All Aboard!!

[Compleks]

I could probably still get finance for $400k, but it's a little out of my comfort zone. I would consider extending to $350k, but again I haven't really put in much time yet researching.

I'll still be following up on those regional hubs too.
I'll be sure to look at all the options in my budget.

Cheers.

 

[Compleks]

We're still moving forwards, slowly...

After a few recommendations and some more research I have been looking at Bendigo a little closer.

Some points I've either read or been told:
The vacancy rates are reportedly extremely low.
The railway and highway construction/improvement in past years has made commuting more efficient.
Construction on the new hospital is a good sign. $600+million over the next 4 years .
Has shown good growth over the last 3 years.
Melbournes high property prices are driving more people to look elsewhere.
The available rental properties are no where near enough to meet demand (read 10:1).

I spoke to Ben (Belu) earlier today and he was extremely helpful. I also called a number of local Property Managers to see if they could offer any insight on the area, as I'm not from around there.
They all seemed to have similar opinions. The general consensus being that demand is very high and that it's difficult to really pick a bad area. Anything close to the CBD was recommended. Golden Square and Kangaroo Flats were both popular choices, as were a few areas near the university as well as up north near the hospital.

I guess the next step is probably to arrange a trip to Bendigo and have a look around with one of the real estate agents at what's available?

So far things seem to moving smoothly, albeit slowly

 

[Belu]

Was good to chat today mate. Was on the stock-run so sorry if we didnt cover everything. Let me know when you're up and we can go for a drive around the place!

Ben

 

[Compleks]

Update!

Took a trip up to Bendigo on Friday. I hadn't been there since I was a kid, so really had no idea what to expect of the place.
I was pleasantly surprised. I thought the city had a really good 'vibe', the people were all very friendly and there were good signs of growth and plenty of money being spent.

I met up with Ben (Belu) who spent his whole morning driving me around and inspecting different properties/areas. Ben is a top bloke and I would definitely recommend anyone considering investing (or living) in Bendigo should give him a call.
We looked at 5 or 6 properties, all in my price range and all in different areas so I could get a feel for what was available.

I have a meeting booked with my accountant before I make any decisions/offers. But I feel I'm definitely getting closer!

 

[Patsy]

Can I hitch a ride please

Loving your thread, it's almost a de ja vu experience for me as I am going a similar path, keep the updates coming and thankyou to all the more seasoned and experienced members who generously offer their time to reply and advise.
I soooo love this forum, don't post often as I'm a newbie investor and don't want to sound like a nuff nuff, but over the past 6 mths have been a regular 'stalker' and have learn't bucket loads, can't wait to be able to contribute my experience, hopefully my train not too far away

 

[Compleks]

For those of you playing along at home.

I made an offer on a property yesterday. 3br 1bath house in Quarry Hill, Bendigo.
My offer was not accepted, but some negotiations done by the agent and we came to a deal. $272k, 45day settlement, and 5% deposit. Subject to finance, building/pest inspection and access for letting prior to settlement.

The wheels are in motion!

Was all very surreal, but it's settling in. I felt like I didn't have a clue what I was doing, which was(is) probably true
But, I didn't want to sit on the sidelines any longer. Plus I was pretty happy with the property/location and general outlook of Bendigo.

So I met with Peter (Sage Lending) to get the finance underway a few hours ago.
Still wrapping my head around everything. I was after a guarantor loan. Peter recommended Bank Of Melbourne. We're looking at a $286k borrow, split into 2 loans 80/20. Both interest only, 30years, variable (5.75%).
I have the 20% in savings already, so I can release my parents from liability at any stage.

Ummm, now I'm just getting the paperwork sorted. Then getting a look at the contract before it becomes unconditional I guess.
It all seems fairly simple, but also very complicated at the same time...

onwards!

 

[wobbycarly]

Good work! What's the rental return?

 

[Compleks]

Thanks Carly
Rental is estimated at $280 - $295/week.

Which, if my calculations are correct*, should be 5.3% yield at the lower end and 5.6% at the upper range.


*there's a good chance they are not correct

 

[westminster]

Congrats Compleks. You did it!!

When do we get to see the property you chose?

 

[Compleks]

http://www.barryplant.com.au/Bendig..._3550&menuItemID=95536&propertyIDList=2110743

Have a gander.
It's a low entry price for the area because the land has been divided with plans to build 1 unit out back.

So I'm not getting the full block, but hope this wont effect capital gains too significantly.
I'm also hoping the renovations will mean I can claim a decent amount of depreciation.

 

[Jake Milne]

Congratulations!

I look forward to seeing how you progress with settlement.

 

[hobo-jo]

Compleks, have you considered the fact that Melbourne and some other regions in Victoria are currently the worst in Australia fundamentally?

http://somersoft.com/forums/showthread.php?t=82348

Yields are awful. You should be getting at least 5-6% in metro city areas, not regional Victoria (which is higher risk and should come with higher yield).

Stock on market for Bendigo is around the same levels as during the GFC:
http://www.sqmresearch.com.au/graph_stock_on_market.php?postcode=3550&t=1

Rentals may be reasonably tight, but that might be because so many investors have turfed their tenants to sell!

Questions:

- Do you really think 2.5 weeks and looking at 5-6 houses is adequate research to take out a loan for more than a quarter million dollars?

- Why is the loan $286k when purchase price is only $272k and you are paying 5% deposit?

- Why are you doing a 95% lend instead of using your available cash to avoid LMI? What amount of LMI are you paying?

- Why are your parents acting as guarantor for this loan? Do you think it's a good idea?

- 1% off the asking price seems a high amount to pay given the weak state of the property market, did you consider letting the seller stew on a much lower offer before deciding to pay so much?

- Do you think 5-6 properties is enough to look at to really get an idea of the market?

- Did you use a data company to pull up recent sales in the area in order to base your offer price?

- Had you considered using a buyers agent rather than traveling around with a real estate agent who has a vested interest in selling you a property from their own stock?

In short I think you have rushed this purchase big time and think you should consider using the cooling off period to exit the contract.

To be honest I was disappointed to read this thread and see no more than back slapping... where are the seasoned property investors on Somersoft to give this guy some solid advice??

 

[S.T]

hmm yeh looks like the whole block sold for $335 in oct 2011, before the subdivide and it was listed for 265k in June with First National. before changing agents to Barry Plant and listed for 275k.

Just going off Price Finder search

 

[alexlee]

I was after a guarantor loan. Peter recommended Bank Of Melbourne. We're looking at a $286k borrow, split into 2 loans 80/20. Both interest only, 30years, variable (5.75%).
I have the 20% in savings already, so I can release my parents from liability at any stage.

I don't get this. You deliberately pulled your parents in as guarantor to get the 105% loan, even though you already have the 20% savings?

 

[Aaron_C]

I don't get this. You deliberately pulled your parents in as guarantor to get the 105% loan, even though you already have the 20% savings?

As long as everyone is OK with it, then I don't see a problem. You get 105% leverage.

 

[Shadow]

Compleks, have you considered the fact that Melbourne and some other regions in Victoria are currently the worst in Australia fundamentally?

Hobo-jo, don't you think it's a little disrespectful to publish a blog (here), mocking Compleks' investment decisions?

 

[hobo-jo]

Hobo-jo, don't you think it's a little disrespectful to publish a blog (here), mocking Compleks' investment decisions?

It was not intended to mock the decision, simply a reaction of disbelief that someone would take a loan for greater than a properties worth (while having the deposit to avoid), tie up their parents as a guarantor and make a purchase with such little forethought/research.

Shadow, as a seasoned property investor (perhaps not in comparison with some here, but relative to Compleks or my experiences), perhaps you can contribute to this thread with some of your own thoughts on this purchase...

Does it look to you like thorough research was completed prior to purchase?
Is visiting 5-6 properties with a single real estate agent enough to get a feel for a market?
Do you think the yield is enough given the risk purchasing regional?
What do you think of the contract price given the news that this property was advertised at $265k earlier in the year?

Compleks has come here for property investing advice and there has been very little constructive criticism provided which I think would be appropriate here.

At the end of the day it's Compleks decision and if he thinks it was the right one then so be it.

 

[Belu]

Just to clarify something the property was advertised at $265-285, then $285, then $275-$285 followed finally by $275.

 

[Jake Milne]

To be honest I was disappointed to read this thread and see no more than back slapping... where are the seasoned property investors on Somersoft to give this guy some solid advice??

Like you hobo, when I first read this thread yesterday and got to "Bendigo" I was intent on writing a few words to help compleks understand the full picture.

However, the young chap had already purchased, leaving no time to offer proper guidance. To rescind the contract now may lead to more undesirable consequences than to follow through with the purchase but I am in agreeance with you at least in that the option should be considered on its own merits.

As you're aware this is his first property and no doubt an exciting time. Cussing one out in the public's eye is not the way to help someone in this situation. I would suggest that you remove your blog, or edit it for anonymity and then follow up as you've stated with some private advice.

 

[hobo-jo]

As you're aware this is his first property and no doubt an exciting time. Cussing one out in the public's eye is not the way to help someone in this situation. I would suggest that you remove your blog, or edit it for anonymity and then follow up as you've stated with some private advice.

That is a fair point and I have removed the link to this thread and username from the blog post.

I can let compleks know of my opinion, but I think it would be more valuable if those with a larger amount of experience were posting here to guide him.