To Buy/Sell or Not to Buy/Sell
1. I am an novice investor from Singapore and have previously acquired 2 investment properties in QLD.
2. I first acquired my first property(a 4-bedroom double garage waterfront house) for A$184,900 in 1993 from Villaworld Ltd through a Singapore-based agent in the then fast-rising property market. I was subsequently able to purchase the second property(non-water-fron and a 3 bedroom double garge house) in 1994 directly from the same developer at A$134,000, using the increased equity available in the first property, without having to pay any further cash deposit upfront. Unfortunately, the interest rate was "suddenly" increased by RBA in 1994 and since then, our 2 properties have been in a neqative home equity situation till 2002 when we manage to sell off the first property for A$276,100 during the Oct-Nov 2002 period on the advice from our sale agent. We were advised then that the Goldcoast property market would be peaking in December 2002 period soon and will be correcting downwards fast soon, if we fail to sell it off.
3. Because of this negative home equity situation and our so-lled "bad" experiences, we did not dare to further acquire any more Australian property in the meantime from 1994-2001 period.
4. I understand that that Qld/GoldCoast property market has already peaked in December 2002 as advised by our sale agent, or is it still "peaking" further in 2003?... When is the best time to sell off our second property if we decide to pro-actively exploit the property cycle and adopt the "buy low and sell high into the market'strength" as advocated by Leonard Barnes and Steve Narva, instead of the usual "buy and hold" investment strategy, as advocated by Jan Somers? Could the more experienced investors and forummers please provide the expert/informed views on the 2 different investment strategies as well as to help confirm/disconfirm the advice given (and views held) by the sale agent.
5. Will we likely to be similarly be caught in a subsequent negative home equity situation in 2004, as per our previous experience in 1993-1994 period, if we choose to invest in the same Goldcoast market in 2003 now? Beside ensuring that we buy cost-effectively into positive-cashflow investment properties and use of independent buyer agent/advocate services, what are the other ways we can use to avoid being caught in the same negative home equity situation again in our future property investment again?
6. One way to minimise our investment risk, we think, is to diversify into investing inter-state into the Perth property market, which is presently in its initial upswing stage, aswe have been told;- although the Perth market may not rise as fast and as high a boom as that in the Goldcoast, Melbourne or Sdyney property markets. Does this make more investment sense? Will be experienced investors/forummers, please comment.
7. Can the more experienced investors and forumers, please also comment about having to choose between investing in a new 5 year old 90% owner-occupied suburb growing at a low 5.1% long term annual growth rate and a A$241,390 median house sale price and median weekly rental rate of A$230 per week at Canningvale (15 km east of Perth CBD) vis-a-vis investing in a 30-years- old outer ocean-front Rockingham suburb (40km south of Perth CDB) with 70% occupied ownership and median sale price of A$133,000 and median weekly rental rate of A$120 per week, which is fast-changing/developing. Its 2001/2002 annual capital growth rate was reported to be 17.2% in one single year;-. Whereas its long term annual capital appreciation rate has been increased to 10.7% since 2001 onwards, from its previous long term 7.4 annual growth rate since 1971, 6.4.% annual growth rate since 1981 and 4.3% annual growth rate since 1991, as shown by REIWA data.
8. Thank you very much.
Kenkoh2000
