在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo
I would really like to hear from any of the experienced investors here who bought IP anywhere before the "recession we had to have" (so late 80s/ early 90s) or even earlier and have held on through the bumps and get thier take on the current climate....is this just another bumpy time?
No disrespect to anyone here who has made bucketloads more recently with different strategies....i just want to hear the thoughts of long term buy and holders......
I am one of those. We don't hold a big portfolio, and have sold two houses at different times, which we chose to do to clear debt and do a major renovation to our PPOR, and allow me to be a mum at home.
The way I look at it is that we have always bought with the intention of holding for ever, and deciding what to do closer to retirement (getting scarily closer ).
First IP I bought was 30 years ago with my dad. My parents bought their first IP in 1975 using the profit from a small business my mum built up over three years, so I got the bug early.
The ones we sold, we made great gains, which allowed us to live the life we wanted. Of course, to hold them, I could have gone back into the full time workforce, so it was a lifestyle choice for us.
I don't take too much notice of what the market is doing. I don't really analyse anything too much, because as you know, statistics can be bent any which way to prove a point in either direction.
We have always bought when we could afford to do so and held on. The first years after each purchase have been tight, especially in the early years with babies and suddenly only one income, but the capital gains we are sitting on, plus a low LVR, are a good buffer for any drops the market may suffer.
Could we have made a lot more money..... sure. But property investing, for us, was always something that is "set and forget", humming along nicely in the background. Mind you, I have done plenty of work on our IPs plus my parents' IPs, but I actually enjoy doing that once or twice a year, and hubby loves getting behind a sledge hammer instead of a pen sometimes.
I sometimes feel inadequate when I read about some of the grand plans that people have, wanting 20 or 100 properties etc. We are too lazy to do the hard yards for that, and hubby enjoys his job, so getting "out of the rat race" has never been a driving issue for us.
Anyway, not sure if this helps, but when you are in for the long haul, time pretty much takes care of everything.
I would possibly take more notice of trends, charts and things if I was just starting out (but probably not). I tend to just have blind faith that things will work out .
I suppose we qualify as we bought in Glen Waverley in 1987 (when interest rates were 17%) and held that particular property until about 1996 when we rolled it over into a property in Canberra.
I really can't make any guru type comments because when we bought it was our PPOR and later an IP because my husband was posted - and as we had bought the property 9 months previously we didn't want to sell at the time.
I can remember at the time - we thought of paying off the mortgage as compulsory saving. We weren't into shares at the time and that seemed as good an investment strategy as any. Superannuation and compulsory contributions were only just starting to be commonplace - so once again didn't really factor superannuation into the strategy.
I remember my husband used to complain about the property not growing much - but it didn't worry me too much because the rents just kept increasing - the mortgage decreasing (we were into principal and interest loans at the time) - and there was more cashflow to meet our commitments (two children).
We were probably more protected than a lot of the general population because we were involved in the Defence force and had subsidized rental accommodation.
I can't really comment upon any other strategies and the current climate other than to say - just hang in there and there will be opportunities which come along and try and be ready to take advantage of them.
I have one, bought $85k now renting $350 per wk and will be reviewed in a few months, uping by about $50 per wk. Value? Should be about $380k - $400k I would guess.
Keeping it with minor reno and enhancements to sell in a few years time with the next boom as the depreciations will have run out. Will work with a contribution to super strategy to reduce CGT to nil or other investments to take its place, etc.
I don't believe in depression scenario. Cyclic yes, ie economic speaking, clearing after 3-5 years. Rent on IP close to schools and transport to work should be maintained.
I started grade 1 in 1983, so I did live thru it, but didn't take much notice. I did though just last night look up some sales data on a house we purchased in 2001. It goes like this...
1983 - $28k
1991 - $65k
1993 - $88k
1994 - $98k
1996 - $90k
1998 - $87k
2001 - $86k (thats me)
2003 - valued at $120k with new kitchen and bathroom rent $160/wk
2006 - valued at $310k rent $220/wk
2007 - valued at $290k rent $300/wk
The house was built in the 1930's, in a dreadful state and had nothing done to it during this time.
So, from 1983 - 1993 it basically tripled.
From 1993 - 2003 no CG (negative in real terms)
2003 - 2006 - more than doubled.
2006 - 2008 - prices have declined slightly for this type of property.
I am expecting very little CG if any for about 5 years, though we are in the process of developing this property.
I wouldn't consider myself an experienced investor compared to many of the people here, but I have owned a property since the 80s. It hasn't been a strategic decision to hold it. More a lack of strategy.
1987 PPOR purchase price - $160K.
Did a big DIY reno
1997 moved out - $480K bank val.
2002 bank val - $720K
2008 RE agent opinion high 8s, maybe $900K. (The agent strangely did say I'd be mad to sell.)
Thanks for the replies so far guys....keep the experiences coming you others
And as for the question about whether this is just another 'bumpy time' or the end of the world, who knows. Anybody who thinks they can predict what is going to happen is kidding themselves. We all tend to make predictions based on what we hope will happen. Young Scamp desperately wants property prices to collapse so he can buy something. I would prefer it if they didn't collapse. I sometimes feel a bit sorry for the 'expert commentators' who are constantly ask to predict what might happen. I bet some of the time they would like to say: 'buggered if I know.'
I wont say Buggered if I know.... will 'dont hold your breath' do?
depreciator said: ↑
And as for the question about whether this is just another 'bumpy time' or the end of the world, who knows. Anybody who thinks they can predict what is going to happen is kidding themselves. We all tend to make predictions based on what we hope will happen. Young Scamp desperately wants property prices to collapse so he can buy something. I would prefer it if they didn't collapse. I sometimes feel a bit sorry for the 'expert commentators' who are constantly ask to predict what might happen. I bet some of the time they would like to say: 'buggered if I know.'I have to say I agree about the prediction bit.
ScottClick to expand...
I find it a bit of a puzzle when people are so certain that something is going to happen, despite the lack of personal experience or in depth knowledge (or because of?). Nothing like a bit of online reading to make you an expert in any subject these days.
More I drill down into the financial markets the more respect I have for their efficiency and unpredictability, they aren't always 100% efficient and random (thankfully) but they do a pretty good job of surprising you and upsetting anything that appears to work consistently.
I'm cautiously long residential real estate in Brisbane, at least I'm not selling right at the moment despite considering that option closely (transaction costs give a nice headwind to the hold option). I'm relaxed about someone who disagrees with this view as long as they have the courage/intelligence to admit that their crystal ball isn't perfect either.
Unfortunately I don't think you'll find many multiple owners pre 90s. Perhaps 1 PPOR and 1 or 2 IP at best. The multiplicity strategies adopted in the last 15 years could only occur in an asset bubble with free flowing liquidity and not 18% rates followed by recession. Times are different. Owning 20 IPs is nothing these days but if you owned even 5 back then, you'd be comfortably retired now with $5M+ equity and won't need to be frequenting these sites for tips on wealth creation...
asdf said: ↑
if you owned even 5 back then, you'd be comfortably retired now with $5M+ equityClick to expand...Umm only if they are worth a million + each now
peastman said: ↑
Umm only if they are worth a million + each nowClick to expand...If you owned five IPs inner Brisbane back then, they would possibly/probably be worth $600K or $700K each now. At least in my surrounding suburb, this is the case. Once you add in your own PPOR, it is not a far stretch.
wylie said: ↑
If you owned five IPs inner Brisbane back then, they would possibly/probably be worth $600K or $700K each now. At least in my surrounding suburb, this is the case. Once you add in your own PPOR, it is not a far stretch.Click to expand...Add in all the rental income since they became positively geared too.
asdf said: ↑
Unfortunately I don't think you'll find many multiple owners pre 90s. Perhaps 1 PPOR and 1 or 2 IP at best. The multiplicity strategies adopted in the last 15 years could only occur in an asset bubble with free flowing liquidity and not 18% rates followed by recession. Times are different. Owning 20 IPs is nothing these days but if you owned even 5 back then, you'd be comfortably retired now with $5M+ equity and won't need to be frequenting these sites for tips on wealth creation... Click to expand...Hi about Jan Somers? Would she have owned more than 5 during this time? From what I have read she has been accumulating since the 1970's.
I am one of older ones that had more than 5 since then. There are a few of us on SS.
As I have said before quoting from someone else, its not the timing of the market, its the time in the market.
I have sold down and intend to continue selling down as time goes on, if I eventually do retire, I would prefer to be out of property investment, I have tried 7 times but keep getting coerced back into the workforce. I work not because I have to but because I want to, for the social interaction.
One of mine I purchased for $93k during the 17.5% interest time and recently renovated, I did put it up for sale at $420k but left my run a little late and was offered $390k so didn't sell. I can afford to wait.
Who knows what will happen, none of us can see into the future, but can only speculate based on our own experiences.
Another 'oldie' who has bought more than 5 since our first purchase in 1978 - and, like Chrispy, we have sold a few too (though, with the benefit of hindsight - and more recently-gained knowledge - would/should probably have kept most of them).
I've lived with high interest rates and through 'booms' (Sydney in the late 1980s) and years of little or no growth (SE Qld in the mid-1990s). Can't say I've ever seen a 'bust' here in Australia like the current situation in the US. All the properties we have owned have conformed beautifully to the old property adage: doubled every 10 years, on average, although some have performed much better.
It has been my experience that if one doesn't over-commit oneself or panic at the first sign of a downturn, then you can't go too far wrong. But then, I'm a lazy investor!
We intend to keep IPs as part of our retirement income stream ("the icing on the cake", as I've said in previous posts) - though we will probably reassess the portfolio and look at selling property that hasn't performed as well as we'd like. Would like to get into commercial in the next few years, but need to increase my knowledge considerably before dabbling my toes in that particular pond!
As to the future - who knows????? Will just go on doing what I've always done .... am happy!
Working hard equals money equals what you want to do, simple.
We started very young, in 1977, by buying a then, mid range, cheaper project house for $26000.00. It was a struggle, because we had both turned 20,had decided to start a business. and had a baby on the way. My husband received a lawn mower for his 21st birthday! We never wanted to rent.
We deviced a strategy to hold for 5 years, improve the property with our own labour( he had just finished his trade), and then sell.
I always had an eye for decorating (I became an interior decorator later) and the man had turned out into a darned good tradesman.
We would take a good 2 month overseas holiday after each sale- just by closing the doors of the business, and as soon as we returned we were onto our next property.It wasn't easy, it wasn't fast tracked,the interest rates were terrible, but we still did it.
The first property, bought at $26k sold 5 years later for $56K.We had to pay back the loan, which was still at about $26K.
We were the first house owners in a brand new subdivision, surrounded by canefields and cow paddocks.
It was a basic house on stilts, open underneath, and we took 4 years to finish it, living upstairs, in comfort( I refused to live in a dump!)People alway commented on how nice the completed areas were. It was sold on the day we listed it, in 1982( today it is valued at $400K) Now it is part of the thriving northern suburb.
We immediately bought an other block just around the corner for $16K, which was a lot at the time, because it was "on the right side " of the road. By that time the energy was replenished from 2 months of trecking and partying overseas ( my parents looked after our son) and we ploughed into the next house, designing it and building it from scratch.It looked like an architects project. We did the same thing, however, working on areas as the years went by.I cooked in the laundry for the first year, we bagged the blocks on the outside ourselves, we painted,landscaped etc.Again, no living in a mess, just organised into different areas of work.It was a mansion for people our age to own.The upstairs bathroom wasnt finished, the tiling still had to be completed, we only had a half finished staircase, but peopel from the street couldn't see that.We also returned back to the business and swung that into overdrive, had an other baby, and sold it after 5 years, doubling our money.Sold it for $130K in 1987-(today it is valued at $500K)
Interest rates were still not much better, but we didn't focus on that. Only the plan, and the holiday at the end! By this time, our business was going very nicely and we managed to employ a relative to run it while we went overseas,this time for 3 months.We bought an other block of land , a bit higher on the hill, around the same area before we left.-$25K and very expensive in 1987. We knew the area well, and new this was still the best part of town to be.
We managed to rent a house just at the bottom of the street, and flew to the Gold Coast to get ideas.The house was way beyond our means, but we decided not to care, and just plunged into the building process. Again, the formula of building ourselves, then moving in and completing, paid of. In this property, we lived without a kitchen for 12 months, had boards nailed in front of the garage to close it of, and had orange plastic around the bathroom, which was floor to ceiling glass, for ages. But the finished rooms were finished to a high quality. It took 4 years to complete this one, whilst working, whilst raising 2 small kids.
I started dabbling at that point and thought. " hmm. if we bought an other property and did the same thing, the profit could go to paying out our loan.
So we bought a tumbled down little weatherboard house for $80K, did it up, and sold it after 2 years, after the tenants kept giving us major headaches.I didn't even understand how the bank allowed us to buy the 2nd property. The bank manager was like a God,we thought.We did make a profit. and put it towards our own house.
We owned it ( paid out the loan)by the time we were 30, and had a huge celebration.
We had had a $130K loan, P and I.The neighbours used to look at us funny and there were rumours that we were involved in illegal activities, because there was just no way people of our age could own a house like that.People would drive past in the weekend and take photos.\, and knock on our door to ask what colour this wall was, or what kind of tiles we had used.
In 1994, it sold for $400K, which was one of the highest sale figures for a property in the area.( todays value $900k)
During this time, we had no idea about investing, and didn't think about retirement, or property portfolios. We just wanted to own our own home.Silly realy, in retrospect, but the property game wasn't realy that well known and it seemed that only the very wealthy owned realestate for investment.
A lot of others were getting into it at that time, living in sheds whilst building, or just giving up everything for their projects. That was something we were never prepared to do. We had to live in a nice environment, be able to take our holidays and do the same things others our age did, and basically, we just never realy worried a great deal about the interest rates.
Working hard equals money equals what you want to do, simple.
I sometimes think that we should never have sold, and that we were silly, but, on the other hand, to do it young and not miss out on all the fun, holding on would not have worked for us.But the moral of the above story is, you can have your pie and eat it too. You dont have to live in squalor for years, and never take holidays.It's all dependant on how hard you are prepared to work!
From the age of 30, and owning our own house, things changed. We continued the same strategy, buy land, build our own house, etc, but we bought a few more along the way, as we didnt have a cashflow problem and no PPR mortgage.We now own 15 properties,share portfolios, and quite a few luxury items, valued close to $10million dollars, and we are only 50 years old.
Now , we just buy for fun and challenge.And we still love to party and go on adventures (the man is a surfer for crying out loud!)
Anyone can do it. When you decide to do it, however, do it well! Don't fret about the interest rates, don't get in over your neck, and be prepared to work hard, whilst also having fun.
And my major last bit of advise would be, learn how to present yourself and present your properties. Learn a little about design, learn a litttle about decorating, and gain some knowledge about "good taste". It makes everything so much easier if you surround yourself with a nice, organised space, easy on the eye, whilst you are working. The end results are always far better, and your bottom line will show the difference.
Thanks Bianca, great story
bianca said: ↑
We started very young,Click to expand...Awesome story bianca. Thanks heaps for sharing.....
This bit worried me a bit though.
had an other baby, and sold it after 5 years,Click to expand...