Feeling a bit used ...

[LynnH]

I am curious as to why the house in Greenslopes you mention didn't increase in value very much over the five years? During that time Greenslopes prices rose considerably more than the house in question.

Wylie

I may be able to shed a little light on this. We own an IP in Greenslopes which is pretty much as Jon described - sadly in need of refurbishment. As you would know, there has been a huge amount of knock-down-and-rebuild happening in the area in the past 6 years or so. I feel that it is this (i.e. bigger, newer homes) that is really dragging the median up - however the price of the do-uppers - or knock-downers - hasn't risen nearly as much.

The only thing I can think of is that it may be near the Greenslopes Private Hospital with all the associated congestion and parking issues, and possibly this held it back.

I don't really think this is as big a problem as it appears on the surface - our IP is near the hospital, and there is always a queue of nurses and health workers ready to rent it!

Did you consider it a good price when they bought it? Do you think they paid too much? Did they sell too cheaply?

We purchased that IP in August 2003 for $320K and recently had an agent value it at around $410-420K. So pretty much market price on both occasions for the type of property mentioned.

IMHO, whoever purchased it recently will do very well if they are prepared to do a decent reno - we are doing preliminary figures for a reno on that IP in 12 months time ... and they're 'a lovely set of numbers' from the info we have to date!

Cheers
LynnH

 

[wylie]

Thanks Jon and Lynn. Curious about the house near the hospital with nurses and health workers wanting to rent it (which doesn't surprise me at all). My mum has a house one street from the PA and in 20 years she has not once had a nurse or health worker even enquire, which has always baffled me. It is a five bedroom, two bathroom queenslander, so several nurses could easily share. Of course, parking in the street IS a nightmare but the five young men renting it now use public transport, which is fantastic from this particular house. and it is just a short walk or ride to the green bridge to the uni.

Each time it is vacant, we decide to put a notice up somewhere in the hospital, but it rents before we get to do that, so it is easy to rent also, but just always amazed me the lack of hospital workers wanting it.

 

[landlubber]

Doesn't buy OTP stuff himself !

Yes I am a property investor ..... I invest in bottom end units and townhouses as holders. I have 24 years of experience etc etc

I think this pretty well says it all when the REA himself, with 24 years experience etc ...does not buy the OTP product.
LL

 

[Bill.L]

Hi all,

Sigh.

Ok,

Where to start.

A realestate agent that has a pecuniary interest in selling OTP units comes onto the forum claiming what a great investment they are.

How high do you think my BS meter is Jon??

People give their experiences and example of how their properties have performed, to be told by self confessed expert that they are wrong. Examples from "expert" not his own.

Then this bit....

Do I believe that Jodie has made a mistake? Not on your life - but that's just me and I'm an Agent so what do I know.

Let me see, Jodie bought an OTP apartment from afar through a company that introduced her to another that had units to sell (sorry, great investments on offer ) and then asks if she should enquire about a discount??

and your expert opinion sees nothing wrong with this.

Jon, you are wrong.

This is a property investment forum, many of us here post to help newer investors by offering examples of our own and unbiased advice.
It is not a place to be on the developer/agents side of things to the detriment of the investor.

Here is a simple question, In your opinion does OTP property have better cap growth than existing property of the same type in the same area on average???

Silly question – They have the same growth rate on average.

Not a silly question at all, and I thought there was no such thing as a silly question??
They are not the same. Brand new depreciates much faster than older, but you already knew that.

I invest in bottom end units and townhouses as holders.

This is the area of your experience I would like to hear about. How long, where, why, how have they performed etc??
Were any of these off the plan???

bye

 

[boomtown]

They are not the same. Brand new depreciates much faster than older, but you already knew that.

Sufficiently so that OTP purchases almost always underperform the market for the first 4 years or so.

 

[Jon Chown]

Hi Bill – I’m not sure exactly what I have done to offend you except perhaps not agree with some of your statements. Do I not have this right?

Yes, I am a Real Estate Agent and I have never tried to hide that fact. Exactly what difference does my experience have just because I am an agent?

People give their experiences and example of how their properties have performed, to be told by self confessed expert that they are wrong. Examples from "expert" not his own.

I would have thought an example was an example no matter who owned it.

Let me see, Jodie bought an OTP apartment from afar through a company that introduced her to another that had units to sell (sorry, great investments on offer ) and then asks if she should enquire about a discount??

Bill, if you want to have an argument with me, please get your facts straight. The following are Jodie’s exact words.

In the past few months, I've since heard from others who have bought OTP in the past that say they got a 10% discount on the asking price.
Would a discount be a standard common thing for OTP?

From this comment, I assume that she means that she has heard from other Investors who have bought off the plan and received a 10% discount. Not another agent. And discounts are not a standard or common thing for new Developments, at least not in Brisbane (unless you are buying 10 in the same building).

My guess is that her ‘others’ are telling porkies. (I guess I trust Investors about as much as you trust Agents). I feel that the advise that I offered Jodie was constructive, honest and positive with no hidden agenda.

This is a property investment forum, many of us here post to help newer investors by offering examples of our own and unbiased advice.

Any advice supported with facts is good advice but just because someone had a bad personal experience with an investment it does not necessarily equate to that type of investment being always bad. Perhaps they just got it wrong.

Not a silly question at all, and I thought there was no such thing as a silly question??
They are not the same. Brand new depreciates much faster than older, but you already knew that.

This is just mincing words to suit your argument Bill. Over a 10 year time frame, I stand by my comment but you are correct that growth on new properties is in the form of a J curve however if there were no growth in new properties, there would subsequently be no growth in older properties.

Quote:

I invest in bottom end units and townhouses as holders.

This is the area of your experience I would like to hear about. How long, where, why, how have they performed etc??
Were any of these off the plan???

Bill, why on earth would I offer you any advise, you obviously know more than me and your obvious dislike and distrust of agents would dictate that anything that I say would be derided as BS.

 

[LynnH]

Curious about the house near the hospital with nurses and health workers wanting to rent it (which doesn't surprise me at all). My mum has a house one street from the PA and in 20 years she has not once had a nurse or health worker even enquire, which has always baffled me.

Wylie

That's really interesting! The current tenant of our IP is a doctor and the previous tenant was a nurse. I understand that the tenants before that were nurses, too, though we didn't own the property then.

Musings ..... perhaps once a health worker has rented an IP near the hospitals, 'the word' is passed around when they leave, hence the next tenant is possibly more likely to be another health worker??? A cousin of mine also has an IP near PA (at Annerley) which he has owned for more than 12 years, and ALL his tenants have been health workers.

Who knows, really ..... anyway, that's my 'theory du jour', FWIW!

Cheers
LynnH

 

[Bill.L]

Hi all,

Jon,

The following are also Jodie's words from not only this thread, but relevant to give the whole picture....

I'm 28, hubby's 30 and we live off his income ($115k) while I take care of our small children. We have a mortgage of $350k on our PPOR so don't have much cash flow but are interested in getting into property investing.

I spoke to a "professional" in the industry 2 weeks ago who recommends Perth property in the form of older houses on large blocks of lands closer to the city.

Last night, hubby went to a seminar where another professional perfers buying off the plan apartments in the eastern states.

I know nothing about Paramatta, but a quick search on realestate.com.au shows me you can get cheaper apartments with better rental yields that are near new.

We have equity in our home that hubby feels we should do something with. We've been looking into buying our first investment property as a way to use the equity but we don't have any cash flow that could contribute to it the purchase or the interest payments. We'd be having to capitalise it all. On a property worth $400,000 we'd be capitalising over $900 a month.

We'll be borrowing more for a buffer that'll put us at 91% aprox. If that's no allowed, than then we'd just have to lower our buffer, or hope that the values go up in the meantime so that we can borrow the amount we want.

My fear now is being able to obtain finance.

We spoke to a couple of experts and decided that we felt more compfortable with one of them, so we then did a bit of our own research and their strategy seemed to be better then just buying the house down the road, so we took the plunge and bought or first IP based on their recommendation.

We went through Sound Property, who recommended a project being sold by Investrite.

Actually Jon, after reading through Jodie's posts, your "motherhood" statement annoys me a lot less, I understand where you were coming from a bit better. The real issue I see is that Jodie has ignored all such similar advice throughout quite a few threads.

I apologise for offending you, however I do not necessarily agree with all your comments. I am interested only in getting to the truth of what happens with property investment and contributing whatever knowledge I have in this regard. I have not been burnt by OTP, simply because I researched it thoroughly and avoided it based on my research.



A bit of history about where I am coming from....

4 or 5 years ago, on this forum a heated debate occurred about new OTP houses vs older ones in the same area. I was stating that the older were a better investment while the expert/guru was claiming the new to be better. The new (4x2) OTP were selling for $550k vs older (3x1) for $250-$275k. The OTP were on smaller blocks of land.
Right now the those 4-5 year old houses can still be purchased in the $500k-$600k price range, while the older are ~ $400k-$450k. Considering that yields on the original purchase price are higher for the older properties, it is a no-brainer which of the above were a better investment up to now.

I was genuine about my question on your experiences with your property investment, perhaps it could be in a new/different thread.

I notice you did not comment about how it looks, that an agent who sells OTP property takes the side of "what a good investment it appears to be" in the debate.

bye

 

[Bill.L]

Hi all,

Jodie,

After reading a lot of the threads that you have contributed to, I feel very sorry for you and your family. Please let me explain.

From where I sit, you have made a large series of errors, perhaps because you had a large amount of equity burning a hole in your pocket plus a desire to look after your future. Maybe that in itself was the first error, rushing to use this equity.

Anonymous posters on a forum, do not seem anywhere near as "expert" as the person sitting in the plush office with lots of pictures on the wall of flash developments and spreadsheets full of impressive numbers on slicky drawn up documents.

You went with the "expert".

You invested in an area you know nothing about, (your own words said so)
You did not do any due diligence, ie hard research on the area, nor the type of building.
You do not have finance sorted, which in the current macro climate could be a big issue by next year.
I also take it that you have not established if your deposit is safe and the developer has the means to complete the development given the current state of this industry in obtaining funding.

My opinion is that this investment has a high chance of ending badly. It does not come close to the "buying reasonably priced property when you can afford it" category. I do not know anybody who was happy with this type of investment purchase, yet I do know quite a few people who have invested this way. The people I know who are happy with their property investments, invariably did their own research thoroughly, invested within their means, negotiated hard and were prepared to walk away from deals, bought property that started to pay for itself in a short period of time (high yielding) and were prepared to roll up their sleeves when necessary.

My opinion is that property is a good investment, yet it can easily come undone if rushed into blindly. Jan Somers in her book shows a very bullet proof plan, but changing the formula to "supercharge" the plan will only work if the conditions are right, both macro and micro.

Sorry to be so harsh, many others have been trying to say it in a much more subtle way, but you have not been receiving the message.

bye

 

[Jon Chown]

I apologise for offending you, however I do not necessarily agree with all your comments. I am interested only in getting to the truth of what happens with property investment and contributing whatever knowledge I have in this regard. I have not been burnt by OTP, simply because I researched it thoroughly and avoided it based on my research.

Thank you for the apology Bill. I don’t expect that we should agree on everything and like you, I am here to contribute and learn what and how other investors think. Please accept my apologies for my defensive posts as well.

I was genuine about my question on your experiences with your property investment, perhaps it could be in a new/different thread.

Yes, that’s another debate for another place and time. I would be happy to share my beliefs.

I notice you did not comment about how it looks, that an agent who sells OTP property takes the side of "what a good investment it appears to be" in the debate.

Bill, again I believe that you misunderstand me. As I have stated, I am not advocating that OTP investments are always a good deal although I know, and have many Clients who have done very well with them. Likewise, I have seen many people get burned. But then I have seen people get burned on Renovators and Older properties as well, that’s not to say that none of them are viable investment vehicles. If researched and done properly.

As an Agent, I will sell whatever property my Clients ask me to, however I have specialized in Unit/Townhouse sales since 1991. I have perhaps only sold around 40 OTP units and all of them have served my Clients in the fashion that they wanted. I have actually just purchased my first OTP investment unit at 6 Lockhart Street Woolloongabba and it’s a 1 bedroom unit.