Category Archive for Property News

Morning Guys,

I have a  house available in Boambee East which is just 4 minutes from Coffs Harbour.

Its a 3 bedroom house.

We are making it available to someone who wants to own their own home for $565.82 per week. And is serious that they want to stop renting.

Here are some more pictures and my contact details

Don Christie

Just this morning, on my 8am walk, I noticed a house for sale. The sign had been there for some time so I decided to call the agent. When I got home I checked my diary where I noted that it was a good 3 months that it had been listed.

These ones do excite me, as vendors get desperate - as you can imagine - and they are sometimes a great boost to anyone’s equity! He has had tenants that caused or were involved with a fire inside the house. Insurance paid out to cover replacement / refurbishment cost of the fire. Total renovation and re-marketing to cover some outlay. Meanwhile the mortgage still has to be payed each and every month.

When I asked the agent some questions, she said to me that they are looking to re-rent the house out and will have the rental agreement by the end of today. I said why don’t I rent it and buy it at the end of the 12 month lease. Read the Rest.

It seems there is evidence to dismiss the rubbish fed by newspapers and real estate agents that a hot market is forming.

I know for myself that here in South East Queensland, there is nothing but a struggle for the agents to get properties sold and to get new tenants in their management properties. I have never seen more signs in the front of houses up for rent, looking for tenants. I have never seen so many television ads for real estate agents and property websites. Read the Rest.

This morning the Reserve Bank of Australia made the announcement that they are raising the cash rate to 6.5%. You can read more information here. Most investors are on a fixed rate or 1/2 fixed 1/2 variable interest rate, which makes up their commitments to the banks.

When discussing home loans with both homeowners and investors, they always seem to think interest rates are the only real way to compare their mortgages. They usually know what their redraw facility costs and monthly fees, but they do not know the impact that rates have on the loan. To view the speech given by the governor please click here. Read the Rest.

Investors are property problem solvers. They make accommodation available to solve tenant’s problem of having somewhere to live. As an investor you need to address problems to make your investment yield a better return and to develop ways to create equity.

Lets say you buy a block of 5 units like the ones in the picture below.

It is listed for $700,000 for all 5 units and when fully rented it would return $900 per week in rent. For those looking for return on investment that is a 6.69% return.

Now let’s solve the problems I found when visiting the property earlier this morning and work out the likely equity growth.

1. Its appearance could do with some attention. Landscaping, painting and some rendering will be required.
2. New floor coverings will be required to bring the insides up to a user friendly standard.
3. Updating the taps, handles and fittings to liven up the bathrooms, laundry and kitchens in each unit.
4. Re-plumbing the pipes that stick out at both ends of the units.
5. Looking at re-roofing as a possibility.

Now these are all things you can do yourself or sub-contract out to professionals or handy people.

I estimate that for $20,000 you can get away with most of that list, doing the work yourself. I also only spend money on real estate if I get a return of 4:1. That being said the likely valuation of a block of units would be close to $800,000 after you have done this type of renovation.

Its not a bad return on investment when you consider that for the outlay of $20,000 you have a made a equity increase of $100,000. Also the next rental evaluation will usually increase by the amount the property is worth. So in this case it would go up by 14% as this was the increase in the value after the renovation. So the likely rental now has increased to $1026 per week

So what does that mean in a return on investment?

At the start we had a 6.69% ROI. Now we have a 7.62% ROI. All for $20,000. The time frame of this project would be a month to six weeks. As you can see by the figures this is much more rewarding than going to work everyday.

So what do you do next?

Refinance this property and use the equity built up to do more and more unit blocks, houses or units. The only thing stopping you is the ability to manage every part of the project.

How many of these could you do per year?

The answer is limited by resources, but even if you just did one property per year.You would have made more money than working in that timeframe. It sure beats going to work 40 hours a week. Make equity and enjoy spending it!

Don Christie

The reserve bank is set to meet and discuss the current credit spending next Wednesday, and in all likelihood there will be a serious interest rate rise in the region of 0.25%. This is due to reports that Australians still continue to spend even after recent rate rises within the last 12 months.

What does this mean to home owners and residential investors? I refer to the Australian Bureau of Statistics’ figures where it states that 35% of the houses in Australia have a mortgage and to the tune of 40% of the value is the mortgage. That means on a $300,000 property homeowners have to find $12 more per week to satisfy the banks.

You don’t have to be a mathematician to work out that the average homeowner has to earn $15.40 just to take care of the extra amount needed each month. This is almost another hour’s work at some people’s professions. This takes into account tax being already taken from the employee’s salary.

$12 per month sounds like another coffee shop morning tea for those that don’t invest, but what about investors who look for better than average returns from their real estate ventures. They will suffer a little bit, but as the rental market starts to heat up we may see investors flooding the market and therefore negating the rate rise.

What about if the return on your property portfolio went down by $15 each property by 5 houses. That’s where some creative measures need to come out.

It may be the time to do a few small renovations or upgrades in your rental property to justify raising the rent. I suggest going and seeing your tenants and finding out what they would like to see happen to justify the increase in their rent. During the winter may be a great time, to ensure you have ceramic towel rails or a heat lamp in the bathroom. These cost $85 at Bunnings, but the tenant feels better for having those benefits for an extra $15 per week.

The tenants may have a child or children and you could provide a sandpit in the backyard. Although this may cost more, mums and dads realize that and may be happy to pay $15 more per month to justify your expense.You may also find that they are happy to extend their rental agreement for another 12-24 months, because you have found a solution to their needs.

So the obvious reaction to a rate rise would be to fix the rate for a period of time. This can be effective in the event of further rate rises, but can sometimes incur break costs and fees from your current financial institution.

Investors need to work out what the comfort factors for their tenants are. I have found that solving problems and making money come from creative thinking and asking questions.

Lets hope rate rises create happier tenants.

Don Christie