple as "find something that's positively geared, rent it out and reap the capital gains" They are harder and harder to find these days, even with the lower interest rates. High rental yield often represents poor capital gain, unless you can find a good deal.

What I recommend is buy somewhere in a suburb known for decent rental yields. Look for something 10-20% under market value, and add some value through some cheap renovations to turn it positively geared.

There are advantages of negatively geared properties, especially if your paying a bit of tax, and the house is relatively new, depreciation on homes can turn negatively geared properties into positive if you are paying a bit of tax through your every day job.

Make sure you research, research and research, especially if you haven't lived in and around the suburb you are looking at. Do yourselves a favour, invest $500, and get a report from www.residex.com.au if you are serious in buying one. They are the same company that supplies updates to the housing commission, real estate agents commission, state governments etc on suburb growth etc.
 
Pykie said:
Those figures are a little off.

You wont be buying anything for 250-270k in Frankston that fits that description, other than a housing commission home in the Pines, you're about $100,000 off, especially houses with significant space in the front and the back.

And you wont be building anything other than a cubby house for $100,000, even $150k you are stretching it in terms of 2 bedroom units.

As for some of the other comments in this thread.

It's probably not as simple as "find something that's positively geared, rent it out and reap the capital gains" They are harder and harder to find these days, even with the lower interest rates. High rental yield often represents poor capital gain, unless you can find a good deal.

What I recommend is buy somewhere in a suburb known for decent rental yields. Look for something 10-20% under market value, and add some value through some cheap renovations to turn it positively geared.

There are advantages of negatively geared properties, especially if your paying a bit of tax, and the house is relatively new, depreciation on homes can turn negatively geared properties into positive if you are paying a bit of tax through your every day job.

Make sure you research, research and research, especially if you haven't lived in and around the suburb you are looking at. Do yourselves a favour, invest $500, and get a report from www.residex.com.au if you are serious in buying one. They are the same company that supplies updates to the housing commission, real estate agents commission, state governments etc on suburb growth etc.
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Sold
$275,000 April
http://www.realestate.com.au/property-house-vic-frankston-113395211
$250,000 July
http://www.realestate.com.au/property-house-vic-frankston-114235515

For sale
Offers over $250,000
http://www.realestate.com.au/property-house-vic-frankston-115149679
Asking for offers over $280,000
http://www.realestate.com.au/property-house-vic-frankston-114449215
Asking for $290,000+
http://www.realestate.com.au/property-house-vic-frankston-113869099
Asking $250,000+
http://www.realestate.com.au/property-house-vic-frankston-115149679

When I'm talking $250,000 to $275,000 you have to be creative. Letterbox drop so the vendor wouldnt need an agent, already saving them $15k. Offer 15 or 30 day settlement. You have to be able to trump offers that may be $10,000 or $20,000 more than yours. Some people may not be thinking about selling but they see a letter stating you'd buy their place tomorrow for $275,000 and have a change of heart. People questioned me for offering $339,000 for my first property that was for sale for $429,000 but after it was accepted I was the one laughing.

You can quite easily get a 2 bed granny flat completely setup for $100,000k. A basic 3 x 2 will cost you $130,000+ for the little more than the shell which is where you have to become creative. I pretty much built my kitchen and bathroom by buying things from Ross' auctions.

If you want it bad enough it can be done
 
Lyyynnnchy said:
Sold
$275,000 April
http://www.realestate.com.au/property-house-vic-frankston-113395211
$250,000 July
http://www.realestate.com.au/property-house-vic-frankston-114235515

For sale
Offers over $250,000
http://www.realestate.com.au/property-house-vic-frankston-115149679
Asking for offers over $280,000
http://www.realestate.com.au/property-house-vic-frankston-114449215
Asking for $290,000+
http://www.realestate.com.au/property-house-vic-frankston-113869099
Asking $250,000+
http://www.realestate.com.au/property-house-vic-frankston-115149679

When I'm talking $250,000 to $275,000 you have to be creative. Letterbox drop so the vendor wouldnt need an agent, already saving them $15k. Offer 15 or 30 day settlement. You have to be able to trump offers that may be $10,000 or $20,000 more than yours. Some people may not be thinking about selling but they see a letter stating you'd buy their place tomorrow for $275,000 and have a change of heart. People questioned me for offering $339,000 for my first property that was for sale for $429,000 but after it was accepted I was the one laughing.

You can quite easily get a 2 bed granny flat completely setup for $100,000k. A basic 3 x 2 will cost you $130,000+ for the little more than the shell which is where you have to become creative. I pretty much built my kitchen and bathroom by buying things from Ross' auctions.

If you want it bad enough it can be done
Click to expand...


3 of those are ex-housing commission, fibro's, completely ridden with asbestos.

I'm fully behind your reasoning, Frankston is a great area for IP's, but you have to be weary in what you buy in the area, purely because of the history of houses in the area, most of them are more hassle than what they are worth.

You did say "build a house" on the back, a granny flat is a different matter. The rules are pretty clear in Victoria in regards to them, especially in Frankston/Kingston/Mornington council. It's not like NSW where it's open season.

It has to be movable, it can only be used for a dependable person (i.e grandparent, child etc) and it has to be moved or demolished within 3 months of that person not using it anymore (i.e you cant sell it with the house).

As for a 3 x 2 to lockup for $130,000, that's certainly feasible, however, even if you manage to get the kitchen and bathrooms through the auctions for $5-$10k, your still doing a houdini act if you can manage to get the whole place wired, plumbed, plastered, painted and covered for $10k


I work off about $160k for a 2 bedroom brick veneer unit, and that's with having both a DBU and CBU license keeping relative costs down.
 
i own an investment property and one thing people probably dont realise are the extra costs.

My property is rented out for $370 a week.

7-8% in agent fees

I pay $2k a year in rates, $400-$600 for water, probably ~$1k in repairs and maintenance, $1k in insurance

from that $370 rent i end up getting $250-$260
 
cynical said:
i own an investment property and one thing people probably dont realise are the extra costs.

My property is rented out for $370 a week.

7-8% in agent fees

I pay $2k a year in rates, $400-$600 for water, probably ~$1k in repairs and maintenance, $1k in insurance

from that $370 rent i end up getting $250-$260
Click to expand...

Same boat as you.

Property manger had to call a gardener to chop overgrown trees, service the spa, check smoke alarms, but they are tax deductible.
 
It's probably the best way to secure a financial future, and accumulate wealth.

All too easy being a landlord, just collect the rent and watch it pay off the mortgage. People need places to live so there's always demand.

It's an absolute foolproof way to get rich $$$$$$$$
 
TheUndertaker said:
1. Are real estate agents trustworthy? Do they listen to you and try to help your best interests?
Click to expand...

No.

Selling agents act in the interest of selling houses because that is where they derive their income.

They operate like this:

Objective #1 - achieve sale, pocket commision
Objective #2 - push for higher price to make seller happier and pocket marginal increase in commission
Objective #3 - look after the interests of the buyer
Objective #4 - make positive contribution to society

The last one is a bit of a gag, but you get the drift.
 

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I have three investment properties, two depending on how you look at it. I currently live with my partner. I have my home in Victoria plus a duplex. My mortgage repayments are about $1400 a fortnight and I get about $2000 a fortnight rent so I am well and truly positively geared. You need to make sure you factor in rates, insurance, repairs and times when you don't have tenants and make sure that you can cover these. I
 
Lyyynnnchy said:
I myself would never invest in a small town. If I was going rural it would be a large mining town, the risks are just too high with small towns
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Same.
My partner and I have two investment properties in the outer south east of Melbourne.
I wouldn't bother buying properities in rural or country areas.
I would actuually buy in areas that you know - for instance buy in an area that you grew up in so you have a very good handle on what property prices have been like.
 
TheUndertaker said:
A few questions maybe you can help me with.

1. Are real estate agents trustworthy? Do they listen to you and try to help your best interests?

2. Mildura and Moe, would you say they are worthy areas to invest?

3. If no, where could I invest with the intention of spending 150,000 on a home and renting it out? Is that even the right way to go about it?

4. If not, what is?

Hahaha, sorry lyyynnnchy
Click to expand...

1. Yes they are. Although my partner and I have known this agent for near on a decade. Find a good agent and you're half way there.

2. Give rural areas a miss. Still to the major cities.

3 & 4. Speak to your lender to firstly see how much they will lend you. You might be surprised. Don't be afraid to borrow a bit more if it means your rental income will also be higher. Do your maths and embrace negative gearing. Remember there are numerous things you can claim at tax time.
 
The rental market is really slow of late. My agent is stating that properties are left vacant for months so do your research and ensure that you can afford a few months without rent.

Actually the apartment above mine has been empty for 2 months and that's in Kensington (usually are great renting area).
 
pie chucker said:
The rental market is really slow of late. My agent is stating that properties are left vacant for months so do your research and ensure that you can afford a few months without rent.

Actually the apartment above mine has been empty for 2 months and that's in Kensington (usually are great renting area).
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Could be related to it being University vacation and the non-local students have left for the time being?
 
HBF said:
3 & 4. Speak to your lender to firstly see how much they will lend you. You might be surprised. Don't be afraid to borrow a bit more if it means your rental income will also be higher. Do your maths and embrace negative gearing. Remember there are numerous things you can claim at tax time.
Click to expand...

Spend $1 and we'll give you 20c back?

Not a fan of negative gearing. Although if you're going for a short-term loss for long-term gain it certainly helps. Be careful though, if it's a true investment property you're not really looking for capital gains. "Flipping" property is hard work and the capital gains tax cuts a lot of the profit out.
 
Lyyynnnchy said:
Real estate agents have the sellers best interests in mind first and foremost.
Click to expand...

You'll find most don't even do that. I've been looking at real estate for last 6 months and it's very rare when I've seen an agent do the right thing by the vendor. Like most humans, they are self interest, problem being is people are paying them to put their (the vendors) needs first and most won't. Sticks out like a sore thumb in a hot market.
 
Lyyynnnchy said:
$150,000 wont get you much outside the small rural towns which I stay away from. Hard to get a property manager, can be hard to get a tenant, capital growth is not guaranteed, chance the town can go bust. Nathan Birch who I met through Somersoft specialises in this kind of property though http://nathanbirch.com.au/. He's an extremely successful investor who has recently started acting as a buyers agent. I highly recommend having a chat to him if you still think cheap property is the way to go.

My advice, save up more money or get a higher paying job so you can afford a property $250,000+

or if thats impossible

contact Nathan
Click to expand...
I've heard some not to complimentary things about Nathan. He's genuine but tunnel visioned. Has done well but has little understanding about anything outside his niche.
 
Lyyynnnchy said:
If you can afford around the $250,000 to $270,000 mark, I would look for a property in Frankston on the beach side on the freeway/highway. Look for a property over 600sqm with the existing house right at the front or right at the back of the block. Put as much as you can in your offset account as quickly as possible and once you have $100,000 to $150,000 equity, build a new house at the front or back of the block. You now have 2 houses renting for $350 to $400 (existing house) and $400 to $450 a week (new house) for an outlay of around the $350,000 to $400,000 mark.

People look ay Frankston now and think "stay away" but it has all the infrastructure of an expensive coastal suburb. Train line, Freeway, beach, schools, up and coming cafes and pubs. No to low income earners are slowly starting to move inland and I guarantee you in 20 years Frankston will classed as an expensive Melbourne suburb.

You may have some average ternants that dont take the greatest care of the existing house but over the next few years as you build equity and then build a new house on the block those tenants will be replaces with young professionals and familys looking for that beach lifestyle
Click to expand...

Good strategy. Good area to invest. I wouldn't go as far as saying "expensive suburb" but it will gentrify.
 
cynical said:
i own an investment property and one thing people probably dont realise are the extra costs.

My property is rented out for $370 a week.

7-8% in agent fees

I pay $2k a year in rates, $400-$600 for water, probably ~$1k in repairs and maintenance, $1k in insurance

from that $370 rent i end up getting $250-$260
Click to expand...

Normal. Rule of thumb:

old house: use 0.65 multiplier (35% in expenses)
new house: use 0.75 multiplier (25% in expenses)
 
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