FHB market, get in now, sell in a few months

[Sharpstone888]

With the FHB market heating up, I have read a few people on the forum saying that this low end market may get 10% growth this year.

Is it a good idea to get a property now and then sell later in the year?

Maybe negotiate a long settlement and sell it in a settlement and have both settle on the same day and grab some nice dollars.

????

Advice/suggestions/criticism/abuse???

Cheers,
Chris

 

[BoatBoy]

Minus CGT, agents fees, stamp duty, loan break fees plus I dare say a few I left out and what have you got left?

Dave

 

[sash]

Sharpstone

10-15% on a low end property is about 30-50k....by the time you factor holding costs, agents fees and CGT it won't be worth it!

I prefer to buy and hold ....so long as I put hardly any money into the deal.

With the FHB market heating up, I have read a few people on the forum saying that this low end market may get 10% growth this year.

,
Chris

 

[Sim]

Unless you can add value to the property (cosmetic renovation etc), relying on capital growth alone in the short term is a big risk.

 

[auror]

FHBs are already swarming all over the lower price range so you might not get a good bargain?

If the extra $7k is taken away on 30/6, demand will drop and so will prices...

all in all a bit risky.

I do applaud your thinking though, as I have read several of your other threads and you are obviously quite keen to get a head start into PI. I was like that at your age too (I think you said you were in 1st year uni?) But i waited till i had a stable fulltime job, and I'm glad of that.

 

[Sharpstone888]

Yea I guess you guys are right, bloody costs involved.

Hmm, the thing I'm worried about is longer term (within 5 years), when I will be wanting to sell, it ma bubble now with the FHOG but that may end within that time and unemployment might strike (but then I hear conflicting news about unemployment, as the other booms had high unemployment aswell??).

Cheers,
Chris

 

[Sharpstone888]

Over the next 5 years I want to either save money, or buy a property and turn it into an IP and try to pay as much off in those 5 years, then sell it with probably 200-250K sitting in my pocket for a deposit on a 3/4 bedroom house in Coogee, I saw a house I have been looking at for a while on realestate.com drop by 100K, I wish I could buy now, I just wish...

There is hope, if the market is as trashed as some say it is that may mean that the market I am wanting to buy in later will suffer and I can get in easier, ah I need a crystal ball, don't we all...

Chris

 

[Propertunity]

ah I need a crystal ball, don't we all...Chris

No not really Chris. If you quit reading the newspapers and listening to media stories and the other noise and just:
1. Buy when you can afford to
2. In an area that you like after doing your DD
3. Add value with a cosmetic reno
4. with a view to holding forever
5. refi deposits out of it when the value has increased, with a lender you are OK with and a good IR to buy another IP
6. keep repeating this process

You will end up wealthy.

If you keep looking at what is around you:
GFC, recession, FHBs pushing up the lower quartile, govts extending or not extending grants, unemployment rising, IRs falling, rents increasing, fixed rates rising...............there is so much conflicting evidence you could never make a decision.

Steady as she goes, keep a level head, pounce on opportunities......

 

[Sharpstone888]

Thanks propertunity,

You helped calm me down

Those numbered tips you gave me are good. The hold forever is a bit tricky for me as I want to buy a house in Coogee and feel that I would not be able to hold onto the IP aswell, maybe thats just me worrying.

If I follow your steps to wealth then I don't need a crystal ball to see myself wealthy...

Chris

 

[Aaron Sice]

well, then buy, do a cosmetic reno, revalue and borrow against to fund something else....?

minimal costs for some expansion to the portfolio.

it's outta my risk profile though.

 

[Propertunity]

I want to buy a house in Coogee and feel that I would not be able to hold onto the IP aswell, maybe thats just me worrying.

Well Chris,

If you hold the IP long enough it will be cf+....might be a very short time in this environment. Then refi a deposit to buy your PPOR in Coogee? perhaps?
Maybe you need to (ultimately) earn more $'s so you can hold more property. All things to consider. But you have to start somewhere.

IMO you cannot treat property as making you cash in the short term - it is the wrong vehicle for that.

 

[Sharpstone888]

I think I have to get in quick though as the lower-end market is moving a bit and I don't want purchasing to become unaffordable.

Chris

 

[lostis]

I think I have to get in quick though as the lower-end market is moving a bit and I don't want purchasing to become unaffordable.

Chris

Hi Chris,

I am in the same boat as you, youngish, fortunate enough to see how wealth is created in PI and still looking to get that first property.

One thing that I am finding, as propertunity has advised, there is alot of noise in the newspapers and sometimes on this forum as well. Use this information as a guide to find bargains rather than a requirement to make the decision on when to buy.

One thing that I have learnt through books and many of the wise on this forum is that wealth creation through real estate is not completely about buying at certain parts of the cycles but rather about buying as cheap and as SMART as possible. No matter what the economy is facing, there will always be bargains, it's just a matter of doing the research.

Lostis

 

[Aaron Sice]

Well Chris,

If you hold the IP long enough it will be cf+....might be a very short time in this environment. Then refi a deposit to buy your PPOR in Coogee? perhaps?
Maybe you need to (ultimately) earn more $'s so you can hold more property. All things to consider. But you have to start somewhere.

IMO you cannot treat property as making you cash in the short term - it is the wrong vehicle for that.

it's like drag racing a road train.

 

[Sharpstone888]

Hi Chris,

I am in the same boat as you, youngish, fortunate enough to see how wealth is created in PI and still looking to get that first property.

One thing that I am finding, as propertunity has advised, there is alot of noise in the newspapers and sometimes on this forum as well. Use this information as a guide to find bargains rather than a requirement to make the decision on when to buy.

One thing that I have learnt through books and many of the wise on this forum is that wealth creation through real estate is not completely about buying at certain parts of the cycles but rather about buying as cheap and as SMART as possible. No matter what the economy is facing, there will always be bargains, it's just a matter of doing the research.

Lostis

Great advice from someone in a similar position to myself.

Give some details on your situation and your future goals??

Chris

 

[BayView]

With the FHB market heating up, I have read a few people on the forum saying that this low end market may get 10% growth this year.

Is it a good idea to get a property now and then sell later in the year?

Maybe negotiate a long settlement and sell it in a settlement and have both settle on the same day and grab some nice dollars.

????

Advice/suggestions/criticism/abuse???

Cheers,
Chris

You won't get more than maybe 4 or 6 months (very rare) settlement. I seriously doubt you'll get a decent cap growth in that time in this climate.

Someone selling at a very reduced rate would be wanting their money now, and you would need to be buying from a distressed seller to maximise any chance of the cap growth rate you are hoping for. To get both a discount and a very long settlement would be a big ask.

Assuming you get your 10% growth in ONE year (and there's no guarantee you'll get any) you will be up for purchase and selling costs, holding costs and cap gains tax.

If you sell before 12 months are up, you pay CGT on 100% of the gain at your marginal rate, if you sell after 12 months you pay CGT on 50% of the gain at your marginal rate.

Nett result would be not a lot of profit for a good deal of mucking around.

 

[sparky23]

If you are reading this forum because you want to be a property investor put the idea of selling out of your head, you are young enough to build up a good portfolio.

Read Michael Yardneys book 'How to grow a multi million dollar property portfolio' and it will all make sense. You can order it from his website:
http://www.propertyupdate.com.au/

Good Luck!

 

[Sharpstone888]

Read Michael Yardneys book 'How to grow a multi million dollar property portfolio' and it will all make sense. You can order it from his website:
http://www.propertyupdate.com.au/

Good Luck!

I've read over 20 property investing books and thought eventually that all are similar in their theories, i've never given Yardney's a chance. I might go buy that tomorrow.

Never sell, I have been giving it some thought, could neutally gear it, then over tim the rent will increase but the interest will stay flat (flucuate a bit with rate changes though). This wouls result in positive CF and also I would have an increased net worth. Sounds good, now time to find that book.

Thanks.

Chris

 

[sparky23]

I like Michaels book over and above many that I have read, it is written in plain English and he makes it easy for people to get their heads around.

 

[JamesGG]

If you are reading this forum because you want to be a property investor put the idea of selling out of your head

With all due respect, I've gotta disagree with this concept.

The 'buy-and-buy-and-never-ever-sell' strategy is one strategy; it's not the only way to make money from property. This whole game is about finding a method that works for *you*, not just re-using someone else's ideas without adapting them to your own preferences and risk profile.