Investing in regional vic - am I insane?

[squash]

I’ve just purchased (well still going through the process) my first IP over the weekend and am suffering a couple of things:
• Buyers remorse;
• Analysis paralysis.

Buyers Remorse:
• Could I have found a better deal?
• Why did I choose this regional town – believed having done my own research that this was a good idea but having read on this forum maybe not, maybe it’s a little too heated!!!
• Did I pay too much – again believe that I paid roughly market rate but then I DON’T KNOW I’m going insane!!!
• Maybe I should have kept on investing in the share market, I’ve made good money so far, however my investment strategies and life goals lead me to asset diversification.

Analysis paralysis
I reckon after all the research that I’ve done on this town; I know enough to be a tourist guide or a local politician - it all just seems too much. I chose this town on its ability to withstand some hardship i.e. a major industry as well as its general economic condition.

The property – brand double story, three bedroom town house not too far from the city centre. The deprecation aspect and me being in the top bracket might have clouded my judgement, but it just made everything so damn attractive and the numbers kept on coming up trumps.

Am I being too paranoid, is there something that I missed or is this just normal for virgin property investors?

Criticisms, praise and donations are welcomed… an in fact encouraged 

Squash

The country vic town is Ballarat

 

[Aceyducey]

Squash,

Congratulations on the purchase.

Frankly, buyers' remorse simply isn't worth it. You bought the property according to your best knowledge at the time. Time will tell how it performs. After 10 years you'll be able to assess whether it was a great buy or merely an OK one.

Could you have found a better deal? Almost certainly - with time & more experience.

Now you have more experience, make the next purchase a better one!

I don't see anything wrong with your reasoning - you have a solid strategy & the research behind your decision, that's all any of us can do.

Diversification is a good thing - though I would say that more people are going the other way right now - diversifying from property into other areas...I only know one share guy who decided to go into property recently...and he's mired in a development with council issues

Cheers,

Aceyducey

 

[squash]

I'm still pumping money into shares - however with the introduction of our wee one we thought it would be best to go for an IP on one income - crazy it might seem but there is a method in the madness.

Thanks for the words of encouragement....

Later... Squash

 

[geoffw]

Squash

Yesterday was best
Today is good
Tomorrow is too late

Congratulations for getting in.

It may or may not be your best purchase.

But you went in- that's the best bit.

I'm sure you will be happy down the track.

My first IP was a DHA property in an area (Jerrabomberra, near Canberra) which didn't go anywhere for a long time. (First golden rule- don't buy established where there's lots of vacant land). But, after 4 years, it showed some good growth- which provided a good basis for a few other properties later. It was negative for a few years, but is coming quite positive now. (I wish I had heard of DaleGG and trusts back then- all the income is in my name now, as the highest income earner).

 

[units4me]

Hi squash, I think you've just got a bit of the pre settlement jitters. Usually starts on signing contract and you're back to normal by about halfway through contract period. Don't worry too much if you've done your homework. cheers.

 

[scouse]

Squash
I agree with Geoff and Ace congratulations.
Monday's local paper says Ballarat median prices have decreased so you picked a good time to buy. Now it depends on how soon you can rent it and at what price. Ballarat has performed well, as has other regional centres.
We have 4 in town and as long as they are rented they meet the repayments.
enjoy
scouse

 

[mitch]

Gday Squash,

l dont think ive ever bought a bargin.Always l get a bit of buyers remorse,l think it means lm careing enough about what im doing.

If you think your doing the right thing move forward , you wont get shot if your wrong.

And my buyers remorse?

Property A 1994 $74k auction 2004 170k aprox
property b1993 98k (the nab tried to make me sell this in 2000 so l could buy prop c ,wouldnt lend me the $ so l had to change banks)
property b 2000 $115k bank val 2004 215k bank val
propety c 2000 $187k purchase 2004 330k bank val
property d 2002 125k purchase 2004 190k aprox

You cant beat time in the market and it shows l should have been buying alot more.

good luck
Regards Mitch

P.S l wonder what we all will be saying about todays prices in 10 years time ?

 

[Peter Parker]

Trip through Ballarat

I was in Ballarat today, and thought I'd go on a walking tour of various suburbs around Lake Wendouree.

I also wanted to check the claim in McKnight's book about Gillies St being a border between 'cheap' and 'better' housing areas.

My impression of Ballarat was good, with few shops vacant and the area thriving.

Yields seem to be almost exactly 5.2% (+/- 0.5%) for a variety of properties. A $180k house (which is the going price for a basic 3br house in an average suburb) would get approx $180pw rent. Similarly a $95k 1br flat (which was the cheapest listing I could find) would get around $100pw rent.

There were few houses above 300k - those that were are likely to be overlooking Lake Wendouree which seems to be the nicest area. The cheapest house was $108k - a 3br house in Wendouree West that needed some work. This house would be similar to the approx $50k houses in that area that McKnight mentioned in his book.

I looked at some of Wendouree West. It was clearly a cheaper area, with mainly timber houses. Some had been freshly painted, some were dumps (from the outside) but most I would regard as satisfactory. The general presentation of Wendouree West is better than cheaper suburbs in other regional centres I have been to, eg the older part of Rangeway in Geraldton.

Unlike the descriptions in McKnight's book which mentions heaps of houses having their street numbers painted on the chimneys (is this a Ballarat thing - I haven't seen it elsewhere?) I only noticed a few like that. Most had numbers on the letterbox, or professional small lettering on the chimney. The hordes of investors might have made improvements since McKnight's visit.

Moving into Wendouree proper by crossing Gillies St, as the book said, did produce a visible change. About half (maybe more) of the houses were brick and both types were well presented and probably privately owned. The big shopping centre is on the Wendouree side, and the suburb also has a swimming pool and schools.

If I was looking for 'a median house in the median suburb' in Ballarat, a brick 3br in Wendouree would fill the bill, if I was willing to put up with it being negatively geared and the doubful capital gain prospects in the immediate future. I wouldn't dismiss parts of Wendouree West either; parts are convenient to transport and the shopping centre.

Rgds, Peter

 

[Peter_Tersteeg]

Wendouree West is the old commission housing estate in Ballarat. It's improved greatly over the last few years, but when I when to school in Ballarat, it was a VERY nasty place.

Since McKnights book came out, Ballarat hasn't been +ve cashflow by a longshot. About 3 years ago it had a huge growth spurt, and it's obviously grown since. If you're looking at Wendouree, it's a case of it starts cheap in the west and steadly goes up in value as you move across to the east.

There might be some good long term opportunities in Invermay (just past the cemetary on the north east side). It's currently rural, but long term it's a very desirable location and is undergoing more and more development.

 

[Lplate]

Squash
Congratulations.
Any figures?
Builders warranty - inspect very closely now if you haven't already done so before the warranty on finishes runs out. Keep a close eye on structure esp for the first year or two (do they have 6 years structural warranty?).
have fun
Lplate

 

[mitch]

Gday Squash,

l dont think ive ever bought a bargin.Always l get a bit of buyers remorse,l think it means lm careing enough about what im doing.

If you think your doing the right thing move forward , you wont get shot if your wrong.

And my buyers remorse?

Property A 1994 $74k auction 2004 170k aprox
property b1993 98k (the nab tried to make me sell this in 2000 so l could buy prop c ,wouldnt lend me the $ so l had to change banks)
property b 2000 $115k bank val 2004 215k bank val
propety c 2000 $187k purchase 2004 330k bank val
property d 2002 125k purchase 2004 190k aprox

You cant beat time in the market and it shows l should have been buying alot more.

good luck
Regards Mitch

P.S l wonder what we all will be saying about todays prices in 10 years time ?

LOOK OUT !!

Its just over 9 years later and l just started going through some old posts because someone replied to a very old post l was in and l got emailed.

Haven't been here since 2008 and l find this price record from 2004, wow, what a time machine

Property A $270 ish

Property B $330 ish

Property C $450 ish

Property D $280 ish

Property E $800 Bought this property (with a house) in 2004 for $330 as a land banking exercise, that went well, its now going to be a few hundred meters from a new multi million dollar private school, 20 or so blocks, pay off debt and time to retire from compulsory work, maybe 4 years.

I still say 'You can't beat time in the market'.

Mitch

 

[coastal]

LOOK OUT !!

Its just over 9 years later and l just started going through some old posts because someone replied to a very old post l was in and l got emailed.

Haven't been here since 2008 and l find this price record from 2004, wow, what a time machine

Property A $270 ish

Property B $330 ish

Property C $450 ish

Property D $280 ish

Property E $800 Bought this property (with a house) in 2004 for $330 as a land banking exercise, that went well, its now going to be a few hundred meters from a new multi million dollar private school, 20 or so blocks, pay off debt and time to retire from compulsory work, maybe 4 years.

I still say 'You can't beat time in the market'.

Mitch

Mitch you should of bought more

 

[mitch]

In light of this forum closing shortly, lm in part doing an update to myself to find at some point in the future

lm currently renovating property A to sell and preparing to move into property E next year with cbg. Property C will become a rental.

The land bank 5 acres should be rezoned in the first half of next year to general residential but the sewerage is 2 km away and the cost is prohibitive for me to connect it on my own thus slowing down the process.

In the mean time l will renovate the farms house and live off and reinvest the $180 to $200k profit from the sale of Prop A until the sewer is closer, around 2017/18 l have been told.

As its now more than 20 years since l started investing in residential real estate, l say to the banks that made it so difficult for me to borrow and invest...very soon l will need you no longer lol .

Thanks to all the forum people for your input, may you have safe travels

Cheers

Geoff