How much have you paid?

More than one way to value a property...

 

Personally I wouldn't be buying an ip if it is that unusual that there is absolutely no sale evidence to get my bearings from. If I did buy it, I would make sure there is a nice fat reduction in there or look at closest comparable sales and then make a decision.

 

Yes the valuers value by discounted cash flows

 

The bearings used is the cashflow

 

I don't buy the argument that investors are not driving prices up juat because you try and get good deals. Supply and demand. The fact an investor buys at all is extra demand. If you didnt buy then those who missed out wouldn't bid on another property increasing prices etc.

Regarding the rest of the topic, I'm only starting and have just bought a ppor. We overpaid as it had everything we needed. Luckily the market has kept going in the two years since.

So I'd say ppor buyers may lead the major booms with fomo. But to say investors have no effect is just not possible.

 

How does CF give bearings on whether your paying too much for a property or whether it should be bought at all..

You could have a property deal with a poor yield but the buy price could still be a great price if its really bmv.

 

Totally agree that you make the money when you buy. Put you ahead on CG straight away.

 

If investors are looking to buy a property cheaper than the asking price, and/or buying the properties that no-one else seems to want (on the market for a decent time) then they cannot be forcing the prices up. Yes, they are creating more sales, but it's like a butcher's shop having a sale on 1kg's of mince for 30% off, and everyone piles in and buys up the whole stock. There is a lot of sales, but the price hasn't gone up.

All the places I've bought could have been bought by someone else well ahead of me - except our last PPoR; we saw it and bought it within 24 hours, and paid $5k over asking.

That is a PPoR buy; not an investor who is looking to maximise cashflow and CG through purchasing well.

I agree; investors only have a minor influence on prices - 70% of all houses are owned as PPoR's, so it makes sense that this is where thew majority of the influence will be.

But, the usual whining from the media, Civ Lib handwringer groups, and even Pollies (who should know better) always goes down the path of slamming investors, and they paint investors as evil, greedy and a dirge on society for making it "unfair" to others who want to buy by pushing up the prices.

Yet; so far on this thread; the pattern is not that..

 

Having just bought a PPoR I can attest that the emotive influence is greater...after all you're buying your lifestyle as opposed to a marketable commodity.

Yes I paid $30k more than I thought it was worth, but over 20yrs its negligible.

 

Commercial, perhaps?

 

True, commercial is a different beast, though I was talking about residential.

 

I have mostly paid under the asking price but have occasionally paid over.

I have paid over in instances when I already have the place beside and one or two behind it.

I'm not trying to drive the price anywhere, it's just what you have to do sometimes.

 

Based on the net return on purchase and anticipated rental on reviews present valued to today
Its just the lack of sales in Australisia makes it hard to compare

 

Yes commercial
A property similar to the Sydney GPO (the land only as the building is owned by a different company)
I thought i could value it by m2 of a similar site but apparently the lease and rental are a major factor @

 

Both times Bank vals matched contract price.

The first established PPOR we offered in the high end of the "range" it wasn't necessarily over asking price....we just really didn't negotiate hard as we "wanted" it to be ours.

The second one we offered over asking price, we basically just offered what the agent said would take it off the market after an earlier offer by another party was almost accepted.
We reeeeeeeaaaaallllllyyyy wanted that one.

 

My understanding is that the lease/rent income is pretty much the factor when talking commercial valuations?

 

Agree that if a property is going 200k over reserve it's probably not an investor doing that. So run away booms likely ppor driven.

The rise of wanna be developers is definitely influencing prices. Just go to any eastern melb auction for a place on more than 600m2. Investors are winning competitive auctions.

Also in your example where others had chances to buy. If you didn't buy then the property would have remained unsold. They then have to lower their asking price to find a buyer. This example sets a lower precedent for the area. Ie you influenced prices just by buying even if you beat no one.

70% of house are ppor. You can't argue that if 30% of buyers dropped out of the market the result would be unchanged. Houses would take longer to sell or less competition at auctions and we all know what those things do to house prices.

I hope to become a property investor I just know I can't pretend I wouldn't be influencing prices.

 

It's a chicken and egg scenario; if I don't buy, and then someone else does later; they have influenced the price too, but someone eventually has to buy.

They may buy for less than I offered, or the Vendor might take the property off the market until such a time as the market may be more receptive to the price they want.

The prices that I have paid for my IP's (due to waiting and then offering lower) have influenced the prices in the area - but not up.

When I bought them; no-one was buying them; so to offer low and get accepted is pushing the prices down, I would have thought.

Could they have eventually sold for lower to another investor in a few months time? Possibly; but then you have a scenario where investors aren't influencing the price up.

 

The last two properties I have been interested in both vendors had bought a block of land (condition on the sale of their house) and wanted to build. So yes there would be one less home but at the same time there is one more house in Australia.

 

what can happen as a developer is if an area is rezoned there may be no recent sales evidence of the product you are planning to build, however you are still at the mercy of the banks for financing the build and values coming in.

I assume banks look at surrounding areas to determine valuations in these cases?

MTR