Investment properties making a comeback

[see_change]

Witzl

Now...I eagerly await the response from the Naysayers!

I hope you correct . I just bought two entry level units lower north shore.

I just wouldn't be buying them out west though .

Last cycle , central located areas moved 50 % before the out west moved.

It's not called dead cat bounce for nothing . Prices go up in a dead cat bounce , and prices only go up because people are enthusiastic and competitively fighting for Properties . That why prices go , whether it's a dead cat bounce or the start of a sustained recovery .

We will only be able to KNOW which it is in RETROSPECT ...

let me repeat that .

We will only be able to KNOW which it is in RETROSPECT ...

Let me repeat that

We will only be able to KNOW which it is in RETROSPECT ...

If it's the start of a sustained rise , in about one years time it will be more obvious , at that stage people will still be able to get into the market and make lots of money in the next cycle . I missed the start of the last cycle by years and still did very nicely .

At that stage , no one here was debating whether prices were going to go up . The heated debates were over which places represented the best value to invest in . Obviously there were a few nay says , but none of them were taken seriously by the majority of the forum .

IF it's a dead cat bounce , and people over commit , they will be left holding mediocre properties in mediocre areas with rising unemployement leading to rental vacancies and falling rent and the prospect of a long period passing before sustained capital growth .

Let me repeat

We will only be able to KNOW which it is in RETROSPECT ...

Cliff

 

[sash]

Hiisssss!!!...the gurgle...gurgle...silence....now..now Cliff...what a terrible man you are?

The thought of drowning putty cats.....

On a more serious note Witzl is right....the cats' been let out of the bag (pardon the pun!)....areas like St Marys and Colyton are hot.

I bought a place in Deception Bay in Jan. 2009 for 235k...settles today. Was having a chat to the agent about another....she reckons I have buckleys chance...unless I am prepared to pay at least 260k plus. The ones on site at 250k are gone! No reason why the area won't go back to the bottom end being 270k...it was there only 12 months ago!

Oh well chaps....forward ho!.....better do some more buying....now where is that FHB swatter....err....fly swatter!

Maybe you shoud try a hessian bag. They just go splash before they go under water and drown...

Cliff

 

[Witzl]

You are dead right Cliff.
We will only know for sure once the moment has passed and we look back on what actually happened. No one can know for sure what WILL happen.

What i can do is hedge my bets, and position myself to take advantage of the gains to be made if this isnt a dead cat bounce - which i have done.
I am only doing this within a very affordable level so that if i bet on the wrong hand, i can afford to hold out until my hand is a winner.

 

[see_change]

You are dead right Cliff.
We will only know for sure once the moment has passed and we look back on what actually happened. No one can know for sure what WILL happen.

What i can do is hedge my bets, and position myself to take advantage of the gains to be made if this isnt a dead cat bounce - which i have done.
I am only doing this within a very affordable level so that if i bet on the wrong hand, i can afford to hold out until my hand is a winner.

Fair enough

Cliff

 

[Witzl]

and besides... im in this for the LONG TERM. What happens over the next 12 months is really just a blip in my investment radar.

 

[troyhunt]

You have a very hard time making lowball offers out west now.

Totally agree with that Witzl, I'm seeing things definitely moving up on the Granville / Merrylands / Guildford / Fairfield tract I've been watching closely and buying in over the last couple of years. I've had offers out lately that would have probably gone through six months ago but I can't even get a counter on at the moment. Definitely a lot of FHOs targeted by the agents; every second ad seems to mention the grants. Not personally convinced whether it's a dead cat or not but I am convinced the bottom part of the market in these areas is steadily moving forward.

 

[sash]

First of all congratulations in buying the entry level units on the lower north shore! Where abouts did you buy?

Cliff...time to explain my rational behind why it is not a dead cat bounce...

This cycle is different the to last upturn cycle due to the following:

1. The job losses are predominately in white collar jobs....mining is the exception.

2. Immigrants are now chosing to live in areas closer to their communities and it is now more prenounced. As a result rents in areas like Bankstown as high...not usually to get 320-350pw for a 2 bed unit. The value of rents is an indication of demand, thus also affects to support pricing.

3. Developers cannot get finance as a result less development....there is a severe shortage of housing on the way.

4. What is considered mediocre maybe exceptional in a few years. Areas change....who would have thought 60 years ago that Surry Hills, Balmain, and Paddington would become desirable areas.

I agree about your point about being RETROSPECTIVE.....but with proper research and insight there is high likelyhood of picking areas that will perform (by this I mean at least 10% grwoth per annum and getting to cash flow neutral within 1-2 years from a holding cost perspective).

I was too focused on the what ifs last cycle...I intend to get in early to leverage my returns to the maximum.

I am sure you will agree..that..time will tell.....

Again....congratulations on your entry level unit purchases...

I hope you correct . I just bought two entry level units lower north shore.

I just wouldn't be buying them out west though .

Last cycle , central located areas moved 50 % before the out west moved.

It's not called dead cat bounce for nothing . Prices go up in a dead cat bounce , and prices only go up because people are enthusiastic and competitively fighting for Properties . That why prices go , whether it's a dead cat bounce or the start of a sustained recovery .

We will only be able to KNOW which it is in RETROSPECT ...

let me repeat that .

We will only be able to KNOW which it is in RETROSPECT ...

Let me repeat that

We will only be able to KNOW which it is in RETROSPECT ...

If it's the start of a sustained rise , in about one years time it will be more obvious , at that stage people will still be able to get into the market and make lots of money in the next cycle . I missed the start of the last cycle by years and still did very nicely .

At that stage , no one here was debating whether prices were going to go up . The heated debates were over which places represented the best value to invest in . Obviously there were a few nay says , but none of them were taken seriously by the majority of the forum .

IF it's a dead cat bounce , and people over commit , they will be left holding mediocre properties in mediocre areas with rising unemployement leading to rental vacancies and falling rent and the prospect of a long period passing before sustained capital growth .

Let me repeat

We will only be able to KNOW which it is in RETROSPECT ...

Cliff

 

[BoatBoy]

I hope you correct . I just bought two entry level units lower north shore.

Congrats as well Cliff

Did these get the yield like you were suggesting on this thread?

On the multiple properties we've held , we've found that you need to be over 10 % , preferably around 12 % to get cash flow positive . Things break , agents fees. Things add up .

If I was buying purely for cash flow , with no expectation of growth , I'd want over 15 % and even then I probably wouldn't do it .

Cliff

Dave

 

[eternit]

so what sort of yields are the entry level units lower north shore? they must be atleast 10% right????

I hope you correct . I just bought two entry level units lower north shore.

I just wouldn't be buying them out west though .

Last cycle , central located areas moved 50 % before the out west moved.

It's not called dead cat bounce for nothing . Prices go up in a dead cat bounce , and prices only go up because people are enthusiastic and competitively fighting for Properties . That why prices go , whether it's a dead cat bounce or the start of a sustained recovery .

We will only be able to KNOW which it is in RETROSPECT ...

let me repeat that .

We will only be able to KNOW which it is in RETROSPECT ...

Let me repeat that

We will only be able to KNOW which it is in RETROSPECT ...

If it's the start of a sustained rise , in about one years time it will be more obvious , at that stage people will still be able to get into the market and make lots of money in the next cycle . I missed the start of the last cycle by years and still did very nicely .

At that stage , no one here was debating whether prices were going to go up . The heated debates were over which places represented the best value to invest in . Obviously there were a few nay says , but none of them were taken seriously by the majority of the forum .

IF it's a dead cat bounce , and people over commit , they will be left holding mediocre properties in mediocre areas with rising unemployement leading to rental vacancies and falling rent and the prospect of a long period passing before sustained capital growth .

Let me repeat

We will only be able to KNOW which it is in RETROSPECT ...

Cliff

 

[see_change]

Congrats as well Cliff

Did these get the yield like you were suggesting on this thread?

Dave

Be lucky to get 7 % . But I didn't buy in that area with the expectation of getting a cash flow positive property.

This buy is aimed for capital growth in the next cycle. The proverbial Location , Location Location.

I think we've got a bargain , so inbuilt capital growth in a very good area.

The properties we bought in Logan and Rockhampton in the last cycle all returned around 10 % when we bought them and all of them were cash flow negative with one exception and that was one leased to a charity which covered all outgoings and didn't change any mangagement fees.

Cliff

 

[see_change]

First of all congratulations in buying the entry level units on the lower north shore! Where abouts did you buy?

Cliff...time to explain my rational behind why it is not a dead cat bounce...

This cycle is different the to last upturn cycle due to the following:

1. The job losses are predominately in white collar jobs....mining is the exception.

2. Immigrants are now chosing to live in areas closer to their communities and it is now more prenounced. As a result rents in areas like Bankstown as high...not usually to get 320-350pw for a 2 bed unit. The value of rents is an indication of demand, thus also affects to support pricing.

3. Developers cannot get finance as a result less development....there is a severe shortage of housing on the way.

4. What is considered mediocre maybe exceptional in a few years. Areas change....who would have thought 60 years ago that Surry Hills, Balmain, and Paddington would become desirable areas.

I agree about your point about being RETROSPECTIVE.....but with proper research and insight there is high likelyhood of picking areas that will perform (by this I mean at least 10% grwoth per annum and getting to cash flow neutral within 1-2 years from a holding cost perspective).

I was too focused on the what ifs last cycle...I intend to get in early to leverage my returns to the maximum.

I am sure you will agree..that..time will tell.....

Again....congratulations on your entry level unit purchases...

Bought in Mosman. I Bedder 400 K , 2 bedder 500 K , both with panoramic harbour views , walk to ferries , large ( 1 Bedder is 100m2 ) , high patterned fedo ceilings etc

My only concern on the points you raise is the one re unemployement.

Certainly at the moment the job losses have been in the upper / middle management areas , hence the number of properties on the market in places like Palm Beach and ...er Mosman

But , my concern is what's going to happen over the next 6 - 12 months . All of the reading I've done ( with the exception of the pump priming impact on the lower levels of the property market with the FHOG ) indicates that we're facing the largest recession since the depression . Significant drops in industrial out put through out the world. This will have to have an impact on manufacturing in Australia and the overall economy . We yet to feel that . If we do get impacted , then there will be increasing unemployement in the lower areas and that will impact the property market . Two things lead to forced sales and that high rates and unemployement.

It may not happen , but for me it's too bigger risk for me to want to commit to outer sydney at this stage .

Cliff

 

[sash]

Looks like you bought well in Mosman...I knew about Mosman & Palm Beach...but did not make the move there as the returns are not sufficient from my perspective. I am pretty ruthless b%^ard when it comes to self suppoting portfolios and growth (minimum 7-10% pa). What sort of returns are you getting... about $400-420pw for 1bdr and 480-520 for the 2bdr???

Whilst unemployment will rise....I think it will stabilise at about 7% or less..the reason I say this is because employers are really reluctant to shed staff...they have really struggled to hire decent staff over the last few years. A more likely scenario will be people taking cuts in salary or hours worked.

Also, an interesting thing is happening to me I have a few people from other states now PMing me about Sydney.....looks like they too are onto to good thing? Well about time I say....because Sydney has been awful since 2003!

Anycase...time will tell....

Also....you said your job is recession proof...are you in the medical field?? I am in Professional Services...so definitely NOT recession proof.

Bought in Mosman. I Bedder 400 K , 2 bedder 500 K , both with panoramic harbour views , walk to ferries , large ( 1 Bedder is 100m2 ) , high patterned fedo ceilings etc

My only concern on the points you raise is the one re unemployement.

Certainly at the moment the job losses have been in the upper / middle management areas , hence the number of properties on the market in places like Palm Beach and ...er Mosman

But , my concern is what's going to happen over the next 6 - 12 months . All of the reading I've done ( with the exception of the pump priming impact on the lower levels of the property market with the FHOG ) indicates that we're facing the largest recession since the depression . Significant drops in industrial out put through out the world. This will have to have an impact on manufacturing in Australia and the overall economy . We yet to feel that . If we do get impacted , then there will be increasing unemployement in the lower areas and that will impact the property market . Two things lead to forced sales and that high rates and unemployement.

It may not happen , but for me it's too bigger risk for me to want to commit to outer sydney at this stage .

Cliff

 

[see_change]

Should get 450 - 500 for the one , 650 for the two .

We hoping that once the renos are finished it might be more , but we can live comfortably with less.

Cliff

 

[sash]

Okay....so a 6%-6.5% return??

Let us know if you get the rents....where I am on the North Shore (near Chatswood)....rents have dropped about $50pw.....

But you seem to be prepared to ride it through with the short falls.

You mentioned...that most of your stuff is in Logan and Rockhampton...not exactly Blue Chip are they?? Why the change in product type??

Should get 450 - 500 for the one , 650 for the two .

We hoping that once the renos are finished it might be more , but we can live comfortably with less.

Cliff

 

[see_change]

Different time in the cycle .

At the time we bought , Sydney had already moved significantly so I couldn't see the point in buying there given the capital growth that had already happened and tyhe poor yields that had already happened.

We bought in Logan and rocky as they were just starting to take off. They had already started moving with significant decreases in the amount of stock . Logan was partially based on working in Mt druitt , seeing the rises there , and knowing many people who were moving to logan .

I went into my reasoning in this post re rocky

http://www.somersoft.com/forums/showthread.php?t=11656&highlight=rocky+thing.

Cliff

 

[BoatBoy]

Be lucky to get 7 % . But I didn't buy in that area with the expectation of getting a cash flow positive property.
Cliff

Thanks Cliff

You obviously are a believer in future cap growth.
How long at a guess before that starts to happen in an amount that would justify re-vals?

Dave

 

[see_change]

Thanks Cliff

You obviously are a believer in future cap growth.

How long at a guess before that starts to happen in an amount that would justify re-vals?

Dave

I am a believer in future capital growth , but this buy was triggered by what we percieved to be a bargain.

We will do the reval once we've finished the reno.

The revaluation will be to indicate ( hopefully ) the actual value of the property, not the price we paid.

If we revalued without the reno , my understanding is they're more likely to be guided by what we paid , rather than current market value.

Cliff