Investing in Ormeau. Brand new vs existing house

Discussion in 'What to buy' started by Mimi23, 14th Feb, 2017.

Join Australia's most dynamic and respected property investment community
  1. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    Hi,
    I am new to investing. I am in the process of buying an "off the plan" investment property in Ormeau through a Financial Planner Options Wealth Solutions.
    The property is $526K (4 bed 2 toilet 2 garage 605sqm) and the current market value (upon speaking to local real estate agents) that property is selling around $480K. There are pros and cons and I feel that we are paying too much for this property. The main reason we want to invest is to reduce our tax, reduce yrs of our own home loan and of course to make money. Capital growth is low due to the suburb still developing. However, this is a developing suburb and there are plans for Coomera Westfield and Ormeau has business centre and other shopping centres. The property is also located next to Ormeau Woods State High School which has good reviews. I am alarmed there is a huge amount of houses advertised for rental in the area.
    I can keep going on but what are your thoughts going with a financial planner and Ormeau? I am aware you pay more but the question is how much more? Also, is there additional fees that I am not aware of?
    I am concerned that I am making the wrong investment decision. Shall I keep looking? Any information and advice would be greatly appreciated.
     
  2. sharon

    sharon Well-Known Member

    Joined:
    6th Jul, 2016
    Posts:
    441
    Location:
    Brisbane
    If the properties of that type are selling at $480 and you are being asked to pay $526k - why would you? Why not just buy one for $480 if you love that area?
     
    Tanya1335 and Joynz like this.
  3. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    Good question.
    There are perks buying off the plan, less stamp duty (you are paying for land value only), claim more tax, tax depreciation, brand new, low cost maintenance. Btw it's $480K existing house.
    The only consolation I am hoping is that the value will increase in a few yrs when the place starts to develop and Commonwealth games 2018. Thats the big risk.
     
  4. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    Never do any investing for "tax reasons". Brand new commands a premium that evaporates into thin air in a few years time when 'new' becomes 'used'.

    Hope is not a strategy.
     
  5. Simon L

    Simon L Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    385
    Location:
    Sydney, Brisbane
    If optimistic agents say its worth $480k and you're paying $526k thats pretty much all you need to know to run away fast.

    Big oversupply in Ormeau and even more coming online in Pimpama. Limited demand due to being in the middle of woop woop. Don't get suckered in by this "financial planner". At that price I am certain he's making a decent chunk from the developer of these houses

    You will find much better value in 'normal' Logan suburbs closer to Brisbane with all the shopping centers, schools, infrastructure etc in place already
     
    Tanya1335, Luk.bai and Blueskies like this.
  6. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,380
    Location:
    Qld
    Nothing unique about a house and land package in Ormeau. There must be literally thousands of them. And thousands of acres of land still to be developed.

    So you are happy to overpay $46K to get some tax benefits???

    Tax benefits should only EVER be the icing on the cake, not the main strategy.

    With $526K, look closer to Brisbane. That should get you a decent place in the 12-15km distance from the CBD. Sure, you won't get as much in tax benefits, but capital gains should be far better.

    And if your heart is set on a new h&l package, ditch the financial salespeople (the main planning aspect is their commission) and contact local agents to buy direct from the builder or developer without another layer of profit by middlemen.
    Marg
     
  7. abbyfresh

    abbyfresh Well-Known Member

    Joined:
    2nd Jul, 2015
    Posts:
    433
    Location:
    VIC
    10-15% above market value sounds like a very tidy commission for the companies pushing thos place on you.

    Others have said even at market value they wouldn't consider this a good area to invest in.
     
  8. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    Thank you so much for all the advice. I have learnt so much and also confirmed my doubts. I am so glad I found this website.
    It seems to me there is more negative than positive in buying this investment property.
    It makes me wonder though, why would people buy property via a financial planner if you are going to lose money? It doesn't make sense. Is there any positive reasons?
     
  9. hammer

    hammer Well-Known Member

    Joined:
    28th Aug, 2015
    Posts:
    2,854
    Location:
    Darwin
    It makes perfect sense for the financial planner.

    Whom I believe is someone you need to ditch and fast.

    The only financial planning they are doing is theirs.
     
    Last edited: 14th Feb, 2017
    Westie, lotec, RJS and 6 others like this.
  10. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,380
    Location:
    Qld
    In a rising market, everyone gains. Planners can quote spectacular gains when the market booms. If a financial planner had organised an IP for you in sydney 5-6 years ago you would be delighted with the results, even if you had overpaid in the first place. However, some other planners were advising to buy in mining towns and the losses have been spectacular. (Search Moranbah threads).

    But obviously they are in it to make money, so necessarily charge for their services, usually through inflated prices and undisclosed commissions. Many also advise "never sell" which muddies the water, as you can only establish exact value upon sale. "Valuations" quoted to support their advice is only ever an estimate. Again, Moranbah gives some salutary lessons where advisors were telling clients to hold through a "temporary downturn " as the market crashed.

    Their slick presentations and glossy brochures are designed to appeal to unsophisticated buyers who believe the hype. Yes, they will have successes, but more due to market gains than any particular value they have added.
    Marg
     
  11. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    I have written so many times about this I don't even know where to start! A lot of good information above and none of it in support of what your financial planner is proposing. Many financial planners are simply salesmen, they broker products and services to make commission and have no interest in your long term goals or gains and will disappear as soon as the dust settles.

    There is absolutely no benefit to buying a property "through a financial planner". At best, your FP should be advising you - and this is dubious as most financial planners do not specialise in property - and then having you engage a professional to help you buy. A fee-for-service buyer's agent is the way to go and have a professional property adviser help you with your strategy overall if the BA can't.

    Run a mile from this financial "adviser"!
     
    Rich2011 and Mimi23 like this.
  12. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    Thank you for the advice. I must say its quite overwhelming with all the replies & grateful. It has been a roller coaster ride. I have decided to withdraw & sent an email. I signed the contract last Wednesday. As per phone conversation today, the FP plans to come tomorrow so I can finalise withdrawing from buying the property. He says I have to sign paperwork to cancel the contract & Im not obliged to buy it. I will not lose the deposit of $1000. Personally, I feel he will try to convince me one more time tomorrow & I hope he is not difficult & find clause that I have to commit. Feeling worried.
     
  13. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,380
    Location:
    Qld
    At the very worst, if you lose $1K I think you have had a lucky escape.

    If he tries to talk you into buying, simply say no. You don't have to give a reason. And keep saying no till he gives up. Just imagine you are a parrot!!

    Don't give a reason. Salespeople are thoroughly trained with set answers for any negative reason you can think up. If he/she insists, simply say you have changed your mind.

    Start practising..."no, I don't want to continue. Please give me the paperwork to cancel the contract today". Use that, or something similar, to counter every argument.
    Marg
     
    Catweazle, Gockie and Propertunity like this.
  14. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    You are so funny. That's the first time I laughed since Wednesdsay. Been stressing out. Thanks.
    In this case, Im happy to lose the 1 k if I have to. No No No....duly noted :)
     
    Gockie and Marg4000 like this.
  15. Phase2

    Phase2 Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    1,289
    Location:
    Perth
    This x 1000!!! :)
     
    Mimi23 likes this.
  16. Phase2

    Phase2 Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    1,289
    Location:
    Perth
    Don't be happy about losing $1,000. Get a friend to join you in your meeting with your financial planner, sometimes it helps to have that bit of support when you've got a pushy salesman. I don't see the need for the FP to actually visit. Docs can be signed and sent by mail/courier or even electronically. This is a last ditch sales pitch.

    PS - too many Yowies in Ormeau. They'll scare off your tenants. (google it)
     
    Marg4000 likes this.
  17. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,380
    Location:
    Qld
    Good idea to gave someone with you.
    Marg
     
  18. Mimi23

    Mimi23 Member

    Joined:
    14th Feb, 2017
    Posts:
    8
    Location:
    Sydney
    Yeah I thought of having people with me. I already planned to have my brother, husband & Mum with me. It just happens they came over to visit when the FP comes.
    I'm ditching Ormeau. Once this settles Im going to do my own research instead. I already spoke to my previous broker who helped me buy my first house.
     
    Savy mum, Marg4000 and hammer like this.
  19. NOTAM

    NOTAM Member

    Joined:
    15th Feb, 2016
    Posts:
    14
    Location:
    VIC
    Hi. I'm just a humble beginner to investing too. I have spent the past year reading books on investing and listening to podcasts like Property Couch (Ben Kingsley and Bryce Holdaway) and from my learnings so far I would say run, run, run! You are the last link in a very long chain of people who all want to make a profit from this property.
    Look to buy something that is worth more than you are paying, not less.
    Look for something that is unique, or at least scarce, something that would appeal to owner-occupiers. Something that you can squeeze more value out of, by renovating, subdividing etc.
    don't invest with the aim to reduce tax. Negative gearing is a tool to essentially soften the blow of losing money on your investment. Invest to PAY tax. If you pay tax, you're doing well.
    Best of luck.
     
  20. NOTAM

    NOTAM Member

    Joined:
    15th Feb, 2016
    Posts:
    14
    Location:
    VIC
    Mimi23. How'd you go?
     

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia