VIC My thoughts on what makes a good purchase

Discussion in 'Where to Buy' started by IamsorryIamnotgood, 8th Feb, 2020.

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  1. IamsorryIamnotgood

    IamsorryIamnotgood Member

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    1) somewhere people want to live
    2) has land
    3) on a transport corridor
    4) has increased in price the last 10 years
    5) don't buy something that hasn't already gone up in value at some point in the past

    This basically rules out anything in my price range. I assume everything that doesn't meet at least some of those criteria will never increase in price.

    I currently rent an apartment, it has been its price forever. Can anyone make any suggestions why apartment prices would increase ? They are all still about 400-450k.
     
  2. Trainee

    Trainee Well-Known Member

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    Define forever.
    Cbd apartment?
    Maybe it wont go up. So dont buy there.

    what makes you think your criteria are good? How much have you made off these rules?

    1 is subjective. Some areas may not be desirable, but its cheap and not everyone has 1000 a week for rent,
    2 excludes apartments
    3 ignores beach etc locations
    4 dismisses cities or areas at the bottom of a cycle, IF it turns. You also risk buying at the top.
    5 go back far enough and everythings probably gone up at some point.
     
    Last edited: 8th Feb, 2020
  3. kaibo

    kaibo Well-Known Member

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    if construction cost increase then it may increase in value or rents start to climb (unlikely though)
     
  4. Inov8ive

    Inov8ive Well-Known Member

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    Ok, I dnt really agree with any of your points except maybe the transport corridor. You say that you shouldn’t invest anywhere that hasn’t gone up in the last 10 years? Why? Historically trends are worth consideration but what is far more important are the drivers of why a suburb or area will grow. Infrastructure spend or re-zoning effects can have massive impacts on capital growth but will have nothing to do with a historical trend
     
  5. lightbringer

    lightbringer Active Member

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    1. somewhere people want to live
    I think there's a difference between where people want to live, and where they can afford to live. I want to live in a mansion in Mornington Peninsula, but that's not gonna happen any time soon.

    2. has land
    This is quite a discussion. I would rather hold a townhouse in Melbourne suburb with about 200sqm than a big block of land in a mining town. You'll need to know what you're targeting, as this criteria is too vague to say anything except avoiding high rise apartments.

    3. on a transport corridor
    This is again, depending on the demographic of the area you're targeting. Let's say it's a high end area, where Mercedes, Audi, Ferrari are everywhere. People don't use public transport in that area.

    4. has increased in price the last 10 years
    This is like you're driving while looking at the rear view mirror. There is no guarantee that the price continue rising if they have been so consistently in the last 10 years. Something disastrous could happen, which people often refer to as "Black Swan". Things like huge bush fire like we just witnessed, or maybe an asteroid just happen to drop on top of the suburb, etc.

    5. don't buy something that hasn't already gone up in value at some point in the past
    As @Trainee said, if you go back far enough, everything goes up in value (could be because of inflation, or appreciation, you pick).
     
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  6. IamsorryIamnotgood

    IamsorryIamnotgood Member

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    rrrr
    People who own houses made 80k or so a year over the last decade. Many people who own apartments would have been lucky to make 100k in total over that same decade.

    My friend bought an apartment in 2009 for 450k, I tihnk in 2020 those same apartments now sell for between 450k to 500k.

    Meanwhile, my colleague who bought a house has made close to a million over 5 years.

    I am a poor person and have not made any money but I am trying to learn information. Some people seem to be very smart and know why property goes up in price, others are lucky ignorant people.
     
  7. IamsorryIamnotgood

    IamsorryIamnotgood Member

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    11111111

    There are clearly some properties that have increased in value explosively while there are others which have not increased at all (or have increased very modestly) over the last decade. What is the cause ?
     
  8. Judi

    Judi Well-Known Member

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    Hahaha,,
    No one has a crystal ball, many people who invest property successfully would be both smart and lucky, plus have the means or mortgage ability to buy.

    Other than' don't buy apartments ', all the other rules seem pointless.

    For Melbourne, apartments prices stay stagent. For Sydney, apartment prices seem to rise. Wonder why,

    For apartment prices, maybe get a nicely located livable unit somewhere, better money spend, or snap up a house in the slum.
     
  9. TMNT

    TMNT Well-Known Member

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    Op you seem very cynical about anyone who has made a profit (I get how you feel)

    Plus these blanket rules arent wrong but it's "it depends" type situation

    Also RE is more about time and buying right, and not about pot luck or making a zillion dollars in 2 to 3 years

    For every person thats made 50% in 6months there is another thats made 25% in 10 years
     
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  10. IamsorryIamnotgood

    IamsorryIamnotgood Member

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    It 100% is about making a zillion dollars a year, the way is to buy one place, watch it jump 200k a in a year or two then use that equity to buy another house and outbid people who's purchasing power is bound by what they can save.

    There are people around who do that year after year, I was hoping to get comments from them.

    Obviously they don't share their secrets :)
     
  11. Trainee

    Trainee Well-Known Member

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    The devil is in the detail. There are no secrets.
     
  12. SkyeR

    SkyeR Member

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    I’m very new to the investment game and looking at purchasing my first home as an investment, but I to want to know what the secret is to purchasing a property that looks like it’s going to boom! Please share! How do you know what to look for in an area? I’m hoping to find something very cheap, nothing over 250k but I want it to be the right choice to kickstart my investment portfolio. Veterans of the art of investment, share your secrets ;) also what does everyone think of Perth??
     
  13. TMNT

    TMNT Well-Known Member

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    No places are going to jump 200k a year unless you buy in the 2m plus range
     
  14. Trainee

    Trainee Well-Known Member

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    dont understand this idea of thinking dollars. Return, profit etc should always be in percentages then translated into dollars.
     
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  15. Codie

    Codie Well-Known Member

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    I don’t think it has anything to do with people seeming smart, sure there is a bunch of luck in terms of buying a PPoR in a great location and making 1m from it.

    But most successful investors dedicate a huge amount of time and research to making a portfolio work, its far from easy or passive. I’d recommend you spend some time on the forum doing the same
     
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  16. Sackie

    Sackie Well-Known Member Premium Member

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    I've bought some more apartments in Sydney about 6-7years ago for mid 500k. Today all are valued over 1.1m.

    You need to understand not all stock is equal. Not all suburbs are equal, not all markets you purchase in are equal and certainly not all investors are equal with their buying decisions.
     
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  17. Sackie

    Sackie Well-Known Member Premium Member

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    This.
     
  18. Sackie

    Sackie Well-Known Member Premium Member

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    I'll tell you the secret. But you won't like it. Probably won't believe it because it seems too simple. Here it is.

    Most really successful investors have spent a great deal of time, effort and energy to learn their craft via self education of hundreds of hours plus networking with other successful investors.

    I don't know a single successful investor who relied on others whispering all their 'secrets' to them.
     
  19. SkyeR

    SkyeR Member

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    i guess signing up to this forum today was a good start for networking ;) and don’t worry, I’m putting plenty of hours into self education and research. I aim to be a smart investor. Thank you for your reply
     
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  20. The Y-man

    The Y-man Moderator Staff Member

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    The secret to property investing I didn't know at the start and figured out much later: It's all in the timing.

    People tell you it's time in and not timing, but I found in a place like Melb, it's all about timing.

    We didn't have much money at the start, so we started with 1 and 2 bedroom apartments in 2001~2004. We sold off almost all of them in 2008 - at really decent profits (typically double what we paid).

    If on the other hand you bought when we sold and held to today, you would get what you observed - almost no movement.

    The Y-man