Hindsight and property price increases?

[TMNT]

12-18 months ago there I was looking at 5 properties in the same suburb, they were asking about $150-$160k each, in terrible condition (but thats beside the point) these were priced quite fairly maybe even $5-$10k too high,
Some sat on the market for a few motnhs

I made a few lowballs hoping for an accept or a counter offer close to my lowball, that I would have accepted. I didnt get any of them,

Fast forward 12 months, and 2 of these properties were put back on the market by the new owners for $40-$50k higher and sold very quickly.


in hindisght, had I just bloody paid asking price for all of them, and had I not gone down the path of getting a nice bargain, I would be $250k up in equity in 12 months doing absolutely diddly squat.

THe above example with very similar figures but not quite as impressive happened in another state as well,

the odd one would be asking $150k, I tried to get it at $130k, now the cheapest on is asking $185k, thats 20% growth in 1 year, had I taken all of them, id be laughing, and thats before i value added!!

So whats the lesson here?????????

if you know the market is rockbottom, and there is a high chance of receovery like in most markets around the country, just buy everything at market price instead of being selective????

Sometimes you get lucky/unlucky!?!!?!!?!?!

Predicting the market is a dangerous game and to go for a bargain every time?

 

[datto]

Hindsight is 20/20 vision

 

[alexlee]

if you know the market is rockbottom, and there is a high chance of receovery like in most markets around the country, just buy everything at market price instead of being selective????

When have you been that confident? At the bottom, the markets usually look very, very scary, and look like they're going to fall further.

 

[willair]

12-18 months ago there I was looking at 5 prop
Sometimes you get lucky/unlucky!?!!?!!?!?!

Predicting the market is a dangerous game and to go for a bargain every time?

18 months is not a lot of time in Real-Estate,one only has to look back at the lead up to the dot-com bubble,some thought the upside was unlimited but as several found out the downside was huge and very quick,the same as "Gold"spec investors same story and the same ending,who's to say if unemployment-inflation-upswing in interest rates kicks in over the next 2-5 years the downside would be monstrous..

 

[Scott No Mates]

This is a good comparison property - several like for like sales (including a complete rebuild and pool install prior to the most recent sale) each reflecting increases on previous sales price over the past 5 years.

Check it out on Ksou or onthehouse.com.au

16 Pengilly St Riverview 2066

 

[pieman]

Mate, it's always too expensive. When I purchased my first dump in south Melbourne there was plenty of negative comments such as
"That's a lot of money to borrow on your wage" 28kpa income borrow 160k
"Properties on the way down" 1996
"Properties a bad investment now" after the downturn of the early 90's
"There's now way that little single front property can go over 180k, they're not worth that much!!
Etc

 

[see_change]

We've only ever bought what I considered a bargain on one occasion which were two units we bought in mosman at the peak of the GFC .

Most of the time we've bought , it's been based around the timing the market .

Recognising the time to buy and then going out and buying the best value we can buy at the time . We keep on buying until we get to the end of our comfort zone .

At the peak of the GCF we didn't gear up aggressively . We bought more properties two years ago and six months ago when it was obvious that the markets were moving we bought until we got to the edge of our comfort zone.

My reason for doing this is that I find looking for properties boring . I know if I spent more time looking I will get better deals , but id prefer to do other things on my weekends.

Cliff

 

[Intrinsic_Value]

Predicting the market is a dangerous game and to go for a bargain every time?

not if in you what the intrinsic value is.

If you know that the intrinsic value is, then just like the seasons, there will be periods when you will just pay, there will be periods when you ask for a discount, and there will be periods when you will just walk away

(Kenny rogers song: know when to fold)

But too many people try to use an investment strategy based on only a single season.

This is what makes making money so easy

 

[MTR]

Lesson learnt.

I know an investor who just missed out on a fantastic buy all because he low balled $5000, its like cutting your nose despite your face. This property had development potential, $5000 absolute peanuts and it was a brilliant buy. Probably worth an additional $20K now due to lack of supply.

When the market hits bottom and starts moving you give the buyer what they want, that's my philosophy and you make much more money at the end.

Sometimes you can get real lucky though, my recent purchase last week I paid $550,000, bank valuation came in at $675,000 which is conservative.

I always ask the agent "what does the buyer want" it makes sense to me, as I want to eliminate my competition, and get the agent on my side

Cheers
MTR

 

[perthguy]

I know an investor who just missed out on a fantastic buy all because he low balled $5000, its like cutting your nose despite your face. This property had development potential, $5000 absolute peanuts and it was a brilliant buy. Probably worth an additional $20K now due to lack of supply.

It really depends. I lowballed on a property with development potential because no one else wanted it. I went to 2 consecutive home opens and people were walking in, turning their noses up and walking out. The agents were marketing it to first home buyers and it was going to be a LOT of work, and it stank. House had been on the market for 12 to 18 months and with no competition, I figured I could negotiate. My first offer was so low the agent actually yelled at me over the phone... lol. However, my strategy related to the particular circumstances of that property. If there had been any other interest, it would not have worked.

When the market hits bottom and starts moving you give the buyer what they want, that's my philosophy and you make much more money at the end.

Good advice. Match your strategy to the market conditions at the time.

 

[MTR]

I am talking general here and specific to TMNT scenario, I only buy in rising markets or when the market has bottomed off, this is when buyers are starting to jump in and there is competition, so low balling does not make sense to me.

The property you mentioned and I assume in Perth??? development potential, regardless of condition I don't expect you would be low balling this in current market conditions, development sites get snapped up in days?? When you low balled this property was the market flat??? I assume it was?


Cheers
MTR

 

[perthguy]

I am talking general here and specific to TMNT scenario, I only buy in rising markets or when the market has bottomed off, this is when buyers are starting to jump in and there is competition, so low balling does not make sense to me.

The property you mentioned and I assume in Perth??? development potential, regardless of condition I don't expect you would be low balling this in current market conditions, development sites get snapped up in days?? When you low balled this property was the market flat??? I assume it was?

2 years ago, Cloverdale, R20 property pre R20/40 rezoning, sub $500k. The market was not flat but it was not like now. The property and marketing had many issues. One issue was that it was listed at over $550k for a year, which was well over priced for R20 at that time. That's probably why it dropped of many buyers radar. I found it, wanted it, forgot about it, found it again and bought it. By then the price had dropped. It took over a year from finding it to buying it.

As I said, the agents were marketing it to first home buyers. Wrong strategy. Also, the gazettal of LPS 15 was pending so the agent could have known that the property was about to be rezoned. There was nothing in the marketing about this and obviously no one bothered to check if it was in the rezoning area.

I would not to try to lowball a R20/40 development site in Belmont in this market... unless it was ridiculously overpriced. Yes, it does happen! Example: this house was on the market for $675,000 and I KNEW it was overpriced. It sold for $612,750. Interestingly with a new agent. http://www.realestate.com.au/property-house-wa-cloverdale-114143907

Do your research, know your price, offer accordingly.

 

[MTR]

2 years ago, Cloverdale, R20 property pre R20/40 rezoning, sub $500k. The market was not flat but it was not like now. The property and marketing had many issues. One issue was that it was listed at over $550k for a year, which was well over priced for R20 at that time. That's probably why it dropped of many buyers radar. I found it, wanted it, forgot about it, found it again and bought it. By then the price had dropped. It took over a year from finding it to buying it.

As I said, the agents were marketing it to first home buyers. Wrong strategy. Also, the gazettal of LPS 15 was pending so the agent could have known that the property was about to be rezoned. There was nothing in the marketing about this and obviously no one bothered to check if it was in the rezoning area.

I would not to try to lowball a R20/40 development site in Belmont in this market... unless it was ridiculously overpriced. Yes, it does happen! Example: this house was on the market for $675,000 and I KNEW it was overpriced. It sold for $612,750. Interestingly with a new agent. http://www.realestate.com.au/property-house-wa-cloverdale-114143907

Do your research, know your price, offer accordingly.

Good work

Sometimes you can also sell a property which is overpriced when the market is hot people will pay too much, its emotive, just offloaded one of these. Can work both ways.
Cheers
MTR

 

[perthguy]

Good work

Sometimes you can also sell a property which is overpriced when the market is hot people will pay too much, its emotive, just offloaded one of these. Can work both ways.
Cheers
MTR

Good work to you too.

 

[TMNT]

I am talking general here and specific to TMNT scenario, I only buy in rising markets or when the market has bottomed off, this is when buyers are starting to jump in and there is competition, so low balling does not make sense to me.

The property you mentioned and I assume in Perth??? development potential, regardless of condition I don't expect you would be low balling this in current market conditions, development sites get snapped up in days?? When you low balled this property was the market flat??? I assume it was?


Cheers
MTR

none of mine were development sites,

subdivide or tear down to build duplexs is happening but not yet, still a while away,

these were all buy, fix up, and hold ones,

in fact one of them was asking $155k for ages and ages, I offered $140k, didnt get it, this was gutted by fire and needed $50k work, this was auctioned off in the same condition maybe 8 months later for $205k

 

[MTR]

none of mine were development sites,

subdivide or tear down to build duplexs is happening but not yet, still a while away,

these were all buy, fix up, and hold ones,

in fact one of them was asking $155k for ages and ages, I offered $140k, didnt get it, this was gutted by fire and needed $50k work, this was auctioned off in the same condition maybe 8 months later for $205k

Curious, was this QLD? at these prices would be SE if QLD

 

[Deltaberry]

The key to avoid these types of situations is to know your market very well, and to have a very good grasp of the potential/future movement of your market.

That usually requires a bit more than driving around the area for 12 months, reading magazines for 24 months, or hanging out on this forum for 36 months.

If you don't know your market well, it's probably safer to buy conservatively and only look for bargains.