It'll Never Appreciate: The Skit
I made an enquiry with Wakelin Property, received a phone call and have made an appointment to see them. The rep sounded rather alloof.
I'd love to write a skit about a hypothetical meeting between a newbie investor running some ideas past an inner-city BA.
It might go something like this:
I: Hey, I've found a few properties for sale and wanted to see what you thought.
BA: Sure!
I: There's this house in Reservoir, on main road but with rear access garage. Near thriving shopping strip. On 1200 m2 of land, council says I could put three units or go commercial given it's on main road. Asking $300k which I thought was not bad given the next suburb in is $120k more and nothing under $350k has recently sold in the street.
BA: Isn't that the other side of the Yarra - near Thomastown? Ooh we don't go there. Don't buy that dump. It'll never appreciate.
I: Then over in Warragul I found this block of 6 units. Nice side of town, good repair, excellent tenants. The new rail has just started and the bypass will speed driving. I've just seen plans for some big companies moving in needing accommodation and the PMs say they've got nothing. Currently 10%+ yield and the vendor most sell quickly.
BA: Where the hell's Warrangil?? Redneck country? Not the place I'd want the groom for my daughter to come from. Positive gearing's the biggest rort known. It'll never appreciate.
I: And out at Melton, there was this 1988 3 bedder going for $120k. Rented at $180pw, on a month to month. Vacant blocks further out but smaller go for $130k. It's on 900m2 near sought-after private school. I think it could get $200pw.
BA: Bogan country. No cafes out there. All single mums on social security. Depreciation's a trap you know. You don't know who you'll get as a tenant. Give it a miss. It'll never appreciate.
I: Oh another went past yesterday. 1950s clinker brick home in Bentleigh. House itself is OK, but front yard is daggy. A new fence and some paint would work wonders. Renting at $450pw. $370k they want even though next door just sold for 100 grand more.
BA: Still more than 10 km out. Another dud. It'll never appreciate!
I: So what is good?
BA: Just come on the market is this lovely 1 bed apartment in Elwood in block of 10 with active body corporate. $380k in quiet street. Gonna grow 10% pa, like it has for the last ten.
I: But what's the rent?
BA: We think it would get $250pw. Rentals are scarce.
I: Let's see - $30k interest and $12k income. Add some more expenses and take off some deductions. Hmmm - I'm still down nearly $15k, and I want to get another IP next year.
BA: But you can afford that can't you?
I: I'm on $50k pa so it could be a struggle.
BA: Oh, you poor thing. How can you eat? Our secretary must have made a mistake. Normally we only talk to people on over $100k pa! We don't recommend you buy anything!