Property Investment Advice Australia - Australian Real Estate Buying and Selling Tips

Bedroom Insulation – the couple who tested it

admin — Fri, 25 Nov 2011 13:42:16 +0000

3 votes

Open days can be a bit hit and miss in Byron Bay. Over half of our buyers come from out of town and can’t make it to open days. At the open days themselves I often see the same faces cruising around – professional tire kickers. Of course, during holiday season open days are great. Plenty of people get bitten by the Byron Bay bug and come along to open days to check out the Byron Bay Property Market. We are talking Byron bay, so we get plenty of colorful characters coming along to open days…. But one recent family was… more colorful than usual. They were clearly tourists but they seemed very serious. Would classify them as Rippies(Rich form hippies)I chatted with them for a while and they said they’d been to numerous open days but had not found a house with the right layout. I was sure this would be the one. Ocean views, multiple balconies, curved walls like waves matching the curved coast line. Perfect. They seemed to love the place and were still there at the end when everyone else had left. Then they asked if they could spend 5 minutes in the house alone with their children. I saw no real issue with this, I had some phone calls to make and went out the front to the driveway. Taking on my mobile a few minute later I realised that the 5 minutes were being used…. rather intimately. There were muffled groans and bumping noises come from the master bedroom whose window overlooked the driveway. Stunned, I did not know what to do. Clearly, this was inappropriate behavior but I didn’t want to walk in on it. I decided to leave them to it and give them a lecture when they emerged. 2 minutes later, they did… looking not quite as flushed and ruffled as I would have expected…. Though the 13 year old daughter was clearly flustered and red in the face. I wondered for a moment if it had been a set up. The man motioned me over and explained what was going on. Apparently, their 13 year old daughter was constantly complaining about the “noises” coming from their bedroom in Sydney where they lived in a house with poor sound muffling and with the master bedroom close to the smaller ones. She had requested a house with better noise insulation, and with a master bedroom far removed from the children’s rooms. The couple were demonstrating to their 13 year old how sound proof the house was – through a simulation. Apparently the test was successful, though less so when the two Rippies pretended to move the simulation to the kitchen, then the lounge room, then the hallway…! They did not end up buying the house, but I was able to find them another which was perfect. Solid floors, insulated walls, master bedroom at the end of the house, great acoustics, no sound travelling at all from one end to the other. I guess the lesson here is, as a Vendor, there are sometimes Buyer requirements that are not spoken about…. but which you could well benefit from thinking about in any case. Fix those squeaky bedroom floorboards and install that wall insulation. It will add to the presentation value of your home and will address some issues that are probably not going to be raised directly.

Mortgagor Sale vs Distressed Vendor vs Bankrupt Estate vs Deceased Estate

admin — Wed, 23 Nov 2011 18:27:45 +0000

Mortgagor sale vs Distressed Vendor vs Bankrupt Estate vs Deceased Estate OK, so you’ve found out a property is on the market because the

Vendor is having a cash crisis and needs to sell or
The mortgagor has taken possession of the property and is forcing a sale or
The owner of the house has gone bankrupt, or in the case of the property being owned by a company, the company has gone bust or
The owner has died and the property being sold as part of a deceased estate or

(1) Vendor in a cash crisis. This is an ideal situation to be making lowball offers, especially if your funding had already been approved. A vendor needing to sell to avoid a forced sale where they will lose even more money will often listen to any offer.

(2) Mortgagor has taken possession. Another ideal situation. The mortgagor wants to recover the money loaned on the mortgage, but without mortgage payments being made, they will not wish to wait 12-18 months to make a sale. They want their mortgage repaid or as much of it as possible, but that may well be at a price below the market value. Of course the mortgagor has a responsibility to sell for as much as reasonably possible, but showing they took an unreasonable lowball offer when yours is the best offer they got is a hard thing to show indeed.

(3) Owner of the house has gone bankrupt. The important factor here is to know if the trustee the Government run Insolvency and Trustee Service, or is it a private trustee? If it’s ITSA, the property is probably going to auction with the reserve set at the valuation price. If prices are on the way UP, then you are going to get a good price, as by the time the property sells, the valuation will be wrong. If prices are heading south, steer clear. If it’s a sale through a private trustee, things are better for the buyer. The private trustee certainly has a responsibility to sell the property for as much as they can… but like a mortgagor in possession they are more interested in a quick sale than ITSA and at the end of the day, the need to see property sell so they can collect fees and get paid. The people at ITSA get paid whether the property sells or not so they are not so motivated to make a sale happen. Propeties owned by companies that have been placed into liquidation are always managed by a private trustee so if you find out about one of these, get your check book ready.

(4) Deceased EstatesGreat if you are after furniture to go with the house(though it’s likely to be old and dated….) Deceased estates vary too differently to fall into a category. Sometimes the executors are looking for a quick sale to both put cash in their pockets and the death of a family member behind them. Other times, they may be prepared to wait for the big offer. Such properties also vary greatly in quality. Elderly people often let the upkeep of their house slip and such properties will need a fair bit of work to bring them up to scratch. So look out for

Vendors in distress.
Properties for sale by a private trustee.

That’s where you’ll find truly motivated vendors.

Wholesale Real Estate Property Development vs Retail Property Buying

admin — Thu, 15 Sep 2011 17:06:02 +0000

There is money in real estate – no question – but where is there the most money? Unlike many business models which have a manufacturer/wholesale/retailer vertical path, real estate generally has only one path and that’s direct to the buyer. So where a manufacturer has to sell to a wholesaler at a price where the manufacturer makes a margin when selling to the retailer, who also needs to make a profit…. The wholesale real estate business takes all the money from selling direct to the end buyer. Whenever someone says they have made money in real estate, serious money, I’m listening to find out whether they bought and developed a totally new subdivision, built an apartment block, or renovated an old warehouse or the like into apartments. Of course, being in the wholesale end of the market can be a lot more dangerous than being in the retail end. Projects tend to take a lot longer and if the market turns, the developer may not be able to back out of a project that has no hope of being profitable when it’s time to start selling the units. The ank may in fact halt the project, demanding more security if a drop in land/property prices leaves the bank with less security. Moving a few retail real estate properties is one thing – selling 50 or more is another. Remember my words on scarcity? With a large development unless it’s in a super prime position -well – there just is no scarcity. If you are thinking of making the transition from retail real estate investor to wholesale, real estate developer do so with your eyes wide open. You can make money from buying and selling at the retail end of the market. Many people do. But the serious money to be made in real estate is from the direct vertical of manufacturer to Retailer.

Learn to Negotiate a Property Deal – Australia is Part of Asia

admin — Thu, 15 Sep 2011 16:13:44 +0000

In Australia for many people their every day life is not one filled with negotiation. You rarely get the chance to negotiate for your purchases. Your mobile phone company won’t accept your request for a lower rate, your milkman won’t knock 20 cents of the price of a litre, your service station owner won’t discount your petrol bill. We don’t walk into a restaurant and try and bargain them down or into a clothes shop and ask for a big discount. We do bargain at times, but its much rare than in other cultures. Travelling through Asia, Australian’s soon learn that bargaining is an important part of these cultures. Rarely are prices shown at all, so you need to know. a. What the fair, local price is.. b. What the price is you are prepared to miss out at. Many times in Asia you will come up against a seller who at first offers you a high price, then discounts it by 50% quickly. if you know the price should in fact be half again, you can ask for this price, or lower. The seller may be adamant that they will not sell at this price, they will go no lower than $X and you are going to miss out. On many occasions if you walk away the will simply relent and sell to you at the price you ask. But if you stay and bargain? You likely will never get them to accept. They realise whilst ever you are there, there is a chance you will accept the higher price. Whilst ever they are insisting there is no lower price and you remain there bargaining…. there is some chance you are going to accept this price. Why else would you still be here negotiating? Being able to walk away from a negotiation is a tactic that demonstrates you are serious about the price you are prepared to pay and if the vendor really wants to make the sale, they need to come down to your price.

Before Auction day and on the day – Check the contract

admin — Thu, 15 Sep 2011 15:34:46 +0000

When directly negotiating a real estate purchase with the vendor by private treaty you and they have the chance to discuss clauses and conditions, settlements dates etc, Perhaps the contract settlement is going to depend on a valuation of a certain level, a favorable pest inspection report or even finance? That’s all well and good – but not if you are buying at auction. You are buying on the terms set out by the contract set for the auction. Make sure if you are interested in a property that you get a copy of it and have a look at it. Look for clauses and conditions, certainly get your solicitor to check it out a week before the auction date. Know what you are signing up for when you raise your hand. Where you might be protected by a cooling off period when buying by private treaty, there none on offer at an auction. You bid, you buy. In order to bid you will need to have provided ID and if you can’t or don’t make good on your offer if you are the final winner the Vendor can sue you for any differences between your winning bid and the final sale price if its lower than your bid.

When it turns from buying the property, to winning in the auction process . STOP!

admin — Thu, 15 Sep 2011 15:18:33 +0000

Human’s are competitive creatures. We like to win. The auctioneer and his team know this too and seek to take advantage of it. It’s easy to get caught up in the moment and fin yourself in a bidding way way above what you had been prepared to pay. Yes, I have recommended you STRETCH to buy a good property, but this I mean pay more than you had budgeted to spend on a property at all. This does not mean I think you should bid $100,000 above what you think a property is worth, just to win the auction. So many people know this, yet when they attend the auction and find themselves reaching the point where they promised themselves they would drop out from bidding… they find they can not. They will NOT let that man in the dark sunglasses across the other side of the auction win. hey were so close and he is not going to take this away! If you are at an auction, recognise that you are a human being and winning is a natural instinct. Its only a victory if you buy a property at less than the price you have set beforehand as your walk away price. You can’t raise this price during the auction – doing so is not going to based on your research, its going to be based on your emotions only.

Setting your Maximum Price for a real esate purchase

admin — Thu, 15 Sep 2011 14:42:56 +0000

Think not what we are prepared to pay, but at what price are we prepared to miss out? You might find this brings two very different answers. Curious but true. Surely these questions should elicit the same answer. The price we are prepared to pay… should be EXACTLY the price at which we are prepared to miss out. It makes no sense for there to be any gap between these two figures… some price range where you are not prepared to pay this much…. but where you are neither prepared to not pay this amount if it meant not buying the property! So… why the gap? Why is it that when I ask people this question invariably… there is a gap. My hypotheses is that people get confused between The Price they want to pay and not setting a maximum price to far above this price. The actual maximise price they are prepared to pay… which may well be quite a degree above the price they want to pay. Go ahead, want to buy a cheap property. I do. Everyone does. Its fantastic to get a great property for a cheap price. But the next best thing is to get a great property at a fair price that you were prepared to pay and its a long way better than missing out on that same property then realising in hindsight you would have been OK with buying the property at that price.

If a property looks cheap everyone else is thinking the same thing……

admin — Thu, 15 Sep 2011 14:40:31 +0000

So! Find out why it’s cheap. Is it a problem property? Something wrong with the neighborhood(Eg, a lot of housing commission properties, a noisy childcare center two doors down, the “open land” next door has recently been rezoned and a block of apartments is going to be built next door – meaning 12 months of building noise during the day, and then your view/open space land/quiet street is now all very different. Short of getting a professional in, have a good look at the property. Is it damp in places? Cracks in the bricks? Obvious recent repairs been done? Have a look under the house if possible. Issues with damp or rot? You’ll still need a full pest and structural report of you decide to buy, but even before you get one you can often find reason why a property is listed cheap.

Once you find the problem or problems causing the low list price, all of a sudden the property is not going to look cheap, it’s going to look reasonably priced or even over priced. There is a big difference between buying a premium property cheap, and a cheap property at its market value. In such circumstances capital growth is going to be lower than expected for such a property and rental returns will be lower as well.

You will have to ask less from tenants, you will likely get poorer quality tenants who can afford nothing better and your turn over of tenants will be higher than average leaving you with periods where you have no rental return. Of course, there is always the possibility that the property is simply underpriced. The owner wants a quick sale and figures the best way to get one is to offer the property for sale cheaply.

Usually, they are right so if you do your investigations diligently and find no reasonable explanation for the property being offered cheap then:- b. Get ready to buy fast. If it’s cheap because of a motivated seller, best to be a motivated buyer ready to take advantage. c. It’s likely still cheap if it costs a bit more so be prepared to outbid someone else who has also spotted this little bargain. .

Don’t buy quirky and quaint real estate.

admin — Thu, 15 Sep 2011 13:40:15 +0000

If a property is described as quint or quirky – beware. You might like quirky and quaint, it might suite your style. The problem is quirky and quaint when i comes to real estate are terms that are used to describe a property that has some charming features, but a lot of negatives. Perhaps i has a bad aspect, the bedrooms are too small, the plumbing is ancient or its in an area with no public transport. If quirky and quaint are the best attributes that the agent is espousing about a property…. it’s time to look for a different property. Quirky and quaint means a property that is going to really really appeal to a small % of the market. Even if YOU are part of that market… RENT such a property rather than live in one. Buying one is usually a mistake as properties which appeal to only a small % of the market take longer to sell, and sell for less. When it comes time to sell and move on you will see a smaller return on your investment and it will make buying a new property harder as the one your are living in will invariably take longer to sell than the one you looking at buying. Buy quirky shoes, buy quirky clothes or even quirky music and jewellery just don’t buy quirky real estate.

Inner City Property is Hard to Beat

admin — Tue, 06 Sep 2011 22:02:07 +0000

For investment, inner city locations are without doubt hard to beat. Proximity, lifestyle, land scarcity and tight vacancy rates are only putting upward pressure on inner city housing prices. That’s only good news for investors looking to see growth over the coming years.

As you move into the outer suburbs you tend to gain space for your large family, but with Australian’s tending towards smaller families or even opting out of children entirely, in 2011 the size of the average home shrank for the first time in decades. We need less space. And this outer suburbs extra space is cheaper than inner city space but it still comes as a cost, especially if you work in the city. Choked roads, long rail, tram or bus trips.

If you spend 90 minutes a day getting to work in the city, that 15 hours a week of your life lost. Assuming you do this for your working life… that’s over three and a half years you will spend commuting! Inner city property has always done better than suburban real estate and it seems this is only going to increase in Australia.