karina said:
Karina,
I think DD1 is busy at Kingston at the moment.
http://www.somersoft.com/forums/showthread.php?t=21352
DD1 is May 2005 pg 48
Good story.
A86
23 properties in 5 years
- Thread starter karina
- Start date
Karina,
I think DD1 is busy at Kingston at the moment.
http://www.somersoft.com/forums/showthread.php?t=21352
DD1 is May 2005 pg 48
Good story.
A86
The median price paid for each of your properties. For example Jesse's properties were <50K each (if memory serves me correctly).
2000 COASTALSYD $272,500
2000 COASTAL QLD $107,500
2000 COASTAL QLD $108,000 (sold 2004- 283,500)
2002 COASTAL QLD $145,000
2002 COASTAL QLD $167,500
2003 NSW COUNTRY $175K (block of units)
2003 COASTAL NSW $169K (sold 2005 $215k)
2003 COASTAL QLD $150K ( sold 2005 $225k)
2004 + 2005 COASTAL REGIONAL WA 61,500 61,500 63,000 63,000 73,500
73,500 79,000 79,000 79,000 79,000 81,500 82,000 88,000 100,000
2005 REGIONAL NSW $80K
2005 COASTAL TASSIE $90,500
2005 MINING WA $83,000
2005 COASTAL QLD $200,000 (duplex pair)
b. The overall capital growth achieved by your portfolio (eg. paid = $1,000,000 (over 5 years) and current market value is now $1,500,000)
The difference between what I owe and the market value of the properties is sitting at around 1.15 million (created in 5 years)
c. Your current LVR (percentage) and how this aids/hinders your serviceability and the prospect of expanding your portfolio.
LVR is at 67%
Still have the ability to add more deals to the portfolio. Won't go over 80% LVR.
d. Why ON EARTH are you working full time??? I mean having 23 IPs would be a full time job in itself, and although you have PMs that manage same, the phonecalls would drive you insane!!!
At this stage my portfolio is not producing a cash flow for me to live off . Hopefully time will get me there. It has achieved good growth and cashflow has been improving but not quite there yet. Selling down some properties would improve the cashflow and perhaps create a small income (certainly not replace my existing income at this stage) so I think right now its best for me to keep working. The plan is that when the next cycle comes along I would sell off maybe 30% of the portfolio and pay out all existing debt and live of the rents of the remaining properties. All good things comes to those that are patient.
Kenneth,
In regards to which suburbs I will be investing in and why. As I mentioned earlier in this market I am not targeting suburbs but rather good deals. My latest purchase in QLD was in Cairns and although that market has boomed there are some properties that still offer fair returns (not exceptional ) but enough for me to hold them for another cycle. The hardest thing for me in having multiple properties has been managing cashflow. It is easy to make money through equity growth, time will do that for you. The difficulty is selecting properties that have good cashflow yields so that you wont be in a situation even in a market downturn where you will be forced to sell. Managing cashflow will allow you to offload properties when you are ready. You never want to find yourself in a situation where you are forced to sell. For this reason I also fix the majority of my rates along the way just to protect me against rises.
In WA I see growth opportunities in areas of perth (house and land) priced around the 150k. there are still good quality homes available in the outer areas (brick and tile). Rents are not great maybe 160p/w on a 150k purchase. I think with time though as rents rise so too will prices. I don't own any properties in these areas and probably wont buy on those yields as I am very strict with my cashflow right now but if I was able to find say a house for 160k renting for 215 per week with some depreciation I would look at something like that. Really anywhere in WA in Perth or along the coast where you can get say a 7% + return would be worth looking at in my opinion. Also I believe WA has not had the price rises that syd,bris had in the last cycle so prices are still affordable. One thing to factor in though when you are looking at WA is property management fees. They charge for everything! Not cheap to have property managers look after your properties there.
2000 COASTALSYD $272,500
2000 COASTAL QLD $107,500
2000 COASTAL QLD $108,000 (sold 2004- 283,500)
2002 COASTAL QLD $145,000
2002 COASTAL QLD $167,500
2003 NSW COUNTRY $175K (block of units)
2003 COASTAL NSW $169K (sold 2005 $215k)
2003 COASTAL QLD $150K ( sold 2005 $225k)
2004 + 2005 COASTAL REGIONAL WA 61,500 61,500 63,000 63,000 73,500
73,500 79,000 79,000 79,000 79,000 81,500 82,000 88,000 100,000
2005 REGIONAL NSW $80K
2005 COASTAL TASSIE $90,500
2005 MINING WA $83,000
2005 COASTAL QLD $200,000 (duplex pair)
b. The overall capital growth achieved by your portfolio (eg. paid = $1,000,000 (over 5 years) and current market value is now $1,500,000)
The difference between what I owe and the market value of the properties is sitting at around 1.15 million (created in 5 years)
c. Your current LVR (percentage) and how this aids/hinders your serviceability and the prospect of expanding your portfolio.
LVR is at 67%
Still have the ability to add more deals to the portfolio. Won't go over 80% LVR.
d. Why ON EARTH are you working full time??? I mean having 23 IPs would be a full time job in itself, and although you have PMs that manage same, the phonecalls would drive you insane!!!
At this stage my portfolio is not producing a cash flow for me to live off . Hopefully time will get me there. It has achieved good growth and cashflow has been improving but not quite there yet. Selling down some properties would improve the cashflow and perhaps create a small income (certainly not replace my existing income at this stage) so I think right now its best for me to keep working. The plan is that when the next cycle comes along I would sell off maybe 30% of the portfolio and pay out all existing debt and live of the rents of the remaining properties. All good things comes to those that are patient.
Kenneth,
In regards to which suburbs I will be investing in and why. As I mentioned earlier in this market I am not targeting suburbs but rather good deals. My latest purchase in QLD was in Cairns and although that market has boomed there are some properties that still offer fair returns (not exceptional ) but enough for me to hold them for another cycle. The hardest thing for me in having multiple properties has been managing cashflow. It is easy to make money through equity growth, time will do that for you. The difficulty is selecting properties that have good cashflow yields so that you wont be in a situation even in a market downturn where you will be forced to sell. Managing cashflow will allow you to offload properties when you are ready. You never want to find yourself in a situation where you are forced to sell. For this reason I also fix the majority of my rates along the way just to protect me against rises.
In WA I see growth opportunities in areas of perth (house and land) priced around the 150k. there are still good quality homes available in the outer areas (brick and tile). Rents are not great maybe 160p/w on a 150k purchase. I think with time though as rents rise so too will prices. I don't own any properties in these areas and probably wont buy on those yields as I am very strict with my cashflow right now but if I was able to find say a house for 160k renting for 215 per week with some depreciation I would look at something like that. Really anywhere in WA in Perth or along the coast where you can get say a 7% + return would be worth looking at in my opinion. Also I believe WA has not had the price rises that syd,bris had in the last cycle so prices are still affordable. One thing to factor in though when you are looking at WA is property management fees. They charge for everything! Not cheap to have property managers look after your properties there.
Hi Karina,
I'm wondering if you are affected by land tax in any areas?
I'm also intrigued as to how much you research your market before buying and whether you are happy that you really understand exactly where you have bought or have just reached a level where you are comfortable that it will be OK. I know you said you are on the phone every day but do you ever worry that you don't really understand the area deeply enough...or have you experienced that problem first hand in any way?
I ask this question because it is often something I worry about when investing long distance - that lack of local knowledge and the nagging thought in the back of my mind that perhaps I'm missing something that's hard to see unless you are there.
Thank you also for answering our questions so thoroughly & willingly,
regards,
Jen
I'm wondering if you are affected by land tax in any areas?
I'm also intrigued as to how much you research your market before buying and whether you are happy that you really understand exactly where you have bought or have just reached a level where you are comfortable that it will be OK. I know you said you are on the phone every day but do you ever worry that you don't really understand the area deeply enough...or have you experienced that problem first hand in any way?
I ask this question because it is often something I worry about when investing long distance - that lack of local knowledge and the nagging thought in the back of my mind that perhaps I'm missing something that's hard to see unless you are there.
Thank you also for answering our questions so thoroughly & willingly,
regards,
Jen
Well done you sure make investors proud.
Hi Jen,
Buying in an area that you have not visited has certain challenges but I think with all the information available today it certainly can be done.
A really good way to get a feel for an area is to speak to property managers. I speak to the property manager of the agent selling me the property but also call property managers from other real estate agencies in town to get an unbiased view. I ask lots of questions like
What type of property do people want to rent (2br, 3br, 4br,units,studios etc)
How many properties do you manage and how many do you currently have vacant (this helps you work out the vacancy rate)
How long would you expect to be able to find a tenant?
Are there streets, areas you wont take on listings or areas that you suggest I stay away from?
What changes are happening in town?
Is the population increasing /decreasing?
What does the town survive on - industry etc
I have at times contacted the council and spoken to the town planner , they seem to know what new developments are going on, which company's are moving to town etc etc - I would generally not do this for a population of over 20,000 but if it was under then I may do so.
Speak to other sales agents and ask them.
What is the absolute rock bottom price I could buy a house for in town?
What is the cheapest property you sold in the last 12 months?
What were prices like 10 years ago.... a geraldton agent told me that he was selling houses in rangeway in 1975 for around $12,000 (so prices do increases even in places like geraldton)
I took a bit of a punt on the tassie place I just bought. I like coastal property but have always been reluctant to buy in towns with small populations. The property was an x dept housing home in a seaside village called Triabunna (an hours drive to Hobart) its a fishing village, there are plans for a marina and resort. The property cost me 90k, I have just rented it today for $180.00 per week to a mature couple looking for a lifestyle change.They can't wait to get started planting things in the garden! So far so good. I think it is going to be a good investment. There are no houses available for sale under 130k I believe. The house is 4 bedroom brick. I actually had to pay $5k more than the asking price as they had multiple offers on it. Honestly I have done very little research on Triabunna but the fact that there are no houses in that price range for sale and the rental return available on it seemed to me like a good deal.
Another one I just bought was in Kalgoorlie for 83k (totally renovated, new kitchen, bathroom , carpets , blinds ,landscaping) This settled about 2 weeks ago also and I just received a call from my PM (while I was writing this post) to say that she has just showed the property and the person loved it and wants to rent it at $180.00 per week (we had it on at $200.00 negotiable) She is coming in tomorrow with an application. Fingers crossed !
I guess I always worry a little until new properties are rented but I have learnt that if there is a rental market in town and the property is priced well it will generally rent within a 4 week period (sometimes less sometimes more)
If I am buying just the one I don't worry so much but in the last 2 weeks I settled on 3 properties so I was quite keen to get them rented (the other one was a geraldton property and the tenant is coming in on friday to sign the lease) again hopefully!
Land Tax yes I had to pay land tax last year for WA (it was under $300.00 though so no big deal, luckily QLD has a threshold of 450k (they just announced it in the last budget ) so I don't need to pay any there. NSW cost me about $1500.00 in land tax last year because of our BRILLIANT Labour govt which I will not be voting for next election....Bring on Brogden. Vendor tax alone last year in NSW cost me over $10,000 so I am not HAPPY with this government. Is it not enough that we have to pay capital gains tax!
Luckily they have introduced the tax free threshold in NSW however I don't own much in NSW now so it wont make a great deal of difference to me.
Buying in an area that you have not visited has certain challenges but I think with all the information available today it certainly can be done.
A really good way to get a feel for an area is to speak to property managers. I speak to the property manager of the agent selling me the property but also call property managers from other real estate agencies in town to get an unbiased view. I ask lots of questions like
What type of property do people want to rent (2br, 3br, 4br,units,studios etc)
How many properties do you manage and how many do you currently have vacant (this helps you work out the vacancy rate)
How long would you expect to be able to find a tenant?
Are there streets, areas you wont take on listings or areas that you suggest I stay away from?
What changes are happening in town?
Is the population increasing /decreasing?
What does the town survive on - industry etc
I have at times contacted the council and spoken to the town planner , they seem to know what new developments are going on, which company's are moving to town etc etc - I would generally not do this for a population of over 20,000 but if it was under then I may do so.
Speak to other sales agents and ask them.
What is the absolute rock bottom price I could buy a house for in town?
What is the cheapest property you sold in the last 12 months?
What were prices like 10 years ago.... a geraldton agent told me that he was selling houses in rangeway in 1975 for around $12,000 (so prices do increases even in places like geraldton)
I took a bit of a punt on the tassie place I just bought. I like coastal property but have always been reluctant to buy in towns with small populations. The property was an x dept housing home in a seaside village called Triabunna (an hours drive to Hobart) its a fishing village, there are plans for a marina and resort. The property cost me 90k, I have just rented it today for $180.00 per week to a mature couple looking for a lifestyle change.They can't wait to get started planting things in the garden! So far so good. I think it is going to be a good investment. There are no houses available for sale under 130k I believe. The house is 4 bedroom brick. I actually had to pay $5k more than the asking price as they had multiple offers on it. Honestly I have done very little research on Triabunna but the fact that there are no houses in that price range for sale and the rental return available on it seemed to me like a good deal.
Another one I just bought was in Kalgoorlie for 83k (totally renovated, new kitchen, bathroom , carpets , blinds ,landscaping) This settled about 2 weeks ago also and I just received a call from my PM (while I was writing this post) to say that she has just showed the property and the person loved it and wants to rent it at $180.00 per week (we had it on at $200.00 negotiable) She is coming in tomorrow with an application. Fingers crossed !
I guess I always worry a little until new properties are rented but I have learnt that if there is a rental market in town and the property is priced well it will generally rent within a 4 week period (sometimes less sometimes more)
If I am buying just the one I don't worry so much but in the last 2 weeks I settled on 3 properties so I was quite keen to get them rented (the other one was a geraldton property and the tenant is coming in on friday to sign the lease) again hopefully!
Land Tax yes I had to pay land tax last year for WA (it was under $300.00 though so no big deal, luckily QLD has a threshold of 450k (they just announced it in the last budget ) so I don't need to pay any there. NSW cost me about $1500.00 in land tax last year because of our BRILLIANT Labour govt which I will not be voting for next election....Bring on Brogden. Vendor tax alone last year in NSW cost me over $10,000 so I am not HAPPY with this government. Is it not enough that we have to pay capital gains tax!
Luckily they have introduced the tax free threshold in NSW however I don't own much in NSW now so it wont make a great deal of difference to me.
Karina,
Thank you for answering my questions so THOROUGHLY I hardly expected such a detailed/itemised account, and I thought that by asking for a "median" price paid overall was not being too intrusive of your personal affairs. I appreciate your frankness, as well as your willinginess to share same with myself and others.
Again, well done on your investment endeavours, and I envisage that you will hang up your work hat in the near future and (finally) sit back to enjoy the fruits of your labour.
Cheers,
Jo
Thank you for answering my questions so THOROUGHLY
I hardly expected such a detailed/itemised account, and I thought that by asking for a "median" price paid overall was not being too intrusive of your personal affairs. I appreciate your frankness, as well as your willinginess to share same with myself and others. Again, well done on your investment endeavours, and I envisage that you will hang up your work hat in the near future and (finally) sit back to enjoy the fruits of your labour.
Cheers,
Jo
just beat me to it
Karina,
just adding my well wishes to this long list of those who have also.
Congrats on that duplex in cairns - i know the one you purchased as you beat me to it...ah well - serves me right for not getting my stuff sorted sooner
Went for a drive past it on the weekend as - grabbed another unit myself
OSS
Karina,
just adding my well wishes to this long list of those who have also.
Congrats on that duplex in cairns - i know the one you purchased as you beat me to it...ah well - serves me right for not getting my stuff sorted sooner
Went for a drive past it on the weekend as - grabbed another unit myself
OSS
Dayanand,
The duplex is in Westcourt
OSS,
Sorry mate I just can't pass up a bargain. Had it under offer within a matter of hours of seeing it on the internet. Congrats on your purchase. Can I ask what did you buy / how much?
Also what is the grogan street property like. I havn't seen it yet, only in pics!
The duplex is in Westcourt
OSS,
Sorry mate I just can't pass up a bargain. Had it under offer within a matter of hours of seeing it on the internet. Congrats on your purchase. Can I ask what did you buy / how much?
Also what is the grogan street property like. I havn't seen it yet, only in pics!
karina said:
Am i right in saying that is a 10% yield ?? WOW
I didn't think that sort of yield was Achievable these days.well done,
GG
Gordon Gekko said:Am i right in saying that is a 10% yield ?? WOW
Karina certainly got a great deal. A property like the example would normally go for approx $110k.
Being a mining town, yields for all types of property are above average. Kalgoorlie has seen some capital growth since 2003, but it's not been nearly as dramatic as Bunbury, Geraldton, Mandurah, etc.
8% is unexceptional and 9% available in agents' windows.
If you happen to find a 9% property that's under rented, then 10% is easy.
Then if the building is post-1985 (which, unlike other country towns, many are), occupancy is OK and holding/repair costs aren't too high then you will get CF+ (after tax at least).
Peter
Spiderman is right. There are good yields available in kalgoorlie, it´s not that hard to get a good return. I would not buy lots of property in Kal because its a mining town but I thought no harm in buying one and see how it goes.
The valuation that the bank organised had some positive comments from the valuer about the general market in Kalgoorlie saying that it is a rising market.
Geoff I sent you a PM (private message) as you requested.
The valuation that the bank organised had some positive comments from the valuer about the general market in Kalgoorlie saying that it is a rising market.
Geoff I sent you a PM (private message) as you requested.
redwing said:
Or even pick up a house in Hay St (they're cheap) and do a conversion. Just beware of any asbestos fibres floating around.
Peter
Gordon Gekko said:Am i right in saying that is a 10% yield ?? WOW
Here's a (close) example http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=102545776
(admittedly not in the best part of the town, a bit old and not brick)
Peter
The ad says ...
"Appraised to rent at $180.00 to $190.00 per week"
Don't know much about this area but sounds too good to be true !
"Appraised to rent at $180.00 to $190.00 per week"
Don't know much about this area but sounds too good to be true !
LearningMan said:
There are wild, extravagent estimates and estimates that are very plausible. As Ausprop said, this appraisal is one of the latter.
I have an IP about 2km away from the one advertised. It's modern (1991), brick and in a better suburb. But being one of two on the block it would be classified as a unit rather than a house and have much less backyard.
Just yesterday it rented to new tenants for $210 pw after a vacancy period of 11 days (this time of year tends to be quiet for the Kalgoorlie rental market as I also discovered in 2004).
Sometimes rental appraisals can be slightly high, and taking $10-20 off may produce a figure that may rent more quickly. When I bought it (in April 2004) the rental appraisal was $200 - 220 pw. All my pre-purchase calculations were done on the basis of a $200pw rent which was arrived at by my independent assessment.
It was first advertised briefly at $220pw, then $210 pw then dropped to $195pw (which was cheaper than most others of its type).
It didn't take long to get a tenant after this latest drop (maybe it's the internet where people could search for $100-199 rents, and my place would have come up). Maybe $199 pw would have worked just as well!
After the blinds were replaced (at the tenants request) I put the rent up to $205 pw where it stayed until these tenants finished. Though my PM suggested $220pw, I made an early decision to drop it to $210pw to avoid the previous error of being too slow to do it. However it is now in the mid range of the agent's estimate, a little more than a year after purchase.
So my conclusion is that after a year or two, assuming rents increase with CPI, then issues of slightly varying estimates don't matter very much provided vacancy is kept down.
Rgds, Peter
