How do you know if you've found a bargain?
- Thread starter holtk5
- Start date
I always buy something that has the potential to be positively geared through some sort of development.
e.g. Buy a corner block with a home on it and either split it or dual occ a second house.
I find that if it becomes positively geared, then the value also increases - equals a capital gain if I decide to sell. this offers me a nice buffer - options.
Having options is v important especially if the market is uncertain.
I never buy something that has no development potential, and yields a standard yield of say 4%.
Can't see the point unless holding for a very long time.
Regards
GIDDO
e.g. Buy a corner block with a home on it and either split it or dual occ a second house.
I find that if it becomes positively geared, then the value also increases - equals a capital gain if I decide to sell. this offers me a nice buffer - options.
Having options is v important especially if the market is uncertain.
I never buy something that has no development potential, and yields a standard yield of say 4%.
Can't see the point unless holding for a very long time.
Regards
GIDDO
A bargain to somebody may not be a bargain to another person.
For example ...
You may find a block of land with excellent water views for $650k but would cost you $400k to put a house on it - final resale would be $975k.
A builder may be able to build 2 townhouses on the same block for $300k with a resale of $1.5mil.
Who got the bargain ?
Real baragins will be found looking outside the square.
* Turning an ugly house into an attractive house for little $$'s
* Finding a house with cosmetic problems that look expensive to fix
* Houses on main roads with good proximity to ammenities
You may have to take a punt on a property you believe is a bargain.
For example ...
You may find a block of land with excellent water views for $650k but would cost you $400k to put a house on it - final resale would be $975k.
A builder may be able to build 2 townhouses on the same block for $300k with a resale of $1.5mil.
Who got the bargain ?
Real baragins will be found looking outside the square.
* Turning an ugly house into an attractive house for little $$'s
* Finding a house with cosmetic problems that look expensive to fix
* Houses on main roads with good proximity to ammenities
You may have to take a punt on a property you believe is a bargain.
For someone just starting out, the bargain is the property you bought 10 years ago.
Alex
Sorry i should have said it another way...how can you tell if something is overpriced? Other than knowing the prices of the suburb.
Good question. Generally speaking, things are cheap for a reason. The market isn't perfect, but it's perfect enough so that only those who invest heavily into their research will see any real bargains.
We only purchase undervalue, or props that can be value added, either with subdividing or renos.
As said previously, research research and then more research, brings knowledge of a true bargain in a particular area. Even purchasing a large block of land cheaply isn't a bargain if it can't be developed or subdivided. Have known a few people get caught by not doing their research with local councils.
If the question is how to research, we obtain all information of previous sales through RP Data or Home Price Guide, and then keep our eyes and ears on the market, and become very good friends with a couple of REA.
sunshine
As said previously, research research and then more research, brings knowledge of a true bargain in a particular area. Even purchasing a large block of land cheaply isn't a bargain if it can't be developed or subdivided. Have known a few people get caught by not doing their research with local councils.
If the question is how to research, we obtain all information of previous sales through RP Data or Home Price Guide, and then keep our eyes and ears on the market, and become very good friends with a couple of REA.
sunshine
In a hot market - you can't. All fair price if somebody is willing to pay, and pay they do.
The other way of telling it is overpriced - it doesn't sell. These ones usually sit in the market for a while.
sunshine
Cool, ok got it. Thankyou!
Well said, Alex!
And how true!
How many times I have tried to be "prudent" and missed out on purchases for refusing to pay market price, only to find prices for whole area lifted up by 20-30% a year later.
Ouch
