How do you get that dream beachside property????

[quoll]

G'day Property Meister

What would I do?

Look at buying a $1m beachside house now with potential to subdivide. Rent it out as holiday or std rental, either way really crappy yeild so no hope of it paying for its self. Therefore you need something else to cover the short fall, should be some positive housing around this year. If you have enough equity currently you might be able to got down this path. If you don't have the equity currently then you are going to have to buy some property that will grow and in say 5 years you might be able to buy that beachside property.

To reduce the debt on the beachside property you subdivide, build your house and sell off the other block leaving you with a smaller loan which is easier to cover the interest.

Everything depends on what position you are currently in. Any creative strategy that can get you into the beachside property can also help grow your portfolio, either way you are growing the portfolio, it doesn't matter if the beachside house is in our out of your portfolio it just matter about equity, value, yeild, serviceability, get that portfolio growing as fast and safely as possible, NO CAPITAL LOSS.

Cheers

 

[MichaelW]

With my calculations it's about 1900!
Must think bigger...

What? *scratches head*

$1M pa gross income over 1900 properties would be $526 per property per annum, or the amazing weekly rent of $10pw.

I think you're a tad under-market mate...

I'd need 23 of my IPs to generate that much gross income. After Mona Vale I will have 3! 20 to go!! Then to pay them off I'll need another 60 and some time in the market...

Cheers,
Michael

 

[HiEquity]

What? *scratches head*

Me too...

I'd need 23 of my IPs to generate that much gross income. After Mona Vale I will have 3! 20 to go!! Then to pay them off I'll need another 60 and some time in the market...

I didn't say anything about paying them off!

This has got me thinking - all of the people I know who have achieved this range have a large proportion of commercial / industrial property. Food for thought for me anyway...

 

[MichaelW]

I didn't say anything about paying them off!

I know.

But, what's the point of $1M in gross income if its servicing $1M in interest charges on debt...

That won't buy you many shiny new beach houses!

Cheers,
Michael

 

[LynnH]

Don't worry, Michael, they won't stay "shiny new beach houses" for long!

But the salt crust does add a certain, err, patina (?) to everything.

Cheers
LynnH

(*Grumble on* Bl@@dy salt air is the bane of my life! *Grumble off*)

 

[Kristine..]

A timely article in the spirit of the thread

http://www.mortgagebusiness.com.au/index.php?option=com_content&task=view&id=1604&Itemid=37

cheers
Kristine

 

[want2bewealthy]

We did something like this.

Bought an IP in a "dream" location (land value) five years ago when just married and was only able to hold onto it because of the negative gearing. About to move in to it at the end of this month. It was bought just because of the location (quick stroll to beach, premier beachside suburb near CBD, close to schools, services etc) with a view to moving in eventually. We have a young family (now) so don't need a mansion yet although some expansion will be required over the next 10 years - we were just buying the location and big block but it was a big stretch for us given the suburb and the fact we already had a PPOR (and other IPs) to service as well.

Our idea then was that we could buy this property (just) and would probably never be able to again. Our portfolio (inc this property) has since more than doubled in value so we can't complain at all.

Would we do it again? The clear answer to that is no. Had we bought high yielding IPs in sub median suburbs instead, the same level of negative gearing would have been spread over a much bigger (3-4x at least) asset base, which would also have more than doubled in value. Rent increases across that hypothetical portfolio would have seen me seriously considering retirement at a time when our kids are still toddlers - an option that is much more valuable (in hindsight). The higher level of income and assets would also have meant purchasing this house now would have been a doddle anyway if I wanted to keep working for a bit longer.

My suggestion is to think BIG! If you have $1m per year in rental income (and associated assets) then it is amazing what you can buy. Get to that type of level as fast as you can, then wonder about what you are suddenly able to buy with the money...

Great post.

 

[tsunami]

Very interesting thoughts here. Well I'm only about to buy my first home so I have a long way to go yet. I think I would like to buy a beach house sooner than most since I don't need to live by the city with my work. I hope to pick up a reasonable house on the east coat anywhere between Melbourne to Brisbane. It would have at least a couple of aches of land, on the beach but I would not want the house to be too close in case of floods or tsunamis (mind the pun) . Ideally it would be close to a surf beach with boating and kayak access, a jetty would be great too. So I guess that is my goal for my own dream home, the sooner I get that the better and as long as I still have another investment and my business running well then that is good enough & anything else is a bonus.

Having a creative, enjoyable and tranquil home & lifestyle while not having to ever move homes again is a lot more important than getting rich faster for me. I would rather get wealthy a bit slower in comfort.

 

[tsunami]

To reduce the debt on the beachside property you subdivide, build your house and sell off the other block leaving you with a smaller loan which is easier to cover the interest.

Not pointing at you personally as I see quite a bit of talk about sub dividing... I just find it a shame everyone wants to continually cut up all these great Aussie properties. I lived overseas for a lot of my life although from here originally. When I came back to Sydney it was quite a shock to see how tiny the properties are here. I guess this is from many sub divisions over the years. I was expecting to see many homes with the good old back yard.

I recently read how the up and coming tennis talent has all but been lost these days since there are now 90% less homes with tennis courts than what was back in the 90's. I don't know how people can enjoy living in a concrete wall, with artificial ventilation 24/7 x 365... cramped up in their tiny subdivided townhouse where neighbors are nearly falling in your windows. Give me a good old Aussie home with a tennis court or at least a back yard , an area to play cricket with your mates or family and a swimming pool any day... too bad money has made that now only a memory from years gone by for most Australians.

 

[Monty Burns]

buy when the market is low
and no I didn't buy this one

Greg Roberts | January 26, 2009
Article from: The Australian

IN a sobering sign of the times, a beachfront property on the Gold Coast sold yesterday for $5.5 million less that what was offered for it six months ago.

The 963sqm property on Main Beach Parade, just north of Surfers Paradise, sold for more than $9 million at auction when no reserve price was set.

The owners, offshore investors Maxwell and Cleo Conrad, rejected an offer of $14.5 million for the property last July when it was first auctioned.

The Conrads paid $13.5 million for the property in June 2006.

An independent valuation before the July auction had estimated the value of the property at $17 million.

Following considerable publicity, an estimated 500 people attended yesterday's auction for the double corner block. The property has 180-degree ocean views, 21m of beachfront and a 1930s renovated beach house.

The buyer, who asked to remain anonymous, put in the winning bid of $9,010,000 by telephone.

The auction had been billed as a "once-in-a-lifetime opportunity to buy one of the best beachfront blocks on the Gold Coast".

Ray White Broadbeach real estate agent Michael Kellosche said the owners, who declined to comment yesterday, were obviously disappointed the price was not higher.

Mr Kellosche said upmarket properties were selling at rock-bottom prices on the Gold Coast as the wealth of sellers and buyers shrank in difficult economic times. However, he believed the market had bottomed out, and the first quarter of this year would see housing prices begin to rise.

"Everyone has been looking for the bottom and prices have adjusted accordingly," Mr Kellosche said.

"Prices are now very attractive. It's an ideal time to get blue-chip properties at rock-bottom prices."

Mr Kellosche is optimistic about the property market in the year ahead.

"We've got a volatile stock market and interest rates down, so we'll see an upward movement in prices," he said.

"Investors know they can get a return from rent that's comparable to fixed-term deposits, and they've got an asset that will still appreciate in value over the years."

Ray White sold 49 per cent of 71 properties the agency put up for auction on the Gold Coast over the weekend.

"There has been a noticeable pick-up in buyer interest in January," Mr Kellosche said. "That's been very encouraging."

Prominent Gold Coast businessman Keith Williams sold two Main Beach properties at auction last week for $1.7 million and $1.6 million.

 

[see_change]

I'd low ball on places you can't afford with a price you can.

In a couple of areas we watch there are waterfront properties within two hours of sydney on the market for under 800 K . Some of these have been on the market for over 2 years. I'd guess some of these might have been passed on down the family for a while and have no debt .

If the owner has been retrenched ( much of the recent retrenchments have been in the upper / middle levels ) and has a PPOR debt and no income , they might jump at an offer of 400k . We've been specifically told about one with a highly motivated vendor . It's interesting what you get out of agents when it' a buyers market.

We're having a debate as whether we do this now or look around for another well located investment property . We could do both . Investment in Super and Holiday home for the wife .

Who knows things may even get worse. Currently I'm wondering whether an old fashion Dow style bottom in the share market might be a significant indicator . It doesn't signal the worst has been reached but it does ( to me ) indicate that the light in the tunnel isn't an oncoming train. No sign of one at the moment.

Cliff

 

[Property Meister]

I'd low ball on places you can't afford with a price you can.

In a couple of areas we watch there are waterfront properties within two hours of sydney on the market for under 800 K . Some of these have been on the market for over 2 years. I'd guess some of these might have been passed on down the family for a while and have no debt .

If the owner has been retrenched ( much of the recent retrenchments have been in the upper / middle levels ) and has a PPOR debt and no income , they might jump at an offer of 400k . We've been specifically told about one with a highly motivated vendor . It's interesting what you get out of agents when it' a buyers market.

Cliff

$800k property for $400k, now that is a bargain, to be honest, Id just start making offers, if you get rejected, no worries, even if high end properties dropped by 30% you'd be ewll up, are these $800k properties yielding 5%??? if they were you'd be soooooooo positive cashflow....

I might have a look at doing that!!

 

[asdf]

In a couple of areas we watch there are waterfront properties within two hours of sydney on the market for under 800 K . Some of these have been on the market for over 2 years. I'd guess some of these might have been passed on down the family for a while and have no debt .

Hey Cliff, am assuming its waterfront on a lake somewhere? the newew front line stuff is still holding its own. You might get the occasional decrepit land value pull down job where you might snare a bargain but then construction risk is just too high in this environment. Better off buying that bargain from a developer trying to stay afloat. I'd consider a bargain paying $1M for a done up beach front up in Blueys which you'd have to pay $2M for 18 months ago. But I haven't heard many of those bargain stories... yet. Values are also holding up down south coast. Wheres this blood the media keeps painting?

 

[see_change]

Talking to an agent yesterday

Northern beaches property , previous sale in mid 4 mill , Recent sale low 2's.
I don't think the actual sales are being publicised as it's not in many peoples interest for it to be widespread knowledge .

Vendor will be depressed or embarrased.

Agent would be inundated by people low balling to non motivated vendors who would get P...ed off . There are enough people out there looking for bargains to buy the ones that do come up.

Buyer may be looking for another bargain and doesn't want people to know.

Local newspaper will get agents off side and they rely on their advertising.

Re other areas , not prepared to name names as we're still keeping our options open . Bluey's is too far from Sydney for me and also expensive .

Cliff

 

[fokas]

What? *scratches head*

$1M pa gross income over 1900 properties would be $526 per property per annum, or the amazing weekly rent of $10pw.

I think you're a tad under-market mate...

I'd need 23 of my IPs to generate that much gross income. After Mona Vale I will have 3! 20 to go!! Then to pay them off I'll need another 60 and some time in the market...

Cheers,
Michael

Shhhhh! I'm a newb. I was calculating as if each property was only cashflow+ by about $10

 

[asdf]

Northern beaches property , previous sale in mid 4 mill , Recent sale low 2's.
I don't think the actual sales are being publicised as it's not in many peoples interest for it to be widespread knowledge .

Now thats the kind of bargain I like. Unfortunately every jo average on the northside is looking for the same bargain also in the $1-$1.5M mark.

Good luck with the beachside hunt. We're all set, just under 2 hours from Syd too so won't be competing with you guys but I'm assuming you read this in the SMH Money section today?

http://www.smh.com.au/news/business...hats-no-holiday/2009/01/26/1232818337613.html

 

[see_change]

Now thats the kind of bargain I like. Unfortunately every jo average on the northside is looking for the same bargain also in the $1-$1.5M mark.

Good luck with the beachside hunt. We're all set, just under 2 hours from Syd too so won't be competing with you guys but I'm assuming you read this in the SMH Money section today?

http://www.smh.com.au/news/business...hats-no-holiday/2009/01/26/1232818337613.html

That's why we;'re not rushing in.

Still undecided as to whther it's a good move or not. THey'll never be cheaper ... but ... should we be buying one anyway.

If I could pick up a waterfront for 300k or under within 2hours of Sydney I'd be tempted

At the moment all our money is tied up untill we finish reno'ing Mosman and get it refinanced.

Cliff

Cliff

 

[moyjos]

We bought our "beachside paradise" 6 years ago and have been living here 4.5 years now. It is a resort unit and we were looking for something at around the same value as our bris 3br 1 bath house.

The original plan was to sell the bris house and move here. We found this place WAAY before we were ready to move (daughter still at school ) so we had it as a holiday rental for a while. (NOT a profitable venture )

Our accountant advised us to keep the Bris house as an IP, which we did for a while before selling ( I know we shouldn't have but it was the best move at the time) to fund hubby's new business.

Now 4.5 years down the track we are still loving it and have absolutley no ambition to go back to living in a house (and all the associated yardwork and maintainence - We love sitting on the balcony watching the yard guy cutting "our" grass . As for BC fees - we are paying LESS now than most of our Bris friends that have a mower guy, pool expenses, household outdoor maintainence.

 

[Adlante]

How about finding someone that wants to live in a similar property with a similar purchase price. You get them to buy the house YOU want, and you buy the house THEY want. Then you can rent each others property. You get the dream house you were after costing you significantly less with tax deductions/rent on the house you bought for the other person. Oh course the hardest thing would be to find someone willing and working out the deal that was neutral. But as with most of the wealthy people, they don't own anything they just control it.

 

[asdf]

so we had it as a holiday rental for a while. (NOT a profitable venture )

Only because no one rented it or your maintenance and expenses were too high. Plus theres the wear and tear to contend with also from weekenders. If you don't need the $, might be worth considering weekly rentals only or exhorbitant weekend rates to get the right clientale.