real estate ad from 1977

[Bill.L]

Hi all,

It was meant to be a question without an implied answer.

Considering that we were paying $55 pw for a 2 bedroom house in Burwood/Camberwell in 1979, I doubt that these units in the country would have been returning that much. Probably way less than 8% yield.

I think they were overpriced at sale. We bought a house in Mulgrave in 1981 for $44,000, at the end of the '79-'81 boom. I would hazard a guess that these Cranbourne properties would not have moved greatly during that boom.

Depending on what you did with the units, would have decided if they were a good investment.
For example, if you had capitalised the annual losses on the property (by using equity from somewhere else), you would have been very disillusioned with this property/properties.
However if you had paid down the loan then you would eventually find they started to throw off cash, then rinse repeat.

Looking at interest rates during the late '70's and '80's, these units would only become cashflow positive when interest rates fell in the early '90's, on the original purchase price.

I wonder if the same criteria will hold true for the next 30 years for outer suburban property in terms of how long it would take to become self funding??

bye

 

[BayView]

Thanks for sharing, that's the era that my parents started investing in property and they found so many hurdles regarding servicability, finance, affordability etc... same as what investors are finding now

In 2039 someone will be posting todays newspaper articles here and saying how cheap they were back then

Correct Xen.

It's never been easy - for any previous generation.

If it was, we wouldn't need loans, and banks probably wouldn't have a share price of $35.

 

[wylie]

Wylie, how come you did this? meaning thought to do this? (if it's not too sticky beaking to ask)...you are a teenager and you just decided to buy some property? or your new line of work (at the Bank) prompted the wheels to start turning? Or folks maybe?

Where you close to not doing it? or it was going to happen hell or high water?

Was there a turning point or you had the slow plan for a while?

I'm just really curious that the desire to invest in one so young...and the trigger(s) for it?Thanks.

When I was 12 my parents bought a six days a week casket agency/tobacconist business which was very run down. My mum ran it and built it up over three years they owned it and we didn't have a holiday for those three years. We worked after school in the business and it put me off ever being tied to a business again

My dad had always wanted to work for himself. My mum built the business enough to a point she either needed a staff member or my dad to help. He left his job, helped in the business, but "the grass is greener". They were burnt out and he went back to his old job with a new outlook.

The money they made from the built up business they bought their first IP. So from 15 I got the bug to get my own place as I saw the rent coming in. I joined the bank at 17 but back then I had to wait eight years to get a discount home loan. A man could get a loan after six months if he was married and I had the option of having a baby in order to get the same deal, ie. supporting a child, but was not THAT keen to get a discount loan. However, I found it really unfair and hard to wait, so I didn't wait.

I bought a half share in a unit with my dad (the body corporate problems there put me off body corporates) and then my brother, dad, ex-boyfriend and I bought a house, but my brother needed to sell before prices went up by much, and the ex-boyfriend's new girlfriend was NOT happy that he was still seeing me via the investment.

My parents have several IPs and at last count I have painted, renovated (new kitchens and bathrooms and decks) at least 35 houses over time, including our own IPs, PPOR and mum's IPs and PPORs (some of these are multiple times on same house). I am pretty good at painting and renovating now

Funny, but my brother bought one PPOR, sold it for a good profit (regrets selling it now) but didn't really like being a landlord and having the upkeep. So don't know why I was fired up but he wasn't (except he was busy drinking and surfing his money away when he was younger, whereas I was not.)

 

[dreaming]

I joined Comm Bank in 1976 and was in Brisbane head office housing loans department by about 1977 or 1978. From memory (hazy I must admit) you pretty much had to go cap in hand and beg for a loan. You HAD to have a savings history over several years and I think you had to have 20% deposit.

VERY different today, and so much easier to get a loan, but of course, the trade off is that people can get in too deep, and get burned.

I remember when I had just finished my apprenticeship in 1979 I had about $6500 saved and I went to the comm bank for a loan to buy a house in Holland Park in Brisso, for $33000 but they would not lend me the money because I couldn't tell them how I would buy furniture.When I told them I was living in a share house which we had furnished already for next to nothing they did not believe me. They just didn't lend 19 yo's that sort of money and I could be wrong but I think the interest rates at the time were fixed at about 3.5%, such a shame it would have been a great start.

 

[topcropper]

The thing to remember about Cranbourne in 1977 is that it was about 1 hour drive past civilisation, and there were about 200 farms, 4 houses and 3 dogs there; at the end of a dirt road.

.

Great thread everyone.

Good comments, and I tried to give you kudos Bill, but I have to spread them around.


Just to point out the flippen obvious though. The return from the unit was only 6% compound. Pretty ordinary, I agree. I wonder what the compound return would have been if instead of buying the unit, the money instead went to buy the same value of farm land which then was later developed? As complete speculation, I would say 18% plus.

 

[our obsession]

Wylie you are inspirational; great focus and determination and lateral thinking.

...and you match it with elbow grease! 35 paints and reno's is an impressive achievement.

Just good on you, top stuff.

 

[wylie]

Thanks OO for your kind words. I must say, between bouts of hard work I like to be as lazy as I can get away with

My youngest son today asked me on the way to school what I do all day. He wasn't being smart (he is 12) but wanted to know how I spend my day.

Funny thing is that during the last bout of 15 days straight, he spend a lot of time at the IP either helping as he could (which was a breath of fresh air) or riding a skateboard on the deck. At least being with us means he was not at home which would just not have worked, three boys at home for twelve hours at a stretch .

He saw how stuffed we were, and smelt how bad we smelt after shovelling gravel in the western sun, so he knows that when we are renovating, we work really hard. He just couldn't figure what I do "normally".

We have painted (and partly renovated) three houses since September, two for my mother and one for us. Each time I do this mad, long hours stuff I think "next time I will just call in a painter" but each time I look at the dollars I can save by doing it myself and that is what I do. Hubby generally adds the patios, sunshades or landscapes while I paint. It works well, but I certainly will not be doing it when I am 71 like my mother. She just will not stay home, but insists on coming over and shovelling gravel with me. She is a real inspiration.

(I think she's bloody MAD.)

I know others have said I could put my time to better use and make money while I pay someone to do the work for me, but the difficulty is that I don't have a "job" to make money at (my choice), so my own labour is the best use of my time when we are painting or renovating.