My recommendation stands. She should have seen some growth.
Sell and purchase in Brisbane
Source - property investor for 8 years & a qualified property analyst
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Investment property
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Sell and purchase in Brisbane
Source - property investor for 8 years & a qualified property analyst
Wickzki
Definitely Sam MacLure.
- Oct 1, 2010
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Thanks mate.
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I would like some advice on my situation. I had a house in Victoria. I moved up to Qld and rented my house in Victoria out. I lived with family for a while then purchased my own place here. The place I purchased here is a duplex. The plan was to live in one and rent the other out. I had a tenant in the other duplex but he destroyed the place to the value of $17,000, covered by insurance luckily, and I evicted him. The property market has crashed here and I have not been able to get another tenant in over a year. There is something like 1,000 vacant properties in a city of 80,000. I've been thinking that, without too much work, I could change the duplex into a four bedroom house. However I need money so I am thinking of selling my Victorian house to do so. I have tenants in my Victorian house at the moment which is covering my mortgage. I am coping ok financially at the moment but if the tenants in Victoria ever left and the house was vacant for an extended period of time it would be a struggle. If I don't convert my house it's basically a unit I'm paying for sitting there not being used. Selling the duplex is not really an option because of the market. My questions basically are:
1. Would it worthwhile to convert my duplex into a house?
2. Should I sell my house in Victoria?
1. Would it worthwhile to convert my duplex into a house?
2. Should I sell my house in Victoria?
Can you give a bit more detail as to where these properties are?
raskolnikov
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My house in Victoria is in Leongatha. My duplex is in Gladstone in Central Queensland.
Really shattered I hesitated last year.
- May 5, 2006
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I don't think property is ever going to 'crash' in the Australian cap cities.
My house is worth about the same as it was 5 years ago, which isn't that much more than it was worth 10 years ago. Who knows how long that trend will continue, but people have been predicting a crash since about 2007 - which is now 9 years ago.
AFAIC the 'property can rise faster than inflation forever' era is done, the easy money is made and people are going to have to get used to the idea that if you a buy a house for $500k it's not just going to double in value because that's what happened 20 years ago. That doesn't mean people will stop making money in real estate, and it doesn't mean prices are going to halve overnight.
My house is worth about the same as it was 5 years ago, which isn't that much more than it was worth 10 years ago. Who knows how long that trend will continue, but people have been predicting a crash since about 2007 - which is now 9 years ago.
AFAIC the 'property can rise faster than inflation forever' era is done, the easy money is made and people are going to have to get used to the idea that if you a buy a house for $500k it's not just going to double in value because that's what happened 20 years ago. That doesn't mean people will stop making money in real estate, and it doesn't mean prices are going to halve overnight.
Some parts of Perth have already "crashed". Mosman Park down 30%, Cottesloe down 15% and I see no signs of it slowing down until 17/18 which means a potential decrease of up to 50% for some suburbs.
I am definitely keeping my eye on some of those Western Suburbs though. A 700sqm block of land on marine parade recently went for 1.7 million - http://www.realestate.com.au/property-residential+land-wa-cottesloe-201262509. An absolute bargain.
This 3 x 3, green title 100m from Cottesloe beach - http://www.realestate.com.au/property-house-wa-cottesloe-119398083 is asking for $1.75 million but could very well end up selling for $1.5 million. Not the most attractive house but modern, a decent size and plenty of outdoor living. Would have been un thinkable at that price 5 years ago. IMO if that goes for $1.5 million thats a 50% drop from its high.
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I picked a home in Nedlands last sold for $3.2m for $2.2m. I feel it will drop another $300k or so but plan to live here a while.
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Growth in Melbourne is pushing through atm, big spikes in the suburbs last qtr of last year, slowed slightly, but still decent.
Nice buy. If youre picking up something to live in for the next 10+ years I dont think you can go wrong buying now, however as you said, there's still some room for further declines in prices.
I still believe Perth will be a good buy long term, it has the foundations to become an extremely desirable city to live and invest in. Finish Elizabeth Quay, the City/Northbridge Link and the new stadium and you have some truly world class attractions. Improve public transport, continue and increase investment in industries outside of mining and implement strategies that encourage more private investment and Perth is well on it's way.
- May 5, 2006
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Horseshit.
A potential decrease on some houses in some suburbs does not represent a crash.
When the GT is flooded with $1m 'bargains' on houses that sold previously for $2m then I'll accept that that market has crashed. There are bargains in every downturn and people make money, just like there are people who over-capitalise in boom times and lose money.
Power Raid
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100%
population growth, same time zone as most of Asia and the resources are still here. I also think you're on the money by looking for the suburbs that have been hit the hardest.
With 30,000 homes coming online in WA and 16,000 people leaving a week we will definitely have some pain but it will be temporary.
http://www.realestate.com.au/property-house-wa-cottesloe-118512291
Sold Sep 15 for $3,600,000
Sold 2009 for $5,400,000
Drop in price of 33% plus selling costs
http://www.realestate.com.au/property-house-wa-cottesloe-119909421
Sold Sep 15 for $2,000,000
Sold 2009 for $3,800,000
Drop in price of 47% plus selling costs
http://www.realestate.com.au/property-apartment-wa-nedlands-120329473
Sold October 2015 for $1,070,000
Sold 2008 for $1,550,000
Drop in price of 31% plus selling costs
http://www.realestate.com.au/property-house-wa-mosman+park-118977303
Sold November 2015 for $3,700,000
Sold 2006 for $4,250,000
Drop in price of 13% plus selling costs
http://www.realestate.com.au/property-house-wa-nedlands-117417343
Sold November 15 for $1,800,000
Sold 2007 for $2,200,000
Drop in price of 17% plus selling costs
http://www.realestate.com.au/property-house-wa-floreat-120301697
Sold Sep 2015 for $1,900,000
Sold in 2012 for $2,300,000
Drop in price of 17% plus selling costs
http://www.realestate.com.au/property-house-wa-mosman+park-120471965
Sold for $1,580,000 in 2007
Asking for $1,350,000 and has been on the market for 7 months
Drop in price of at least 17% plus selling costs
http://www.realestate.com.au/property-house-wa-mosman+park-120552673
Sold for $1,200,000 in 2013
Asking $1,095,000 and has been on the market for 7 months
Drop in price of at least 10% plus selling costs
http://www.realestate.com.au/property-house-wa-cottesloe-118366059
Sold for $1,730,000 in 2009
Sold for $1,500,000 Nov 15
Drop in price of 15% plus selling costs
http://www.realestate.com.au/property-house-wa-cottesloe-120009469
Sold for $2,900,000 in Oct 15
Sold for $3,200,000 in 2013
Drop in price of 9% plus selling costs
Out of 349 suburbs 241 recorded flat or negative growth for 2015 - http://reiwa.com.au/the-wa-market/perth-suburbs-price-data/. And thats coming from REIWA who are naturally more conservative and IMO inaccurate with their data compared to RP Data who are showing heavier falls.
Blue chip suburbs like Crawley (-18%), West Perth (-15%), Swanbourne (-12.8%), Attadale (-12.1%), North Fremantle (-11.4%), Peppermint Grove (-11.1%) have suffered large falls.
I would say that's more than a "potential" decrease in "some" suburbs. What do you see coming in Perth/WA that will have a positive affect on property prices or at least enough of a positive affect to see prices staying flat?
Prices have fallen 10 - 30% in some suburbs in less than 24 months. If it continues for another 24, then there is absolutely potential for a suburb to have a decrease of 50% from its highs
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- May 5, 2006
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Hardly crash territory.
What do I see pushing prices up? Nothing, and I haven't seen anything for some time. Real estate growth is largely driven by real estate growth. It's a self fulfilling prophecy. It's been long enough with nothing happening for people to lose interest in buying property thinking it will just go up. In terms of drivers like population growth, wage growth etc. they are all down and staying down.
What do I see pushing prices down? Employment instability - that's pretty much it. If you can't pay your mortgage and you need to sell you'll get what you get. Interest rates are low, so if you're still earning the same money then you shouldn't be concerned about what your house is worth on paper at this point.
Using Swanbourne as an example, it's a suburb of around 1400 properties. I'd be surprised if more than 50 sold in the last calendar year. So if it's dropped 12% it's dropped 12% on less than 5% of the houses in the area. I mean Mt Claremont is up 11% and City Beach up 8%. Are they boom suburbs? On the other side of the river Applecross and Alfred Cove are down, Mt Pleasant and Ardross are up.
I know plenty of people that live in the Western Suburbs. You can tell them their houses are worth $1m or $2m or $5m or any other number, but they're not going to sell you their house for half what they paid.
Like the rest of the GT suburbs it's full of old money. A good portion of million dollar real estate has never been bought or sold for anywhere near that. There are going to be people who bought in thinking the good times would last forever and need to sell up and there are going to be people who just want to sell and move and as I said some people will pick up 'bargains', but that market won't crash. The majority of properties rarely come up for sale and if they do they're just as expensive as expected.
I disagree. I think if you look through what's for sale in the GT it is clear that prices have fallen, as a general rule of thumb, at least 10 to 15% in the last 12 to 18 months and more in some suburbs. If we have a similar 12 to 18 months and prices again drop by that amount or more then we are in crash territory. Imo some suburbs already are.
Also disagree with property rising being a self full filling prophesy. A major driver of an increase in property prices, especially in a flat market, is a suburb becoming more desirable to live in through gentrification or improved public transport. There are many drivers that increase property prices.
There are plenty of examples in the GT of houses having sold at at least a 30% discount, some of which I have provided above.
Lyyynnnchy - help a brother out.
My wife and I (and <1 year old daughter) are home owners in Tea Tree Gully, SA. House value is around the $315,000 mark, with a little over $200,000 left on the mortgage, purchase in 2010.
Our neighbour is looking to move out and will sell his property when he finds a place. Has already indicated he would be willing to talk to us for purchase directly. My estimate is the cost would be around $275,000, plus roughly $10,000 in stamp duty.
My aim is to purchase the home, knock down and rebuild two homes on a subdivided lot (400 sqm each). The builder is able to manage almost 100% of the process, requiring us to effectively pony up the cash, make the final decisions and watch it all unfold. According to the builder, the costs would be:
$300,000 purchase of property
$30,000 demolition and subdivision
$425,000 for both homes to be completed (max cost)
Total: Approx $750,000
There are homes in the same area that are a good match to what we want to achieve that are advertised for $420,000+ each. I need to investigate the actual sale prices closer, but going off that, it's reasonable to aim for selling both for $840,000 total.
My question: Is this something you reckon is worth looking into for a $90,000 profit (minus selling fees and reduced by capital gains income tax)?
My wife and I (and <1 year old daughter) are home owners in Tea Tree Gully, SA. House value is around the $315,000 mark, with a little over $200,000 left on the mortgage, purchase in 2010.
Our neighbour is looking to move out and will sell his property when he finds a place. Has already indicated he would be willing to talk to us for purchase directly. My estimate is the cost would be around $275,000, plus roughly $10,000 in stamp duty.
My aim is to purchase the home, knock down and rebuild two homes on a subdivided lot (400 sqm each). The builder is able to manage almost 100% of the process, requiring us to effectively pony up the cash, make the final decisions and watch it all unfold. According to the builder, the costs would be:
$300,000 purchase of property
$30,000 demolition and subdivision
$425,000 for both homes to be completed (max cost)
Total: Approx $750,000
There are homes in the same area that are a good match to what we want to achieve that are advertised for $420,000+ each. I need to investigate the actual sale prices closer, but going off that, it's reasonable to aim for selling both for $840,000 total.
My question: Is this something you reckon is worth looking into for a $90,000 profit (minus selling fees and reduced by capital gains income tax)?
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$30k is way too skinny for demolition and subdivision costs. Well, certainly in Victoria it is.
Remembering you will have to pay GST on the new homes, as well as CGT.
Demo and subdivision costs are correct for Adelaide. All quotes from the builder and me checking government/council websites. Was no mention of addition cost for GST though.
My household income isn't that high as my income is tax free and my wife has only returned to work part time after having our child recently, so a lot of any profit won't be taxed at the highest bracket, but there will certainly be some. Not sure whether the time it will take to complete the project will result in us being able to receive the 12 month discounts on capital gains. Something I need to look into.
Pykie
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Hmm, what did he quote you for the demolition costs? Is there fibro/asbestos in the building?
You wouldn't get much change from $30k here in the subdivision costs alone, let alone the demolition as well. Surveying, council fee's, town planning etc build up fairly quickly.
You must remember, what he quoted you and what you may have to pay are completely different things. Make sure you are right across what are included in the potential contract and what aren't.
What type of footings is the new house on? What's the soil like in the area? Have other houses in the area encountered rock? If he's using a waffle slab, make sure you aren't sitting on reactive clays etc
Between asbestos and rock, you could potentially kiss that profit goodbye and that's without a multitude of other issues that could arise.
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Cheers mate.
The subdivision and demo costs have been regularly quoted as that much, going up to $30k for subdivision if you are putting three lots on the land. It's an old fibro home (which I didn't mention in our conversation), so if that adds to the demo, then it could be more. But generally speaking, everywhere you look online for those costs in Adelaide are as mentioned above.
I do know that the soil in our area is reactive clay and requires deeper footings which have been factored in to the cost of the home builds I quoted above already. Those prices were also for the builder to complete the entire thing, where I could save a fair bit on labour costs by doing much of the finishing work ourselves - so there's a handy bit of fudge factor available in our favour.
The builder, Rossdale Homes, has a fairly good reputation and claim to be one of the only builders in SA that offer a genuine fixed price quote that doesn't change once building commences, so the positive is I will have a final figure that is locked in before any cement is poured. They've already talked me through the first parts which involve $2,500 per home to be paid upfront for them to do the initially planning, surveying and council approvals. It is then another $3,000 per home for the drawings and engineering which form the basis of the final, fixed-price quote that is signed before building commences. Those prices are also included in the final price of the home builds above.
This is the first time I am looking at doing this, so of course I am very wary of the pitfalls you are suggesting and take all advice on board - it's much appreciated. I'd like to think I am a pretty discerning person and so far, the rep at Rossdale I have spoken to has left me feeling confident that the company are unlikely to shaft me with unexpected prices/issues and are very much in the business of tailoring the builds to our budget and plans (e.g. doing some of our own work).
Funnily enough, a few years ago when we were viewing display homes to get ideas for a knockdown & rebuild of our own home, the same guy was there and after chatting to him for about half an hour, we decided they were definitely the people to go with. I since changed careers and went to university, so those plans were put on hold, but I immediately recognised who I was talking to on the phone when calling them up the other day.
- Aug 13, 2013
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Hi mate,
a few things you need to keep in mind:
1) Unless I've missed it, I think you need to add bank interest and holding costs such as rates into your expenses, which therefore reduces that potential profit.
2) Have you thought about how you could afford to pay the bank loan while the construction is in progress? I say this because I see you're both on low incomes, and have a child.
3) do you have a back up plan, if a property can not be sold, or you can't get the price you want? Eg, would you rent it out?
Hope this helps, and apologies if you've already thought this through.
cheers,
Cheers for the thoughts!
1. I haven't tried working out how much those rates and interest payments would be yet, but am aware that will be an ongoing cost that will add up to a noteworthy amount over the 12-18 months this would take. I know that the construction loans are provided in portions which helps reduce it, but it's something I will definitely be seeking solid figures on through the bank before signing my life away.
2. We do have some cash reserves which should see us through paying interest on the loans, but it is definitely a consideration.
3. I'm aware of how much the property pre-knockdown is worth in rent (roughly $275 p/w, so $250 into my account after agent fees), and the two properties would be significantly more than that once built.
The area I am in is a very old suburb with mostly retirees and young families as residents. It's going through a change at the moment where every fourth or fifth home has been either completely renovated/expanded or knocked down for subdivision with new homes built. The rest of the homes are generally 1970s or earlier builds. The new, larger homes on 800sqm+ are still around though, and they sell for in excess of $600k comfortably. Rent for newly built 3 bedroom homes is in excess of $380 per week; most are well over $400, especially if they have a fourth bed. I'm not quite sure how this will all translate if immediately selling doesn't work out, but overall, there is scope for cash flow with them for sure.
