Easy renters

[Brenda Irwin]

In my endeavours to reduce my debt levels, I have listed a couple of IP's for sale in Murgon, Qld. There is no maintenance to be done (that I know about) and they are straight forward rentals, managed by Murgon realestate. First Ip is rented for $135pw and the second is $140pw. Rent is due to increase on the first IP to $145 but I've left it down whilst the tenant suffers the inconvenience of prospective buyers inspections.
www.murgonrealestate.com.au/rm/listings/l0058.html
www.murgonrealestate.com.au/rm/listings/l0055.html

 

[Monopoly]

First Ip is rented for $135pw and the second is $140pw. Rent is due to increase on the first IP to $145 but I've left it down whilst the tenant suffers the inconvenience of prospective buyers inspections.

Ummmm....excuse my head-scratching here Brenda, but if your first IP is currently rented at $135 but is set to increase to $145 however you have left it be whilst tenant is enduring the inconvenience of OFIs, surely once a buyer is found YOU won't be needing to increase it to any amount as it won't be YOUR headache???!!! Am I missing something???!!!

www.murgonrealestate.com.au/rm/listings/l0058.html
www.murgonrealestate.com.au/rm/listings/l0055.html

By the way, hope your IPs (both of the above) aren't in the nearby vicinity of that neighbourhood voyeur (errr....enthusiast) in Murgon who set up his house like a spy-cam fortress!!! But hey, no matter anyway....I believe he's selling up, and out of the goodness of his heart, is leaving the cameras as fixed chattels to be sold with!!!

 

[Dazz]

G'day Brenda,

Good luck in selling these IP's....they look in reasonable nick from the piccies.

Just a comment on the "fact sheets"....your REA hasn't done you much of a favour by leaving most of the data entry points completely blank.

Maybe it's a marketing ploy to get people to call and have a squizz at the property, but most REA's seem to do this. Happy to get the listing, but their detailed knowledge of the prop. is always far less than the Owners....and it clearly shows when a "detail focussed" type of investor puts them under the griller.

I reckon it would improve your chances of selling them if they filled in the "fact sheets" a tad more, especially if interstate investors have an inclining to buy.

 

[Brenda Irwin]

By the way, hope your IPs (both of the above) aren't in the nearby vicinity of that neighbourhood voyeur (errr....enthusiast) in Murgon who set up his house like a spy-cam fortress!!! But hey, no matter anyway....I believe he's selling up, and out of the goodness of his heart, is leaving the cameras as fixed chattels to be sold with!!!

Hahaha, I must remember to ask my agent about him. I haven't seen the house listed yet. No my IPs are both in good streets. One neighbour is my auntie.

More details are IP I67 is across the road from the supermarket carpark and is on 1012sqm. Council rates pa including water have been $1,220 and ULV is $29,000.
IP I22 is on 690sqm, council rates are $1,074 pa including water and ULV is $19,200.

I would keep these IP's except I want to buy blue chip in Sydney and Bris so will need every $ I can get.

 

[MichaelW]

I would keep these IP's except I want to buy blue chip in Sydney and Bris so will need every $ I can get.

Brenda,

Do I detect a change in strategy? Personally, I'd support the change in focus, but that's only because it aligns it more closely with my own... or is this more a case of diversification so all your eggs aren't in one regional basket?

Cheers,
Michael.

 

[Brenda Irwin]

A bit of both Michael.
On the hassassed guy with video cameras, I have been informed that my IP's are the opposite end of town. He has left the town so things should settle down now. Some just seem to attract contraversy.

 

[Monopoly]

I would keep these IP's except I want to buy blue chip in Sydney and Bris so will need every $ I can get.

Ouch!! Blue Chip in Sydney?? (Brissy not as much) but still I'm guessing that'll need a few Murgons!!!

Selling in a low/flat market is okay if you're going to buy into it as well, but trying to offload your "average" (in your case regional) IP to buy into something as exxy as BC Sydney/Brissy....hmmm....good luck!!!

Seriously, all the best with the sales Brenda.

 

[skater]

I would keep these IP's except I want to buy blue chip in Sydney and Bris so will need every $ I can get.

Does this mean you've given up on the new PPOR?

 

[Brenda Irwin]

Thats the good part Skater. The 2nd PPOR is on the end of the boom cycle. Prices are at present unusually high even if there was something there which I wanted to buy. There's nothing suitable for sale at present. Prices may even come down which for me wanting to buy would be a good thing.

I am not hastily wanting to jump into Bris/Sydney either. I will wait and watch and when the time is right, I will be ready. Patience grasshopper.

 

[topcropper]

Ouch!! Blue Chip in Sydney?? (Brissy not as much) but still I'm guessing that'll need a few Murgons!!!

Selling in a low/flat market is okay if you're going to buy into it as well, but trying to offload your "average" (in your case regional) IP to buy into something as exxy as BC Sydney/Brissy....hmmm....good luck!!!

Seriously, all the best with the sales Brenda.

Monopoly, I think Brenda as usual has her timing spot on. While Sydney has been flat or falling for 3 years, her Murgon properties have been rising, infact they may have even doubled in the same 3 years that Sydney has dropped. A lot of rural towns have doubled in this time.

By getting into Sydney or Brisbane now she would be getting ready for the next cycle. Murgon will be at the tale end. Rural towns won't be doubling again any time soon, not with ridiculous 5% rental yields like they have now.

Great work Brenda.

 

[Monopoly]

Monopoly, I think Brenda as usual has her timing spot on. While Sydney has been flat or falling for 3 years, her Murgon properties have been rising, infact they may have even doubled in the same 3 years that Sydney has dropped. A lot of rural towns have doubled in this time.

By getting into Sydney or Brisbane now she would be getting ready for the next cycle. Murgon will be at the tale end. Rural towns won't be doubling again any time soon, not with ridiculous 5% rental yields like they have now.

Great work Brenda.

Topcropper,

I'm not talking about "timing" which incidentally, I agree with you, if it was just a matter of that then yes, NOW is the absolutely the best time to look at the Sydney and/or Brisbane (in that, as with most) cities prices have definitely been at the lowest in some years!!! BUT.....they are not that reduced that selling a couple of regional properties will get you much bang for your buck!! Selling 2 x Murgon properties @ say $120K will (when you take stamp duty alone into consideration) not buy much in either Sydney's or Brisbane's CBD; even in either's outer burbs with starting prices of $450K!!!

I don't believe in sugar coating stuff for the sake of the exercise, nor will I join in the "yeah go for it" chorus without knowing all the facts ESPECIALLY when the person's previous posts/comments suggest that they are partly selling to "pay down some debt". I would tend to "assume" (perhaps mistakenly) that the reality of the poster changing their direction at this time might not be as straight forward as it first appears to those who are less cynical than myself.

As for the blue chippers, well IMO FWIW....Sydney and Brisbane's values may be DOWN but they are by far NOT OUT!!!

I think Brenda's best bet (and one she has mentioned before) would be to offload the Murgons, pay down some of the debt (thus making life more comfortable) and in the interim keep an eye out for a "bargain" if and when one comes along.

But hey, with all said and done; it boils down to choice and $$$ and knowing what is "comfortable" for you. And if you've made up your mind AND ARE in a position to cover yourself financially (then hell yeah, count me in this sing-a-long Brenda) GO FOR IT!!!

All the best of luck with your ventures. I mean that sincerely.

Cheers,
Jo

 

[Monopoly]

Rural towns won't be doubling again any time soon, not with ridiculous 5% rental yields like they have now.

BTW....I suspect many property investors will be well aware of the fact you raised here TC!!! But with any luck (fingers crossed) many of them have a preference for the "ridiculous" 5% rental yields in rural areas as opposed to the PATHETIC 2% or 3% yields being achieved in the CBDs / blue chipper areas!!!

 

[topcropper]

Fair enough Jo. We will agree there. Yields are pathetic everywhere.

Rural residential property is a low growth investment. The tiny amount of land content in a $150 000 dollar house makes that so. There has been growth in recent times, it's been incredible the last 3 years, but that was only because the yields were 10% to 13%, it had nothing to do with real growth in land values. At 5%??? I don't think so.

Sydney and Brisbane property is a high growth investment. The ridiculous 2 and 2.5% rental yields were about in 2003. I believe that those average yields are higher than that now. I bet plenty of property in Brisbane would be nearing 5%. I believe that rural residential property is a guaranteed bad investment at this stage. The yields don't compensate one little bit for the lack of growth. Yields are also bad in the big cities but they could still get growth, especially now that rents are rising strongly and rental property is in demand.

I believe that Brisbane or Sydney would be a better bet at this time than rural. That's just my opinion. I could be wrong. I've always said that I don't have much experience in residential property. I'm just here to learn from people like yourself and Brenda. I've also been one of the biggest property bears here, and I wouldn't be buying anything just yet, but the time is getting nearer.

You think bush property is better at this stage than city. I don't. We will only know the outcome in a few years, so good luck to everyone.

Cheers.

 

[MichaelW]

BTW....I suspect many property investors will be well aware of the fact you raised here TC!!! But with any luck (fingers crossed) many of them have a preference for the "ridiculous" 5% rental yields in rural areas as opposed to the PATHETIC 2% or 3% yields being achieved in the CBDs / blue chipper areas!!!

Jo,

My latest Sydney IP in Mona Vale is on a 3.8% yield un-developed. Once developed it will be on about a 6% yield. So you can by at least a "reasonable" yield in the east coast majors if you know what to look for...

Just rounding out the discussion.

Cheers,
Michael

 

[Monopoly]

Fair enough Jo. We will agree there. Yields are pathetic everywhere.

Rural residential property is a low growth investment. The tiny amount of land content in a $150 000 dollar house makes that so. There has been growth in recent times, it's been incredible the last 3 years, but that was only because the yields were 10% to 13%, it had nothing to do with real growth in land values. At 5%??? I don't think so. Yes rural areas have experienced some wonderful growth over the last few years, and it is a shame that is has dropped off so much, but then I guess those sorts of figures can't be sustained indefinitely anywhere.

Sydney and Brisbane property is a high growth investment. The ridiculous 2 and 2.5% rental yields were about in 2003. I believe that those average yields are higher than that now. I bet plenty of property in Brisbane would be nearing 5%. I believe that rural residential property is a guaranteed bad investment at this stage. The yields don't compensate one little bit for the lack of growth. Yields are also bad in the big cities but they could still get growth, especially now that rents are rising strongly and rental property is in demand. Absolutely TC!! Growth is bad all round!!
I believe that Brisbane or Sydney would be a better bet at this time than rural. That's just my opinion. I could be wrong. I've always said that I don't have much experience in residential property. I'm just here to learn from people like yourself and Brenda. I've also been one of the biggest property bears here, and I wouldn't be buying anything just yet, but the time is getting nearer. You're right TC, Brisbane and Sydney are definitely "better buys" UNFORTUNATELY however, they are not cheap!!! Brenda would be best to buy in the cities but sadly, the pricetags have not come down ENOUGH to make purchases an easy exercise for someone (anyone) wanting to trade rural for city. But as Brenda said, "all in good time grasshopper"!!

You think bush property is better at this stage than city. I don't. We will only know the outcome in a few years, so good luck to everyone.

Cheers.

Property is pretty yuck across the board TC, and like you (I do so hate to admit that, being an old property bull also (like you) from my early teens, but I guess I/WE have to face facts, that property is just NOT performing as well as it once did.

I think Brenda is wise to sell up a couple, pay down a bit, and then wait.....

 

[Monopoly]

Jo,

My latest Sydney IP in Mona Vale is on a 3.8% yield un-developed. Once developed it will be on about a 6% yield. So you can by at least a "reasonable" yield in the east coast majors if you know what to look for...

Just rounding out the discussion.

Cheers,
Michael

Of course Michael, I'm not saying Sydney IPs are a waste of time, far from it!!! I'm just saying they are still very exxy!!!

Good yields are achievable, but what you have to lay out initially to get quality returns in the cities, hardly makes the interest payments not to mention all the other associated costs, worth the headache!!! You're better of looking at other investment vehicles for equal (if not better returns) and less grey hairs!!!

Even in its worse pockets, Sydney is still commanding prices of $450K+ or in other worse = not a whole lotta bung for your buck.

 

[topcropper]

Hmm.

Not quite sure what we were arguing about now. Don't ya hate that.

You say,...
"I think Brenda is wise to sell up a couple, pay down a bit, and then wait"

I'll go along with that too. My original post was made knowing that Brenda is successfull with property, knows what she is doing and we all know her debt levels are very safe due to the rents she gets. I'm thinking Brenda wouldn't pile into shares or something else. Stick to what you know, sort of.

See ya's.

 

[Brenda Irwin]

I guess I've always been a pioneer in my decisions on investing. When I first bought the IP's my friends were fearful of interest rates rising, values plunging to an all time low. They didn't.

Now I would like to sell a couple in Murgon to reduce the debt and simplify my portfolio somewhat in preparation of buying sometime in the next decade, some inner city investments. I could not afford them before. I will still hold a number of ip's in Murgon, but just not so many. The return on the ones I am selling are around 6% which I thought may appeal to some who cannot find such a return elsewhere. With capital growth there slowing but not dead by any means, the rents will rise and therefore the yields will improve.

For any who are close to the threshold of land tax, these would be great as the land values are low. For me, I am the opposite and not even close to land tax. I have no city ip's with high land value content-yet. My portfolio seems slightly imbalanced.

 

[rkordic]

I think it's a great idea to get more balance into your portfolio. I believe in "buy and hold", unless there is a good reason to offload a property. Wanting exposure to a capital city's real estate is reason enough to sell a few rural properties- it sounds like a smart move, Brenda. Besides , so far your view of the market has paid off ; it's certainly a risk worth taking .

For my own portfolio, I feel that I would like exposure to water. If , down the track , something crops up, I would sell one of my other properties, if I had to. That's still a dream though.


RK

 

[Monopoly]

Hmm.

Not quite sure what we were arguing about now. Don't ya hate that.

You say,...
"I think Brenda is wise to sell up a couple, pay down a bit, and then wait"

I'll go along with that too. My original post was made knowing that Brenda is successfull with property, knows what she is doing and we all know her debt levels are very safe due to the rents she gets. I'm thinking Brenda wouldn't pile into shares or something else. Stick to what you know, sort of.

See ya's.

Heck no arguments from me TC. I agree with what you said initially, except I just felt the need to add my 2c in saying that I personally don't break into a song; cheering someone on UNTIL I can be assured they are okay to begin with (especially in this business, financially). And as it turns out, in her latter posts Brenda has explained she's just doing some restructuring; balancing a bit of quality over quantity, and in doing her homework has found the best method to achieve this goal is to cash-up a few country cows for a city slicker or two!!!

Onya Brenda!!!