IPs in South Perth, WA

[Samwise]

To know if u it will appreciate, did you divide annual median prices by median wages and chart this data going back 20 years to determine if it was good value?

No i havent done this, would be interesting to though. What would constitute "good value"?

I dont own an IP yet, we bought in South Perth to live but i think it will have good long term cap growth based on not much knowledge at all apart from my own humble local observations and deductions over the past few years

Our first IP will probably be below or around $400K and probably not in South Perth, but i'll consider it...

 

[HiEquity]

Wow - I wish I'd seen this thread before it got moderated!

This discussion is an interesting one and IMO worth elaborating on somewhat.

The problem to me here is that when people make generalisations it tends to limit everyone's view of the exceptions. And it is the exceptions where you can make all the money. For example, I would be very surprised if premium short stay fully furnished apartments in the South Perth market in the $1m+ range weren't showing significantly higher yields on average than your stock $400k box. And with plenty of upside ATM in the executive leasing market with resource projects increasing demand in this market where there is limited supply. If you know this market well I'm sure you can make a lot of money.

And the idea that yields get worse with increasing value is just wrong in every other market than standard residential housing. In fact the reverse is generally true. For example if you just go over the river you find this:

From a quick scan the yield seems to be about 10% net with long leases in place to reputable companies. You may say normal (hands up who wants to be normal?) people can't afford it but they can afford to be part of a syndicate. And someone has to market a syndicate and put the whole deal together (and take a cut of the proceeds in the process). That's a way to make some real money which, of course, is not without its risks... as with any investment.

This property at first glance seems to be under rented so there is likely to be upside in the yield as well when a market review comes along and the location can't get much more prime. The disadvantages of syndication don't outweigh those sorts of benefits IMO for a property of this potential calibre.

So my suggestion is don't limit yourself to the wider world of property investment if you really want to make some money...

DISCLAIMER: I have no association with said property and have no idea whether all is as it appears in the ad so DYODD etc etc as I am sure you would...

 

[awesome wells]

The problem to me here is that when people make generalisations it tends to limit everyone's view of the exceptions.

Only for dumb people. Anyone who is half intelligent knows there are exceptions - they don't have to be mentioned every single time - it's a waste of time. It is assumed knowledge.

The problem with just using exceptions as TPGKAD did is that it's unrealistic. Why would you give a starter investor advice based on an exception? Unless of course your only motive was to pwn someone on the internet.

And it is the exceptions where you can make all the money.

And lose all your money if you are not experienced.

Starter investor should not be trying to spot exceptions. There's a much higher chane of them failing miserably through lack of experience.

And the idea that yields get worse with increasing value is just wrong in every other market than standard residential housing.

Who said that? last time I checked this thread was about residential property. I don't recall anyone talking about commercial.

But thanks for confirming I am right about resi. Maybe you should quote your buddy TFPKAD and point out his fault?

 

[HiEquity]

The problem with just using exceptions as TPGKAD did is that it's unrealistic. Why would you give a starter investor advice based on an exception?

Because that is where the good returns are. At least you have the potential to make money versus the certainty of losing it through yields that don't cover the cost of capital. I don't know about you but I want to buy the best performing property out there - the "exceptional" opportunity. Not just the average run of the mill stuff.

And lose all your money if you are not experienced.

Starter investor should not be trying to spot exceptions. There's a much higher chane of them failing miserably through lack of experience.

I find that highly condescending. Everyone should start off with rubbish properties just because that is the way it should be? There are ways of learning the ropes sufficiently without having done your dough already in a low yield property. This forum is meant to be one of them!

With risk can come reward. I wouldn't put off anyone starting their investment journey from taking a risk. In fact I would recommend it if they have ambitions to hold a significant portfolio at some point in the next twenty years. Identifying the profitable exceptions is precisely the path to achieve that goal. And we should be assisting that process not condemning everyone to negative gearing...

IMO starting investors should take more risks rather than fewer - particularly if they have time on their side to correct their mistakes. They have little to lose... and much to gain.

Who said that? last time I checked this thread was about residential property. I don't recall anyone talking about commercial.

But thanks for confirming I am right about resi. Maybe you should quote your buddy TFPKAD and point out his fault?

If you read my post I also made the point about residential short stay apartments likely being a high yield market for the more active investor. Even in residential your comments limit the view from where money can be made.

 

[awesome wells]

Because that is where the good returns are.

What, like buying a place for $680k and renting it 5 years later for $4200?

I don't know of any 1st time investors who have an eye to spot that sort of deal. If they go for that kind of expectation from the start the chances are they will be disappointed.

At least you have the potential to make money versus the certainty of losing it through yields that don't cover the cost of capital.

What are you talking about?

Are you saying that $700k properties are all +ve geared? Are you saying that all investors should be able to spot these lucrative deals?

Seems like you're going right out on a limb just for argument's sake. Your figures you're basing your "smackdown" on are very much exceptional rather than the rule.

I don't know about you but I want to buy the best performing property out there - the "exceptional" opportunity. Not just the average run of the mill stuff.

Who said anything to the contrary?

I find that highly condescending.

Then maybe you shouldn't condescend others. Just a thought.

Everyone should start off with rubbish properties just because that is the way it should be?

Who said that? What's with your barrage of straw arguments?

There are ways of learning the ropes sufficiently without having done your dough already in a low yield property. This forum is meant to be one of them!

Where is this magical post where I suggested someone buy a low yield property?

With risk can come reward.

And loss if you get it wrong. Hardly a place I would be suggesting a novice investor to go into.

I wouldn't put off anyone starting their investment journey from taking a risk. In fact I would recommend it if they have ambitions to hold a significant portfolio at some point in the next twenty years. Identifying the profitable exceptions is precisely the path to achieve that goal.

1. It's not the only path to the goal
2. There are limited exceptions. You act as if they're falling off trees and everyone should be able to get them.
3. Limited risk to start with is a safer model. I've seen too many do their dough because they tried to exceed their ability/knowledge.

And we should be assisting that process not condemning everyone to negative gearing...

I know a lot of people who have made a lot of money out of -ve gearing. Why so negative? Why so close minded? You come across like a zealot who can't accept that there's more than one way to skin a cat.

Even in residential your comments limit the view from where money can be made.

No they don't. At all. It's just you trying to do a big smackdown based on a straw argument. You're totally transparent so I'm not sure where you get off on calling other people stupid.

 

[HiEquity]

Firstly, your quote of me is incorrectly attributed to TPFKAD.

What, like buying a place for $680k and renting it 5 years later for $4200?

I can't speak to that example - it wasn't mine. It's a story I would like to hear about though.

I don't know of any 1st time investors who have an eye to spot that sort of deal. If they go for that kind of expectation from the start the chances are they will be disappointed.

I agree it shouldn't be an expectation to achieve those sorts of returns. I would just like to give them the chance to achieve those returns rather than create the perception they are unachievable when they're not.

Are you saying that $700k properties are all +ve geared?

No.

Are you saying that all investors should be able to spot these lucrative deals?

No. Just that if people want to achieve exceptional returns (and I know I do) then they should be looking for exceptional opportunities.

Seems like you're going right out on a limb just for argument's sake. Your figures you're basing your "smackdown" on are very much exceptional rather than the rule.

As above.

Where is this magical post where I suggested someone buy a low yield property?

Your quote: "Generally cheaper places get better yields. A $650k place might get $500pw rent, a $400k plave might get $350. Allows you to service the debt easier."

These are all low yields - well below borrowing costs on a 100% lend on a net basis. You have to bank on a lot of CGs to make up for being this far under water to start with in my opinion.

1. It's not the only path to the goal
2. There are limited exceptions. You act as if they're falling off trees and everyone should be able to get them.
3. Limited risk to start with is a safer model. I've seen too many do their dough because they tried to exceed their ability/knowledge.

1. I agree
2. I like to focus on what I can achieve rather than everyone.
3. Certainly the safer you are the lower the returns you are likely to achieve but that choice is up to each individual investor.

I know a lot of people who have made a lot of money out of -ve gearing. Why so negative? Why so close minded? You come across like a zealot who can't accept that there's more than one way to skin a cat.

I have also made a lot of money out of -ve gearing but I know I could have made a lot more money if someone had opened my eyes to the potential to make some real money in less "standard" properties. I took the safe and proven way to wealth advocated by the experts much to my current dismay when I look at the opportunity cost and the performance of those things that I knew deep down at the time were better investments.

I'm just trying to help others shortcut the process. I wouldn't be doing the 9-5 thing now a few times over if someone had pointed this all out to me ten years ago.

No they don't. At all. It's just you trying to do a big smackdown based on a straw argument. You're totally transparent so I'm not sure where you get off on calling other people stupid.

I haven't used the word "stupid" in any of my posts.

 

[Aaron Sice]

a-w - you're clearly NOT looking in the right places if you can't find many-a number (no, not all) of $700k properties CF+.

whether you want to invest there, or in that class or property, is something else entirely.

a $700k commercial IP - CF+.
a $700k student acoomodation IP - CF+.
a $700k mining tow accomodation - CF+.
a $700k short stay accomodation IP - CF+.

now expand on that.

commercial IP - look in any capital or regional area.
student accomodation - again, any capital or regoinal centre.
mining - just look at the 18%+ yield house and land packages in Karratha and QLD.
short stay - pick a hotel.

seems this argument is a pot calling a kettle black. an argument is just that - one with no end or realisation. you can't tar someone with one brush, but then take offence when you realise you've been tarring yourself.

negative gearing hurts cashflow. in a world of slow growth predictions you need a property to appreciate by at least the amount you're tipping into it each week just to break even. in other words - you're relying on CG ONLY to increase the value of your investment.

what if you had a property that was CF+ AND good potential CG....? there's plenty out there. or even CG neutral with good growth potential? to me this makes more sense that just outright negative gearing - after all, you're lucky to see a third of it after tax.

the ideas behind CF+ is to pay down your debt exposure with the remaining funds - whether it be your IP or PPOR or car or CC. the more you pay down, the more CF+ it becomes. soon it's totally CF+ and you don't give a rats bum what the value is worth.

everyone spouts it, but no-one actually listens > CASHFLOW IS KING. if you want to give up your 925 you need cash. buying solid placed properties with god rental returns improves your serviceability. you can buy 20 CF+ properties or 1 awesome CG potential property - or the other way around. either way, as long as at the end of the day, you have the cashflow you need (via rents or LOE)to maintain your lifestyle.

for the record - good CF properties with solid CG potential are falling off trees at present.

i have a headache now.