Sydney Market at top - calling a severe correction in 2018-2019

[BayView]

For me:

A grade is probably a combination of north orientation, tree lined street, quiet but sufficiently close to the heart of a suburb, beautiful nature strips, beautiful houses next to or opposite you, could be regarded as a top 5 street or top 2 pocket in a suburb, ideally good bones, best if it holds development potential, no undesirable buildings or industrial land visible or probably even too close by, close to key public transport infrastructure.

I guess a B grade is a property that doesn't exhibit enough of these attributes. Particular killers for me would be main roads, opposite commission flats, T intersections, street looks ugly or is too narrow, street too industrial and doesn't have enough trees or has ugly nature strips, it belongs in a dodgy pocket of a suburb or an inferior pocket, far from the shopping strip, far from bus/monorail/tram/train.

Your A grade description is pretty much mine too.

I would never/haven't ever entertain the idea of buying a B grader.

I think everyone (investors) should follow that A grade selection criteria - might cost a little bit more, but better in the longer term.

 

[sanj]

Your A grade description is pretty much mine too.

I would never/haven't ever entertain the idea of buying a B grader.

I think everyone (investors) should follow that A grade selection criteria - might cost a little bit more, but better in the longer term.

Not to be a smart **** here but don't you own a dump in kalgoorlie (judging by your precious comments)? What's a grade about that?

 

[Biz]

Not to be a smart **** here but don't you own a dump in kalgoorlie (judging by your precious comments)? What's a grade about that?

Yeah but it's A grade in Kalgoorlie.

 

[sanj]

Yeah but it's A grade in Kalgoorlie.

I suppose having an inside toilet qualifies as A grade there

 

[JohnHenry]

That's great .

The main attraction for me for nice properties in nice areas is they involve less hassle to maintain , so make A good long term hassle free investment .

Cliff

ok, so is that include new property (OTP) or you just consider existing building in the newly rezoned suburbs ?

 

[see_change]

ok, so is that include new property (OTP) or you just consider existing building in the newly rezoned suburbs ?

All of our long term keepers are units or town houses , so not bought with the view of rezoning / rebuilding . In established suburbs that are sort after .

Cliff

 

[BayView]

Not to be a smart **** here but don't you own a dump in kalgoorlie (judging by your precious comments)? What's a grade about that?

I'm sure getting a dart in was at the top of your list with that post, but no probs here.

It was never a dump; but after a number of years had become tenant bashed and run-down.

A leak developed in the shower (built back in the times when there were no regs on waterproofing in W.A, according to the r/e), and a leak from a cracked roof tile had caused problems on one of the bedroom ceilings.

As well as that; an earthquake a few years ago had caused movement in a lot of properties in Kal - mine had gaps between the cornices and the ceilings/walls in a number of places, and a few spider cracks in the interior rendered brick walls (there are 4 of these such interior walls). Other than this; it was still in decent condition; just dated decor, needed a repaint and a bit of love..

It was built in 1991, brick veneer and wood frame, tiled roof, one in a block of 4.

5 mins walk to Town Centre, Maccas, KFC, Bunnings and main road.

I ran thread about its reno here:

http://somersoft.com/forums/showthread.php?t=90941

As far as location, affordability to rent, floorplan and so on, rent return; I would regard this as an A grade IP.

It got as high as $310p/w during the boom, so for a $105k outlay it was motoring along quite nicely. The end of the boom has seen rents retract and currently it is at $265p/w, but Kal does not fluctuate as much as other mining towns seem to do.

It's value currently is around $210k I'd say.

It's not a "top end" Taj Mahal type of IP by any stretch of the imagination, but it doesn't need to be a $1mill property to be a good investment.

It was all we could afford at that time, and in hindsight; I wished I had bought 10 of them.

I wanted to buy a couple more at that time (we could have achieved that given the pos cashflows) but I got talked out of it by the MB - he thought we would have been too over-exposed...so we ended up with only two.

I sold the other one a few years ago when things got tight for us financially.

 

[JDP1]

I suppose having an inside toilet qualifies as A grade there

I Would rather have a toilet in Kalgoorlie than a 45sqm dodgy box otp in southbank, Docklands...

Crap...boss alert...need a panic button on this site

 

[skater]

I think everyone (investors) should follow that A grade selection criteria - might cost a little bit more, but better in the longer term.

How is that feasible?

People buy crappy properties every day for many different reasons.

It could be all they can afford, it could be a development site, it could be close to family & friends etc.....

Plus, I would presume that A Grade properties would command a higher than average rent, in terms of $$ that is, so not a high yield. Therefore if all investors suddenly bought only A Grade properties, where would all the welfare recipients and those on low incomes find rental properties.

 

[BayView]

How is that feasible?

People buy crappy properties every day for many different reasons.

It could be all they can afford, it could be a development site, it could be close to family & friends etc.....

Plus, I would presume that A Grade properties would command a higher than average rent, in terms of $$ that is, so not a high yield. Therefore if all investors suddenly bought only A Grade properties, where would all the welfare recipients and those on low incomes find rental properties.

Yes; not everyone can buy A grade IP's, and some don't care, don't know the difference, etc.

For us here on SS - who I assume are trying to accelerate returns and path to riches, retire earlier and so forth - then it is definitely in our interests to only look at A grade selections - if we can

Plus, one entire street could consist of A graders - all of us have driven around looking at areas for a place to live, and seen an entire street/streets where we would probably be happy to buy anything in that street. This is certainly the case at the moment in Sydney, I'd wager...so there is plenty of choice. Some will be more A grade than others; but still A grade.

They are more expensive to buy initially no doubt, the rent returns may be slightly lower than yer B grade ones, but these are factors you have to weigh up as part of your selection criteria.

In terms of A grade; I was referring more to Deltaberry's selection regarding position, orientation, proximity to stuff, etc.

I think if you can maximize all of those factors, and also score a property that is either needing cosmetic reno (to add value and rent increase possibility) and/or subdiv potential; then it is even more A grade.

Our little $105k unit in Kal was not near the cheapest end at that time either - you could buy a dump for around $60k or so back then...needing work and so on; which I could not do from melb.

So, we went for something in better condition and (hopefully) less maintenance...Both of ours there were the same; brick veneer, concrete slab, one had tiles, one had iron roof.

FWIW; I don't regard the condition of an IP in the A grade criteria so much; it's still a factor, but it's more the overall package it provides which will attract future tenants/purchasers - rent demand for cashflow and buyer demand for CG.

Even lower-end suburbs with a larger representation of renters will still have a number of A graders...for those whom are starting out on their investing path and have limited funds (like me) it is handy to know about the A grade criteria to help them make a better first up selection.

 

[skater]

Yes; not everyone can buy A grade IP's,m and some don't care, don't know the difference, etc.

For us here on SS - who I assume are trying t accelerate returns and path to riches, retire earlier and so forth - then it is definitely in our interests to only look at A grade selections - if we can

They are more expensive to buy initially no doubt, the rent returns may be slightly lower than yer B grade ones, but these are factors you have to weigh up as part of your selection criteria.

In terms of A grade; I was referring more to Deltaberry's selection regarding position, orientation, proximity to stuff, etc.

I think if you can maximize all of those factors, and also score a property that is either needing cosmetic reno (to add value and rent increase possibility) and/or subdiv potential; then it is even more A grade.

Hmmm....although I do agree with you on many things, I have to disagree on this one.

I don't think I've got one "A Grade" property in my entire portfolio. I've got a range of different properties that suit a range of different criteria, and I'm happy with the progress of them all.

But then, I am predominantly a cashflow based investor.

Admittedly this is due to circumstances initially, not being able to afford to buy, unless all my costs were covered. From there we've just kept doing the same. Buying basic properties that will always be in demand.

 

[see_change]

For us here on SS - who I assume are trying to accelerate returns and path to riches, retire earlier and so forth - then it is definitely in our interests to only look at A grade selections - if we can


.

Disagree

Our best returns cap growth wise on were on the Logan properties we bought in 2002 / 03 . And they were not a grade properties even by Logan standards . A couple were definitely at the bottom of the market .

Didn't stop us getting good returns and very nice capital growth .

I have A grade properties in A grade suburbs all the way down to the bottom level with the exception of minor regional and gagewood .

Cliff

 

[Deltaberry]

Yes development and subdivision potential on an A grade is very good. My best residential return these few years has been an A grade that ticks all you said.

Big block, north facing, tree lined, quiet but wide street, but within 750m of basically Melbourne Central. And what made it work was it was 2 houses on one block with a big backyard.

Today I could subdivide this into 4 blocks (the original two houses plus two blocks at the back where I would build two 4 storey townhouses with city skyline views), and either one of the houses would almost (almost but not quite) get me my entire capital back (ie pick up the other 3 for free).

 

[BayView]

Disagree

Our best returns cap growth wise on were on the Logan properties we bought in 2002 / 03 . And they were not a grade properties even by Logan standards . A couple were definitely at the bottom of the market .

Didn't stop us getting good returns and very nice capital growth .

I have A grade properties in A grade suburbs all the way down to the bottom level with the exception of minor regional and gagewood .

Cliff

I did say; "if we can"

And, I have just illustrated how one of mine was at the lower end. In fact; 3 of our 5 were at the lower end.

The point is; if we all get educated about what the criteria are to select a prospective good investment, then using that acquired knowledge; we can all maximize the returns on our investments.

Everyone will ultimately buy as their situation allows.

There is nothing wrong with buying less than A grade.

But why waste an opportunity to buy an A grader if you have one?

 

[Deltaberry]

Hmmm....although I do agree with you on many things, I have to disagree on this one.

I don't think I've got one "A Grade" property in my entire portfolio. I've got a range of different properties that suit a range of different criteria, and I'm happy with the progress of them all.

But then, I am predominantly a cashflow based investor.

Admittedly this is due to circumstances initially, not being able to afford to buy, unless all my costs were covered. From there we've just kept doing the same. Buying basic properties that will always be in demand.

Cashflow works too. It's definitely a safer approach if you are geared.

 

[skater]

Our best returns cap growth wise on were on the Logan properties we bought in 2002 / 03 . And they were not a grade properties even by Logan standards . A couple were definitely at the bottom of the market .

Our best CG have been Mt Druitt, & Campbelltown. Campbelltown all cashflow positive on purchase, Mt Druitt almost positive cashflow on purchase.

Cashflow works too. It's definitely a safer approach if you are geared.

That's why I like it!

 

[BayView]

I suppose having an inside toilet qualifies as A grade there

oooh; nice snipe, Sanjeev.

let me see;

bought for $105k, current value at ~$210k in a down market,
currently rents for $265p/w in a down market,
weekly loan repayment of $95 at current rate
built in 1991 - depreciation

Thankyou for the uneducated, arrogant disrespect. Normal behaviour.

I guess we all need to just listen to only you; who has all the answers?

 

[sanj]

oooh; nice snipe, Sanjeev.

let me see;

bought for $105k, current value at ~$210k in a down market,
currently rents for $265p/w in a down market,
weekly loan repayment of $95 at current rate
built in 1991 - depreciation

Thankyou for the uneducated, arrogant disrespect. Normal behaviour.

I guess we all need to just listen to only you; who has all the answers?

Jesus it was a joke about kalgoorlie, nothing to do with you or your property. Not sure what you're getting upset about. Have a cup of tea and a lie down.

 

[turk]

Not to be a smart **** here but don't you own a dump in kalgoorlie (judging by your precious comments)? What's a grade about that?

I suppose having an inside toilet qualifies as A grade there

Jesus it was a joke about kalgoorlie, nothing to do with you or your property. Not sure what you're getting upset about. Have a cup of tea and a lie down.

C'mon Sanj, you snipe at Bayview as regular as clockwork, at least have the integrity to admit it.

 

[sanj]

I'd happily admit it if true, tthis was no swipe. I was genuinely curious about what different people consider to be a grade which is why I asked him and appreciated the answer. I myself don't quite know what I'd consider A grade or not hence the question.

I'm from perth, people take the **** put of Kal at times. That wasn't directed at BayView.

As for my first post, I clearly said I wasn't being a smart ****, it was a genuine question. Precious was meant to say previous.

As for dump, I remember him saying in the past it was unhabitable. Dump isn't a diss for God's sake, a dump can be extremely profitable