I think the hurd are starting to buy in Perth - Peaking ?

[Alex P Keaton]

As we are selling two, we will end up with 3 IPs only. And buy another which will become the PPOR. No cash buffers

My after tax income is 38.5k. And my partner takes home around 35k. She has been working full time during the last 18 months. We live on one income and invest the other. *But we will be on one income in a few months. If our sales and purchases go smoothly, we will have LOC equivalent to her earnings (35k). That is going to be our buffer. We will mitigate risks by fixing the loans.

Wow you would have to be very disciplined with your spending, good work!*

I*agree it can be a good idea to sell an ip. It depends what your strategy is & what you want to achieve I think!

One of my ideas/possible strategy is to add value sell later on in say a 1, 2, or 3 years and put the profit into my ppor offset account. So it will reduce the non deductible debt.Then I can draw out of my ppor line of equity funds for another deposit.

I like the idea of having a bit of a cash buffer. Once the ppor mortgage is smaller then my plan *could/would be buy and holds for a while so as to increase my capital base and grow my equity further. I know that there will be all sorts of costs involved like agents commission, CGT but I think I'd be ok with that if I get a reasonable profit. I'll still have another 20 years to invest in buy and holds. Oh also I could use some of my profits for a Reno here and there. It will come in handy for all kinds of unexpected expenses and would give me done sanf.

 

[Singo]

Alex, IMHO selling is not a good option in these areas. Buying and selling costs will eat away most of the gain.

Say you buy a house for 310k and renovate it by painting and changing the kitchen.

House 310k+buying costs 10k+Reno costs 15k =Total 335k. Say you get it revalued at 365k, you can access around 25k. So the buying and renovating costs are covered. If you bought a bargain, you may get more.

A 310k house definitely will need a new kitchen. And painting, carpets, rubbish removal and some basic landscaping. 15k should be enough. I would prefer not to renovate the bathroom.

But still about 50k (your deposit) is tied to that property. The loan will be 260k. Fix the loan and rent it out for 370pw, it will be neutrally geared. (We self manage so it becomes cf+) When the property prices go up you can use the additional equity to buy again.

This is boring and gonna take long time. But will work. These are bread and butter suburbs. The low income families need houses. Even if economic disasters happen, the prices/rent won't go too low. So you won't go under water. Being on low income, I find these areas safer.

People say about buying interstate, diversifying etc. But we focused on a handful of suburbs sitting next to each other. And did the legwork. Helped a number of friends to buy as well. So the market is quite familiar. Our strategy is simple. Buy 6, wait for 15-20 years, sell 2-3 and live off rents. Building granny flats will make the cashflow better. Hope it works.

 

[Dan_p]

Typically how long does a market stay flat after it's reached the peak? or is that a question like *how long is a piece of string*?

Half its length times two

 

[Rixter]

So when a market reaches a peak, what happens, do some areas stall and then fall back, followed by more desirable areas following suit? Or does everything stall and stay stalled, or stall and fall back all at once?

Typically how long does a market stay flat after it's reached the peak? or is that a question like *how long is a piece of string*?

Here is the Perth median house price charts for the past..

40 Years

7 Years for house, unit & land..

You can see for your self what happened.

I hope this helps.