docklands rents

[lll]

************************************
Dear Lozza,

1. Isn't this the very problem when some "inexperienced"/greedy investors who have over-extended themselves, will have to sell their units at a loss within the first few years upon the unit completion.

2. Are you presently investing for capital growth or for rental yields? What have been the past few years capital growth rate and rental yield rate like for your unit apartments?

3. Thank you.

regards,
Kenneth KOH

Gday Kenneth

That's exactly the case mate. Some investors have bought off the plan in docklands, thinking that they were going to make a quick profit upon settlement within 2 years, and unfortunately, because they "speculated"short term", it didnt quite work out that way, and their properties didnt experience the capital growth that they thought they were going to experience. And therefore, they had to sell at a loss as they had no intention of settleing their property at all, and in most cases, they had no money to actually settle, so they were forced into a quick sale, which means bad news as normally, they have to sell at a loss. But i am a big advocate for long term investing ( a minimum 10 year plan)

As for the present, i am investing for a mixture of both rental return and capital growth. Of course, i want the best rent i can get, and becuase i personally know developers and plenty of people that are experienced in the investing game who have heaps of contacts in the industry, and they are very experienced investors, i can get good deductions and good rental returns etc. And i can also get a deduction on the actual costs of the units as i know people. But i am very keen to hold onto all my property for at least 5 -10 years to experience long term capital growth

And as for 10 years, well, i am hoping my apartments ( currently valued at $400k and $430k will be worth well over $800k each. ( thats working on the theory that property doubles ever 7 - 10 years.)

Cheers

lozza

 

[Bill.L]

Hi all,

Lozza,

If the apartment you bought for $360k is now worth $420k, then perhaps the following apartment (advertised for $350k) in the same complex is a bargin, and you should snap it up quick smart.

http://www.realestate.com.au/cgi-bi...&t=res&ty=&snf=ras&ag=&cu=fn-rea&fmt=&header=

happy investing

bye

 

[Jamie]

There is no stamp duty if you buy off the plan

Yes, there is.

Stamp duty is based on the land value, rather than the finished value. So there is definitely a reduction in stamp duty, but to say there is no stamp duty payable on OTPs is both misleading and wrong.

Also, it is statistically proven that if you own a new house or a new apartment, there is more of a chance of higher rent than if you own an older house.

Lozza, can you paste a link to the study that "statistically proved" that new houses attract a premium in rent? Id be interested to read it, as I havent seen such a study before.

Thanks,

Jamie.

Lozza, you seem very well versed in Docklands property - do you work in the industry in any way?

 

[alexlee]

Lozza, I seem to remember discussing this point with you before. You seem to concentrate on the amount of rent you get without reference to how much the property costs.

How does getting higher rent help an investor if it's because the property is more expensive in the first place? You get depreciation because you used money to buy the assets that are being depreciated. If I buy an older house and get it cheap, do I really care if there's no depreciation? I can be cashflow positive from a property renting for $100pw, while I can die from negative cashflow from a property renting for $1,000pw.

Newer units and houses get higher rents than corresponding older units and houses because newer properties are more expensive! How is getting an extra $20 pw in rent make it a better investment compared to a lower rent property if you had to pay an extra $20k for the property?
Alex

 

[alexlee]

And i like Docklands because i can see , (with my forsight) that once all the appropriate corporate, retail, and other infrastructure is down there ( in another 10 years) then the true value will be realised. Docklands is a bit different to other aparetments in the way that it is a massive urban renewal project, and the fact is, no other docks around the world that have been re vamped or totally done up have ever failed ! Look at capetown south africa and canary wharf in London as examples.

Do you have any statistics on how Docklands in Canary Wharf have done? Very interested as I live in London, and I know lots of people who live in that area.

As for the banking willing to lend 80% LVR, it means the banks are seeing Docklands as less of a risk than before. Now compare that to a normal suburban property that the bank is willing to lend at 100% LVR. Which is more risky in the bank's eyes?

I'm also very interested in hearing the story of your friend who has 10 Docklands properties. How he/she managed to buy that many, what financing methods was used, how long it took, what the current cashflow looks like, etc.
Alex

 

[units4me]

Lozza.
At the end of the day an IP has to make money through capital growth AND rental yield. Properties that lose money hand over fist should not be considered, even in a diversified portfolio.
Are you and your "very smart" investor mates involved in the industry?

 

[warrioress]

Of course, i want the best rent i can get, and becuase i personally know developers and plenty of people that are experienced in the investing game who have heaps of contacts in the industry, and they are very experienced investors, i can get good deductions and good rental returns etc. And i can also get a deduction on the actual costs of the units as i know people

Lozza,

That's great that you have contacts like that...but how does only the Docklands as an investment help the average Joe Shmo...

The Docklands sounds like a great investment for yourself...but not necessarily for others...

As much as everyone loves sharing things here....if I came across an IP or series of IPs that were the best thing since sliced bread and would be fantastic for my portfolio, I wouldn't be advertising it on a forum for property investers (sorry guys! ) ...I would buy as many 'cheap' properties as I could....and then wait for CG after people had jumped on the bandwagon...

Lastly, you don't help your argument by discounting all other apartment buildings except the Docklands. I would love to hear the difference between why the Docklands are better than lets say....the Eureka Tower....(you might have some real logical points, but I would like some more substance to your argument)

Im a novice investor, and I want to know as much information on IPs as possible....

 

[Peter Parker]

I know little about the topic at hand, but a friend has written about his experience of a docklands apartment (penthouse no less) from a tenants perspective in his blog.

http://hechoenmexico.blogspot.com/2006/06/congratulations-we-have-arrived.html

Comments like I was surprised by how bloody common the damned things are and very reasonable rental might offer some insights.

Peter

 

[alexlee]

As much as everyone loves sharing things here....if I came across an IP or series of IPs that were the best thing since sliced bread and would be fantastic for my portfolio, I wouldn't be advertising it on a forum for property investers (sorry guys! ) ...I would buy as many 'cheap' properties as I could....and then wait for CG after people had jumped on the bandwagon...

An excellent point, Warrioress. While we've all defended our own investment strategies in terms of property types, states, even areas from time to time (old v new, houses v units, Perth v Sydney, etc), I rarely see any of us defending a very specific property and give the address as well.

Why? If we 'win' the argument, so to speak, and convince members that it's a great idea, we 'lose' that idea. As much as I like to share my experiences and learn from others' experiences, I'm not going to just give away specific investments for free.
Alex

 

[lll]

Hi all,

Lozza,

If the apartment you bought for $360k is now worth $420k, then perhaps the following apartment (advertised for $350k) in the same complex is a bargin, and you should snap it up quick smart.

http://www.realestate.com.au/cgi-bi...&t=res&ty=&snf=ras&ag=&cu=fn-rea&fmt=&header=

happy investing

bye

Gday Bill

thanks for your link

i had a quick look at the offer, and because i am very knowledgable about Watergate, i can tell you honestly that its nowhere near as good as what i have bought for several reasons.

This one costs $350k
Firstly, it is a smaller 1 bedroom apartment thank the one i bought - ( only 55 sq m whereas mine is 67 sq m.) , it has no carpark, mine does. ( a carpark is worth minimum $40k now) Also, with this apartment, you have to pay full stamp duty, but with the offer i have, i pay only 1/2 stamp duty as i know people. and finally, it costs $360k, whereas mine only cost me $370k, and i got a carpark with it too, an mine is 12 sq m bigger, and its a corner apartment. And i got a rental guarentee of 6% net fromthe developer - So really, there is no comparison

but thanks for your comments anyway

cheers

Lozza

 

[lll]

Yes, there is.

Stamp duty is based on the land value, rather than the finished value. So there is definitely a reduction in stamp duty, but to say there is no stamp duty payable on OTPs is both misleading and wrong.


Lozza, can you paste a link to the study that "statistically proved" that new houses attract a premium in rent? Id be interested to read it, as I havent seen such a study before.

Thanks,

Jamie.

Lozza, you seem very well versed in Docklands property - do you work in the industry in any way?

Gday Jamie

Yes, i agree with your stampduty comment, I actually meant that you pay Minimal stamp duty on an off the plan apartment, so sorry for not being clear.

No i cant paste a link on the statistic that new houses pay premium rent over older houses. This is just what i have learned from people who are in the industry who have plenty of experience, so i have just taken their advice. But i can pretty much say categorically that this would generally be the norm from what i have both been shown and from what i have seen. I mean, if you think about it logically, it would be the case.


Thank youo for noticing that i am well versed in Docklands property. I have researched this area of melbourne for over 5 years now. And yes, i work in the industry for a company that helps people to invest, but i have already mentioned that back in earlier threads, and there is nothing for me to hide.

cheers

Lozza

 

[alexlee]

But i can pretty much say categorically that this would generally be the norm from what i have both been shown and from what i have seen. I mean, if you think about it logically, it would be the case.

And yes, i work in the industry for a company that helps people to invest, but i have already mentioned that back in earlier threads, and there is nothing for me to hide.

So new properties have high rent than older, similar properties. Makes sense. It also makes sense that newer properties are more expensive than older properties. Why is a more expensive property that gets you a higher rent better than a cheaper property that gets you a lower rent? Shouldn't you be looking at yield?

To put it another way, would you say a $350k property returning $350pw is better than a $200k property returning $250pw? Why or why not?
Alex

 

[lll]

Lozza, I seem to remember discussing this point with you before. You seem to concentrate on the amount of rent you get without reference to how much the property costs. [/QUOTE=alexlee]

Alexee, i have said earlier that you make your money when you buy an apartment, and in my case i bought a property for about $370k, and i just hadit valued for $420k., and i am getting $426 p/w rent with a rental guarentee from the developer for 6%. So whats the issue? Getting $426 p /w for a property that cost me $370k for 2 years guarenteed is pretty damn good as far as i am concened! Try to beat that for residential property in Melbourne ! There wouldnt be many around !

How does getting higher rent help an investor if it's because the property is more expensive in the first place? You get depreciation because you used money to buy the assets that are being depreciated. If I buy an older house and get it cheap, do I really care if there's no depreciation? I can be cashflow positive from a property renting for $100pw, while I can die from negative cashflow from a property renting for $1,000pw. [/QUOTE=alexlee]

I never said that getting just higher rent was the key ! Remember, i said that you make your money when you buy,, not when you sell! And i just picked up something for $370k that has been valued at $420k! So, what i bought was "Undervalued", so i don't know what you are going on about! I agree, cashflow properties are the way to go, and thats exactly what i have bought, so i don't really know what the issue is????

Newer units and houses get higher rents than corresponding older units and houses because newer properties are more expensive! How is getting an extra $20 pw in rent make it a better investment compared to a lower rent property if you had to pay an extra $20k for the property?
Alex

Alex, newer properties are only more expensive if you dont get a good deal in the first place ! Yet again, i have said all along that you need to find a property that is under valued as well as getting premium rent, so if you find both, like i have on my investment - and then when you get the added bonus of full depreciation, well, you are ahead arent you ! Thats why i would prefer to buy something newer then older if i get something under valued, as i dont get depreciation if its an older property. But i am not entirely against buying an older property as an investment - as i said earlier, each deal has to be weighed up on its own merits and thats what i do.

cheers

Lozza

 

[lll]

Do you have any statistics on how Docklands in Canary Wharf have done? Very interested as I live in London, and I know lots of people who live in that area.

As for the banking willing to lend 80% LVR, it means the banks are seeing Docklands as less of a risk than before. Now compare that to a normal suburban property that the bank is willing to lend at 100% LVR. Which is more risky in the bank's eyes?

I'm also very interested in hearing the story of your friend who has 10 Docklands properties. How he/she managed to buy that many, what financing methods was used, how long it took, what the current cashflow looks like, etc.
Alex

Gday

We are having a field day here arent we ! lol ! But its fun actually

No i havent got statistics in Canary wharf, but its common knowledge that when they did this area up, it went through the roof ! Just ask your mates! It was documented on television too once from what i remember.

Alexee, apartments will always be a lower LVR than a house and land, no matter what area it is, as apartmetns are more of a risk than houses. But thats a general rule. But who cares anyway ! Just make sure you know people who are good mortgage brokers who can get you the best financial deals like i do !

As for my friends, maybe you should ask them one day ! Its a bit hard to explain over the email , and i dont really have 3 hours to write it down !!

Lozza

 

[lll]

Lozza.
At the end of the day an IP has to make money through capital growth AND rental yield. Properties that lose money hand over fist should not be considered, even in a diversified portfolio.
Are you and your "very smart" investor mates involved in the industry?

Units for me, i agree ! I am a big advocate for positively geared properties. And i agree, cash flow negative properties are a problem on your cashflow. Thats why i took up the deal i was offered... And yes, my smart investor mates are in the industry ! Both have had 20 years experience inteh industry. Anyone with at least 10 properties would most likely have a proeprty finance background, and a heap of experience in the industry...But there are acceptions to the rule i suppose.

lozza

 

[lll]

Lozza,

That's great that you have contacts like that...but how does only the Docklands as an investment help the average Joe Shmo...

The Docklands sounds like a great investment for yourself...but not necessarily for others...

As much as everyone loves sharing things here....if I came across an IP or series of IPs that were the best thing since sliced bread and would be fantastic for my portfolio, I wouldn't be advertising it on a forum for property investers (sorry guys! ) ...I would buy as many 'cheap' properties as I could....and then wait for CG after people had jumped on the bandwagon...

Lastly, you don't help your argument by discounting all other apartment buildings except the Docklands. I would love to hear the difference between why the Docklands are better than lets say....the Eureka Tower....(you might have some real logical points, but I would like some more substance to your argument)

Im a novice investor, and I want to know as much information on IPs as possible....

Gday Wariouress,

i never said that just docklands is the only way to go. I am all for a diversified portfolio. Please read my previous comments - There are bargains everywhere, but seening this thread is on docklands, i am mainly talking about docklands. Any investment that is under valued, and paying a great rental return is very good for the average jo shmo, no matter where it is! No matter if its in docklands, or anywhere else ! What i am saying in effect is that when you buy, make sure you buy something that is under valued, not over valued! and make sure you get a good rental return to conver your interest and other outgoings so its not a burden on your own pockets.

Please dont get me wrong, i am not necessarily saying that an apartment in toorak for example, might not have good rental return or good capital growth etc. What i am trying to point out is that i have studied docklands for 5 years now, and i know what is good value in that area, and what is not good value. and i know what prices are over inflated ( have a look at what i said to Bill before when he showed me what he found on real estate) Its just that i have insider knowledge and practical experience in the Docklands area. And i "personally" believe that docklands, being the biggest urban renewal project in australia ever, has long term capital gains benifits over an apartment at southbank or the CBD. Simply because its waterfront, and it is under developed. But its a 10 year propostion

cheers

Lozza

 

[alexlee]

As for my friends, maybe you should ask them one day ! Its a bit hard to explain over the email , and i dont really have 3 hours to write it down !!

Lozza

Why don't you give me your friends' email addresses, and I'll ask them directly.

So if I've been convinced that the Docklands are a good investment, what would you suggest I do? Anyone I should contact?
Alex

 

[Bandita]

in my case i bought a property for about $370k, and i just hadit valued for $420k., and i am getting $426 p/w rent with a rental guarentee from the developer for 6%. So whats the issue? Getting $426 p /w for a property that cost me $370k for 2 years guarenteed is pretty damn good as far as i am concened! Try to beat that for residential property in Melbourne ! There wouldnt be many around !

cheers

Lozza

Hi Lozza,

I've got nothing against the Docklands - I enjoy going there (think it's too cold though). But getting a 6% rental guarantee from the developer for 2 years may be great, but it may not be market rent - so when that guarantee ends, you may find you're not obtaining the same yields. Just doing a search on realestate.com for rentals in Docklands, one bedrooms range from $300-$350 per week (I think you said you have a one bedroom??). While these may not be in the same building as yours, different views, sizes etc - that's the general market rent of one-bedrooms at the moment. Just need to be careful that you can obtain the same yields once that developers rental guarantee finishes.

Cheers,
Jen

 

[lll]

Hi Lozza,

I've got nothing against the Docklands - I enjoy going there (think it's too cold though). But getting a 6% rental guarantee from the developer for 2 years may be great, but it may not be market rent - so when that guarantee ends, you may find you're not obtaining the same yields. Just doing a search on realestate.com for rentals in Docklands, one bedrooms range from $300-$350 per week (I think you said you have a one bedroom??). While these may not be in the same building as yours, different views, sizes etc - that's the general market rent of one-bedrooms at the moment. Just need to be careful that you can obtain the same yields once that developers rental guarantee finishes.

Cheers,
Jen

I agree. but what you need to understand is that docklands rents are firming up as all the supply is being eaten up. And thats a fact at the moment. So in 2 years, i can pretty much bank on the fact that i will probably get around $400pw for an unfirnished apartment minimum. But the good thing about what i am doing getting the 6% rental return net is that i dont have to worry about it for 2 years , which suits me fine.. But what i plan to do after 2 years is then furnish my apartment , ( pay $5k for furniture which is fully tax deductable, ) and i will rent it out as a furnished apartment, which is also in high demand too.

cheers

Lozza

 

[buzzlightyear]

Interesting Points

Lozza, you have obviously purchased well from a capital gains perspective as you have been able to deal with a distressed and motivated seller.

By the simple fact that you have been able to value the property at $420k, would make any existing similar properties valued at around the same price. I would argue that given you have a real interest, knowledge and contacts in the area, I wouldn't be signalling these opportunties to everyone, but just purchase them all.

You also mentioned that you 'know people' with respect to stamp duty Don't understand this...