Investment Opportunities

You have no idea of my financial situation and nor is it any of your business but yes I have re-financed and have many irons in the fire, why is it that you think I am not doing more? I have one of the best possible brokers available from this forum and I work him to the bone in order to achieve my dream. Aside from my full time job I work on my own portfolio from the early hours until I leave for work and from early evening until I go to bed at night, you have looked at one property and decided it is not a 'Bargain' even though you don't have all of the details and decided the rest are no good either!

With regards to my Anchorage houses I paid $150,000 per block and $200,000 to build each house and they came with a $250 per week rental guarantee and an end bank valuation (which I did not pay for it was a re-finance) of $500,000 each within a year - why would anyone have a problem with that?

You say - 'And what's to stop me from going to the one without the guarantee, saying 'this other guy is selling at the same price with a rental guarantee, so why don't you knock $10k off the price'? Isn't that what you as an investor would do? - so go for it whats stopping you asclearly you are not 'time poor!'

Everyone has a choice, they can look at a deal and they can choose to walk away or choose to pick it up but yes I do work hard and if I can make an arrangement to be rewarded for that it is between myself and interested parties.

Sparky

Sparky, I think the question that Alexlee wants answered is "Do you benefit in any way if someone purchases one of these houses?" It is a question that you have avoided, so please, if it is not too much trouble, could you answer this one small question?

Hi Skater

Yes, I said so in the last post - is that a problem?

I expect there will be a hundred posts telling me it is!

Sparky

sparky23 said:

Hi Skater

Yes, I said so in the last post - is that a problem?

I expect there will be a hundred posts telling me it is!

Sparky

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No, not a problem, I just couldn't see where it was declared.

The Y-man said:

Hi Sparky,

Thanks for sending me details (sizeable pdf so can't be loaded here) of 101 Harrop.

While I understand the project is for a new property, I think it is important to compare with established propoerties in the area.

Here are some in the same area that are comparable to the project in size:

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=38222953&s=vic&tm=1192755777

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=38222953&s=vic&tm=1192755777

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=38222953&s=vic&tm=1192755777

This one on a much larger block:
http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=38222953&s=vic&tm=1192755777


This one is a similar project across the road

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=38222953&s=vic&tm=1192755777

so the pricing you have seems "comparable" but my personal opinion is that it would be misleading to label it a "bargain"

Cheers,

The Y-man

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Yeah; but as they say Y;

Don't let facts get in the way of a good story.

As soon as I saw that word "bargain" the antenna went up.

sparky23 said:

My own rental guarantee experiences have been very positive and no the properties were not overpriced, I think most people would have experienced vacant properties and would have preferred to receive income. As Y-man says the Mount Martha opportunity is comparable so no-body is looking to rip anybody off.

I must say that I have received many positive responses outside of the forum but some have been from people who have stopped posting because of the negative feedback they receive, it always seems to come from the same people too.

I think this has become a pointless exercise, I don't think I am a spammer or trying to rip anyone off but if people want to judge me by their own morals then so be it!

Sparky

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I think you'll find that those neg comments from the same people are actually not negative; just extremely cautious and cynical as they/we have been around for a while.

It is our obligation to keep a look out for the forumites who are new, inexperienced and not able to discern between a sales pitch and a genuine offer.

Vacancies are part of owning rental properties, but as most of us know (and some don't - hence the alerts); rental guarantees by developers and builders are not gifts for free. They are usually a cost to the developer which are built into the price of the property. And the rental guarantee is not that good a percentage in most cases.

Or, if they are REALLY desperate to sell the joint, then it actually is at a bargain price. As others have said; yours aren't.

Ok, so let's see if we can be a bit more constructive for Sparky.

For me, the words "bargain" combined with "brand new property" has a bit of negative associations. So how might the offer be worded to appeal to the likes of me? Also, the original wording repeated a lot of things - eg double garage, the number of BR gets mentioned multiple times.....and I have a thing about ad's with no addresses....


Perhaps something along the lines of:

101 Harrap St, MOUNT MARTHA - $350,000


* 3 Bedroom
* 2 Bathroom
* 2 car garage With Remote
* 2 Car Bay/s
* FIRB Approved
* Council Rates: $700
* Water Rates: $700
* Strata Rates: $80

<xx> km to the beach.

<xx> sqm block, to be completed end of October 2007.

Situated in Mt Martha on the Mornington Peninsula.
<median price statistics for past 10 years here>
<avg rental return for similar property here>
<avg vacancies for similar property here>

Complete with all floor coverings, window treatments, <evaporative/refig> air conditioning & fully landscaped.

A $5,000 deposit with the balance of the purchase price payable on completion.

Rental Vacancy Plan available if required for an extra $<xxxx>.

You may find cheaper properties on the market. However, if you want a competitive price on a brand new property, without all of the hassles of hours of house hunting, then this might be the opportunity for you. After all, what is your time worth to you?

Cheers,

The Y-man

I'd also like to know what the actual market rent for the property is and how much per week the rental guarantee is.
Alex

101 Harrap Street Osborne???

Interesting thread - almost missed it!

A few points:

(1) Rental guarantee (I have a thing about these too, sorry!).
(2) It's NOT a self-less exercise on your behalf, it's just another way for YOU to make money, whether the purchasers do too is anyone's guess.
(3) You called it a 'BARGAIN' and clearly it's NOT - this is just a sales pitch and is clearly misleading.
(4) The property is located on the 'wrong side' of Nepean Highway.

Another thing, 101 Harrap Street on my Melways/UBD/Map (this is an older edition though - if someone has a newer edition please check this for me) is not actually in Mt Martha proper, it's in a 'suburb' called 'Osborne'! So it's actually on the fringe of Mt Martha surrounded by LAND, LAND, and more LAND! And, not sure what the amenity level is like out here.

I've already posted my thoughts on the risks of investing in fringe areas (ie. think SUPPLY +++ and DEMAND ???).

Although I do like Mt Martha for all the reasons that have been mentioned, this sort of property and in this particular micro location (which an interstate investor might be blinded too), I personally wouldn't even touch as an investor OR recommend to friends/family/forumites.

I don't think it's fair that just because you're 'time poor', you have to pay inflated prices on properties with under-market rental guarantees from developers in secondary micro locations/fringe areas and pay commissions to half a dozen in between people...and then, somehow, SPECULATE that you might be able to make money out of it???!!!

JIT said:

Interesting thread - almost missed it!

A few points:

(1) Rental guarantee (I have a thing about these too, sorry!).
(2) It's NOT a self-less exercise on your behalf, it's just another way for YOU to make money, whether the purchasers do too is anyone's guess.
(3) You called it a 'BARGAIN' and clearly it's NOT - this is just a sales pitch and is clearly misleading.
(4) The property is located on the 'wrong side' of Nepean Highway.

Another thing, 101 Harrap Street on my Melways/UBD/Map (this is an older edition though - if someone has a newer edition please check this for me) is not actually in Mt Martha proper, it's in a 'suburb' called 'Osborne'! So it's actually on the fringe of Mt Martha surrounded by LAND, LAND, and more LAND! And, not sure what the amenity level is like out here.

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Funny thing is was Mount Martha, according to my old Melway (2001).

However since then Osborne has become a fully-fledged suburb and it would now be wrong to describe it as Mount Martha.

101 is at the inland end of Harrap Rd, and about 2.5km inland as the crow flies from Dava Beach. Walking it would be about 3.5km, or about 40 minutes. Beaches are quite narrow at this point - different to further south where they stretch along the bay.

The nearest shopping centre is at Bentons Square and the area is served by bus routes 784 & 785. These each run hourly during the day.

The reason I don't like rental guarantees:
1) If market rent is higher than the rental guarantee, the guarantee is worthless

2) If market rent is around the rental guarantee, it's still pretty worthless

3) If market rent is less than the rental guarantee, the developer is paying for it. Why? What are they getting in return? Is it because the place isn't selling very well? A rental guarantee is often a cheap way for the builder to move stock because newbies' eyes light up when they see 'guarantee'. But guarantee what? What's the point of gaining, say, a few hundred bucks of rent you would otherwise lose to vacancies (or below market rent) if you end up buying a place for $10k more?

Bottom line, a rental guarantee, to me, is just smoke the developer is blowing to obscure the true numbers.
Alex

Spiderman said:

Funny thing is was Mount Martha, according to my old Melway (2001).

However since then Osborne has become a fully-fledged suburb and it would now be wrong to describe it as Mount Martha.

101 is at the inland end of Harrap Rd, and about 2.5km inland as the crow flies from Dava Beach. Walking it would be about 3.5km, or about 40 minutes. Beaches are quite narrow at this point - different to further south where they stretch along the bay.

The nearest shopping centre is at Bentons Square and the area is served by bus routes 784 & 785. These each run hourly during the day.

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Really, my 1998 Melways had it has Osborne!

'Walking distance' for me is 500-800m, so not particularly convenient from this point of view, but a short drive/bus trip I guess. Not sure what Bentons Square is like, anyone been here?

How come you ignore my personal example of the rental guarantee? When I first signed up for the Anchorage packages in Rockingham the rental guarantee of $250 per week was about right for the Anchorage, the land was the market price at that time at $150,000 per block and the houses were $200,000 each which for turnkey and the size of house (230sqm) was not overpriced. A year down the track the rents are up around $300 - $350 because that is how the market has gone but the rental vacancy guarantee is still at the agreed $250 per week if I should need to use it.

Not understanding why someone would prefer no rent to having most of it covered?

Thank you however for the constructive advice I shall take that on board, I did not produce the flier that used the word 'bargain'. There are plenty of other deals available if this one is unimpressive so when I get chance I will pop on another if you like and you can have a crack at that one!

I know that newbies have to be protected which is why I would only promote properties that have been extremely welll researched by people who have been doing this for longer than most of you 'experts' alongside my own research. Some of these packages I put together myself based on my own local market knowledge and experiences - and I don't supply a rental guarantee with those.

Some of the areas may have cheaper properties but not necessarily the same quality or turnkey the point is that they are in areas chosen for the CG that will occur according to the research.

Sparky

sparky23 said:

Thank you however for the constructive advice I shall take that on board, I did not produce the flier that used the word 'bargain'.

Click to expand...

So is it Mt Martha OR Osborne???

Sparky said:

....that they are in areas chosen for the CG that will occur according to the research.

Sparky

Click to expand...

When, 2 years, 5 years, 10 years?

sparky23 said:

people who have been doing this for longer than most of you 'experts'

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What makes you think that the people you are dealing with have been doing it longer than (or more successful than) the people on the forum. What makes them 'experts' & not us. Do you have detailed financial information on them, or any of us, for that matter?

sparky23 said:

I know that newbies have to be protected which is why I would only promote properties that have been extremely welll researched by people who have been doing this for longer than most of you 'experts' alongside my own research.

Click to expand...

How insulting !

JIT said:

How insulting !

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Exactly my point.

For newbies looking at properties, when a developer / agent / whatever tells you 'this has been meticulously researched by someone with more experience than you', especially without actually giving you the research, it's a red flag. At the very least I would do some of my own research (15 minutes on the net to look at comparable properties) and get THEIR research and see why they think their area is better than others.

NEVER get intimidated by people who SAY they're more experienced but can't back it up, especially when legitimate concerns are raised. Just like on the forum, people get respect because they know their content, not because they 'say' they're experienced.
Alex

sparky23 said:

How come you ignore my personal example of the rental guarantee? When I first signed up for the Anchorage packages in Rockingham the rental guarantee of $250 per week was about right for the Anchorage, the land was the market price at that time at $150,000 per block and the houses were $200,000 each which for turnkey and the size of house (230sqm) was not overpriced. A year down the track the rents are up around $300 - $350 because that is how the market has gone but the rental vacancy guarantee is still at the agreed $250 per week if I should need to use it.

Click to expand...

That's the market working for you, not the rental guarantee. You made a great buy and that's great, but if there wasn't a rental guarantee, would you have been able to get the place for $10k less? Who knows.

sparky23 said:

Not understanding why someone would prefer no rent to having most of it covered?

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Because I'd rather have a couple weeks vacancy than pay thousands more for a property in the first place. I also prefer to analyse properties when they stand alone without smokescreens like rental guarantees. My personal preference, and I suspect for a lot of other forumites as well. Having a rental guarantee, in my opinion, clouds the issues.
Alex

I reckon Sparky's offer, once backed by figures, is more that reasonable. By all means debate it but don't treat her like a leper for doing so. One day we may have something we believe is good to offer up.

I don't see what is wrong with making money. None of us would be here if it wasn't a driving force. Who are we to be casting stones.

I am surprised she is engaging you guys so much, I would have long since stopped coming back to this thread if I was her.

I for one am interested, I have time poor mates who are looking for opportunities and I welcome ideas like this. if Michael speaks highly of her integrity then this is good enough for me.

ciao,