Gladstone - scratching my head

[knightm]

Ok so I want to put it to the forum, tell me what im doing wrong.

Here is the house

http://www.realestate.com.au/property-house-qld-boyne+island-108037611

Its a 4x1 brick low set in boyne island we have had rented for 7-8 yrs. Its always been a good rental, and rents are rising but a little soft just prior to Christmas so at a guess worst case now would be 500pw with 600-800+ likely in 2012. I haven't seriously investigated what it would fetch fully furnished but around 1000pw seems possible.

Would love to sit and enjoy the cg of next 2 yrs with all these big projects but my wife and i just built our family 5 br home and we need to pay down some debt, so it suits us to take some profit and leave a bit in the deal for the next guy.

Listed it about 60 days ago with first national in gladstone, after I spent some time up there renovating it so its presenting almost spanking now. I was up there and there were no 4bedders under 480 at the time and all the newish or new stuff was mid 5's so I listed at 519k. The agent Paul was the best of 8 that I interviewed in terms of perception of market, hunger to succeed and seeming prepared to work hard for a good price. The others all gave me throw away lines like "list it at 450 and I sell it for you in 3 hrs" etc. I got the impression some of them are a bit drunk on easy commissions, and I just want fair price for the property.

In the 2nd week I had an offer go to contract at 500k which I accepted. They fell over on finance after a val on another place they owned came back low (or so they said) so back to drawing board.

I need to decide whether Im going to sell or pull it off the market and rent out for 6-12 months and then reconsider. Its worth selling to me so I have dropped the list price to 495 and I am hoping for something close enough to this but the buyers dont seem to want to negotiate or make low offers.

Since I listed several other 4 bedders seem to have come on market at around or just below my list price although not all have new kitchens, paint, floors etc.

So after 60 days and my exclusive is expiring should I:
1 keep waiting with same agent at same price
2 same agent lower price
3 different exclusive agent
4 multi list same price
5 multi list lower price
6 pull it off and rent
7 sell privately now the agent's exclusive is done (which to me seems a nightmare process wise but is attractive on price if i can save 15k on fees i can advertise at a lower price perhaps selling quicker with same outcome for me)
8 something i haven't thought of

Any help is appreciated.

 

[Ian (WA)]

Gday KM,

Just a couple of observations having followed the link; the house appears to be early / mid 80's with a lot of exposed beams throughout. It may be that prospective purchasers are looking at the newer McMansions and working down from there. It is also 1 x Bth when generally a 4 Bdr place would ideally have 2 bathrooms.

Regardless of the media beat up, I read the buying market there as two speed i.e. workers moving into the town with families are aiming at newish properties to keep mum happy, but are in direct competition with investors & companies who are buying new to maximise rents & depreciation.

The second market are those snapping up 3 Br older houses for < $450K. So I just see your property is sitting in something of a 'no mans land' until well after the Xmas / New Year labour lay offs.

It may be that even though you've clearly put time & effort into the presentation, that dwelling may need to be pitched at $455K - $470K post February as more people move into jobs there. If you can get another offer around $500K I think you will have done very well in light of the above.

I would feel pretty uncomfortable leaving it empty until possibly Feb / Mar next year....so is there any chance of getting tenants in now at a slightly reduced rate for six months and then apply a relative increase then? Agents saying the market is soft prior to Xmas doesn't apply across the board; some families like to get into their new digs in time for Xmas & more importantly so the kids are ready for school at end of January. I'm sure you could get something in place as an interim measure.

On construction, companies normally will gradually lay people off in the last 10 days prior to Xmas then start to mobilise up last week of January to second week of February. They're certainly not starting new people this late in the year if they can avoid it.

Personally I'd try to hold onto the property until end of first quarter and gauge the sentiment then.

Cheers,

Ian.

 

[mattnz]

Very good comments from Ian.

If there is one thing that really dates the property, its the archway between rooms.

You won't get $1,000 per week, even fully furnished. I have a nicely modernised fully furnished 3x1 in South Gladstone, currently renting for $560/week (up from $360 per week 18 months ago).

Top rent will only be achieved by new properties, with about as many bathrooms as bedrooms for corporate tenancies. I have a DA for two 4 bed, 3 bath, 2 living townhouses and have received an estimate for rent at $950-$1,000 on completion, fully furnished, based on today's market. The preference is also to be in Gladstone rather than Boyne / Tannum. The market there has moved marginally, while Gladstone itself is going very strong.

There are now approx 240 rentals on the market in the Gladstone / Tannum / Calliope region, compared with 60 just 4-5 months ago. The market will pick up next year, but only those seeking realistic rent are being tenanted quickly at the moment.

 

[knightm]

Gday KM,

Just a couple of observations having followed the link; the house appears to be early / mid 80's with a lot of exposed beams throughout. It may be that prospective purchasers are looking at the newer McMansions and working down from there. It is also 1 x Bth when generally a 4 Bdr place would ideally have 2 bathrooms.

I agree 1 bath is the weakest link in the house - the exposed beams actually came up well with the paint job and everyone who walks inside seems to like them. As such I never expected to compete on price with the brand newies. In town the talk is construction is shoddy atm with lots of corner cutting. At least with a 30 yr old rennovated you know its hardwood frame and bricks that have never moved.

Regardless of the media beat up, I read the buying market there as two speed i.e. workers moving into the town with families are aiming at newish properties to keep mum happy, but are in direct competition with investors & companies who are buying new to maximise rents & depreciation.

True so maybe is O/Occ more than investors I will attract?

The second market are those snapping up 3 Br older houses for < $450K. So I just see your property is sitting in something of a 'no mans land' until well after the Xmas / New Year labour lay offs.

I discussed this "no mans land" with several agents, not sure what to do about it, other than drastically cutting price. They all seemed to think it wasn't far off competing with better product and was worth more than 450.

It may be that even though you've clearly put time & effort into the presentation, that dwelling may need to be pitched at $455K - $470K post February as more people move into jobs there. If you can get another offer around $500K I think you will have done very well in light of the above.

I hear that but if I can only get that price I will consider re renting and sit for a while. The agents all thought 450 was firesale price, and they didn't all seem to be overpitching to get the business.

I would feel pretty uncomfortable leaving it empty until possibly Feb / Mar next year....so is there any chance of getting tenants in now at a slightly reduced rate for six months and then apply a relative increase then? Agents saying the market is soft prior to Xmas doesn't apply across the board; some families like to get into their new digs in time for Xmas & more importantly so the kids are ready for school at end of January. I'm sure you could get something in place as an interim measure.

Yes obviously letting it for now is my fallback option. But then if I go to sell in a year the carpet is no longer new etc etc.

On construction, companies normally will gradually lay people off in the last 10 days prior to Xmas then start to mobilise up last week of January to second week of February. They're certainly not starting new people this late in the year if they can avoid it.

Which is why I hoped to have it sold by now...

Personally I'd try to hold onto the property until end of first quarter and gauge the sentiment then.

Cheers,

Ian.

Thanks, will consider my options.

 

[knightm]

Very good comments from Ian.

If there is one thing that really dates the property, its the archway between rooms.

Yeah that was the next thing if I had a few more days and another grand to cut it out and square it up. Ran out of time. Then add another bathroom but that would have needed council and more $ etc.

Also agree re rent if I want it filled it won't be a rediculous price right now. Perhaps mid next year the increase will be decent tho.

 

[Rooster]

Trying to find comparable properties for yours in Boyne Island is difficult, but this one is at the same price point.

http://www.realestate.com.au/property-house-qld-boyne+island-108601416

To it's advantage it has both an extra bathroom and a pool.

Could it still be overpriced?

Rooster

 

[knightm]

Could it still be overpriced?

Rooster

when i listed and there were NO 4 br places listed under 480k i wouldn't have thought so but right now perhaps it is?

will need to think the options thru

 

[knightm]

So over the weekend I have dropped the list price to 484k to see if that sparks some interest.

My agent sent a list of recent sales I tried to attach but it bounced for some reason. when I get time try again from home in case its the work firewall and/or will summarise them manually if its something else.

Thoughts?....

 

[Bon]

I'd go with #1.

It's not the agent's fault the banks are rationing credit to prepare themselves for having 20-30% of their credit squeezed - nobody is having an easy time getting loans from the banks now.

When the access to loans from the banks dries up, where do people come up with the money? Not many people have $500k in cash to buy a house.

I wish you the best of luck, I've been fortunate enough to sell a property in the past week or so... Got $445k after looking to fetch around $460465k.

 

[knightm]

thanks Bon,

im sure it will turn out ok whatever the result. Just realising I find it more stressy to sell than to buy. Learn something new everyday.

 

[Bon]

Haha, just be patient.. took me 3 months to get an offer and sell mine.

remember when you buy, you just go out and do it immediately... you can't do that when you're selling, you have to wait for the buyers to come to you. Of course the real estate try and condition you down every few weeks, because 2% on $20-40k is is only $400-800 to them, what do they care if they're going to make $9k+ in commission?

 

[knightm]

Thanks all for the advice. After some deliberation I decided to pull off the market and let it out for a while, watch my cash flow like and hawk and enjoy some of the predicted 2012 cg most in Gladdy seem to believe is on the way. Just didn't feel comfortable chasing the market to the bottom at Christmas time like I was.

 

[Doovalacky]

In the 2nd week I had an offer go to contract at 500k which I accepted. They fell over on finance after a val on another place they owned came back low (or so they said) so back to drawing board.

I assume you did see the bank rejection letter not that it matters now?

 

[knightm]

I assume you did see the bank rejection letter not that it matters now?

No I tried but basically the agent was a bit soft he let the offer be made on a contract with the "buyer's" promise that 2k cheque was being signed the following day after work. He sent me the contract in the morning to get solicitor view and then sign and he was trying to get the hold deposit by pm when the guy finished work but at that time he said he had spoken to he bank and things didn't look good.

I ended up speaking to the guy later and he was shift and evasive.

My opinion? His wife didn't like it as much as he did and she got cold feet.

Just a bummer we didn't get the 2k out of them for our trouble.

From now on will tell agents not to bother sending me offers unless accompanied by some $

 

[knightm]

Finally a result!

Given I put this up 7 or so months ago I thought I would let you all know that we settled last week on the sale of this IP. I didn't want to jinx it with premature posting. (maybe there is a pill for that?)

Our tenants bought it from us, the negotiation was smooth, my lessons from the earlier buyer pulling out were valuable as I insisted that their offer be on a contract with a substantial deposit. They agreed and apart from a 1 week delay with my bank taking too long to discharge the mortgage it was very easy. I gave them a week of free rent to appease as they were a bit upset at the time and thought I was pulling out or stalling.

It was a pleasure to conduct what I regard to be win win negotiating with another couple who proved to be honest and fair and everone is now happy.

Whilst the long term goals are important, its nice to celebrate the little victories and moments along the way and this is an important step for us in reducing some debt, and remaining solvent with a newly built ppor, 4 younguns and my wife not yet back in the workforce at all.

I can say I am truly grateful for my blessings which are many, and that in this particular moment property investing has helped my life in a tangible way even though I am not yet a gazillionaire or retired or any of those cool things.

I know that Gladstone will prove to give the buyers future profit, but I do not regret selling at all as it was the right time for our family.

I appreciate the collective wisdom that is here on this forum as it is one of my primary checkpoints when I have a crazy idea or question.

I guess I just wanted to share a happy moment.