Is 2016 the year you’ll make a killing in the property market?

The 'vibe' feels very different to last year doesn't it? 2016 ended up being far better than I expected. I'm feeling less bullish about 2017. No more IP acquisitions for me this year, happy to sit tight and see what unfolds from the sidelines. Got some other tasty projects to keep me busy this year.

 

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BM
Depends which way you look at it?? I don't like buying when there is negative market sentiment, I feel this is very risky because we don't know how low it can go

Does it make sense to buy in a flat/falling market when interest rates are rising?

Does it make sense to hold property where rental market has been hammered, and yields are low and there is an oversupply of rentals, properties don't rent out straight away

Does it make sense to jump into a flat/falling market when there are significantly stronger markets starting to rise with higher yields.... cost/lost opportunity.

Does it make sense to pay debt/bank interest when the economy is weak and unemployment is at an all time high?

Does it make sense to buy property just because there is no or less competition?

 

Back to original post question; We didn't actually do any new investments in 2016 - our last two were both near the end of 2015, but the passage of time through 2016 was a good (property) year for us:

1. We bought our next PPoR site on Dec 29, 2015 for $660k (knock over house so; mostly land value). 795s/m = $83,000p/sq/m...have been renting it out since then.

Fast forward to 2 months ago; recent sale of a similar knock-over house block of similar size sold for just under $150k p/sq/m...so; the land value has increased by approx 80%....total fluke.

2. Also; we injected funds throughout that year of 2016-17 (and still are injecting funds for a little bit longer) into to our Ubud Development, which has now finished and is opening on Aug 1. Un-improved land vale at purchase (in 2015) was $100k, construction approx $350k; current property value circa $1m without Business value.

2017 will be a good year for us from the point of view of the opening of the Ubud Development. The website for the complex went up 13 days ago, and since then have booked 35 nights so far across Aug and Sept....averaging almost 3 rooms booked per day which is way above our wildest expectations.

11 on Kajeng, Boutique Villas, Central Ubud. BALI

(another 3 night booking arrived on the alerts through bookings.com as I'm typing this! yay!)

 

With the Ubud Development were you ever concerned about this project, risks etc. Its really outside the square for most investors. What was the clincher that sealed the deal?

I always believe some luck definitely comes into play.

MTR

 

Never had any doubts...my SIL and BIL have been living there for 5 years, know their local area intimately and had already built and sold 2 houses, as well as one they built for a local guy which they are renting back from him.

The wife and I trusted their judgement on this project and had no qualms diving in...the only question was how much to put in.

But; we have done that sort of "outside the square" stuff a few times already - which helps.

I believe you make your own luck, and I believe everyone needs to get outside their comfort zone if they hope to succeed in any endeavour.

 

Fortune favours the bold

 

I looked at the link. It's a lovely place, but I am surprised that the average bogan would pay that much for accommodation in Bali.

 

we dont want the average Aussie bogan, and it is priced accordingly...not only that; the demographic of tourists in Ubud is completely different to them, and Ubud is in the top 5 tourist destinations in the world currently - so we dont need them either...

It is more the higher earning, professional couples, the "wellness" crowd, nature lovers, etc, mostly European, USA, UK, etc.

I have visited Ubud 4 times myself now, and you just dont see many "Bintang Bogans" around the place.

So far we have approx 50% booked out Aug, and we are averaging 3 nights booked per day since the website went up; and there is only one booking from Aus in that lot.

 

Is the land on leasehold? $100k for approximately 1000m sounds like it is.

 

Hi @Bayview, just a suggestion. For your booking.com bookings, take the credit card details and process payment asap. Including CVC. Out of all the booking channels I've used, i've found booking.com guests the most flaky for cancellations.

 

yes, it is a 30 year leasehold

 

I thought bookings.com had a no deposit policy?

 

As a setting you can ensure guests from booking.com have to enter credit card details as a condition of booking but to process payment you will have to ask the guests for the cvc number. Once you get that, I'd suggest to charge as soon as you can (or at least take a non refundable deposit). I had way too many cancellations through booking.com.

Perhaps there's a lot of people who decide to hold reservations at multiple properties then at the last minute only decide to keep the one they really want to use till the very end? No penalties on their side. I had a friend who did that. So I found I had very flaky guests from booking.com in that regard. So ask for payment. If they don't pay, then perhaps it's not a booking you really want to hold your dates for them anyway. I also had one guest that said they'd do a direct deposit, all keen, a week or so later I had no record of payment so I followed up. They didn't pay as they said they would. Then they quietly cancelled. In the meantime those dates were unavailable to anybody else who wanted them. So insist in a payment at time of booking. Perhaps allow 48 hours for guests to lodge a deposit.

I'm also not a fan of after the month ends, booking.com sends you a bill for all the stays during the month for their part of the commission. Payment handling is nowhere near as smooth a process as Airbnb or Stayz, chasing up all guests for payment then having to pay booking.com for their involvement is a pain point.

I've also listed on Stayz, guests seem ok from there and Stayz will collect payment from guests and Stayz will pay you, even send through deposits upfront (which you can set through your settings) which is great.

Setting up calendars and pricing on Stayz doesn't feel intuitive though, it's a big chore and it's calendar doesn't appear to sync with Airbnbs and other booking engines so you manually have to update it, which is annoying.

 

Land around the area is selling around $600-$700/meter.
Your lot approximately 1000m2, $100k for 30 years, that's equivalent to about 0.5% yield for the owner.
That is a good deal.
Either that, or those people buying at over inflated price.