Regretting buying property?!

Discussion in 'Investment Strategy' started by Amber83, 3rd Feb, 2016.

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  1. Perthguy

    Perthguy Well-Known Member

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    It's all good @barnes. :) I have been educated that my opinion is wrong. With the additional information I have been given over the past couple of days, I can see that I was out of line and that you have made a very valuable contribution to the forums. I can admit that I was shortsighted, narrow minded and wrong. I was shortsighted, narrow minded and wrong. I hope you stick around and teach newcomers like me a thing or too. You have been in the property investment game a lot longer than I have. Look forward to a lot more "likes" from me on your comments :)
     
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  2. Perthguy

    Perthguy Well-Known Member

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    Another poster pointed out the negatives of residential property, things I had not taken into consideration:-
    - high cost of entry (stamp duty)
    - high ongoing costs (council rates, electricity rates, water rates, land tax)
    - low returns (a $600,000 townhouse in Perth may rent for $450 pw, a very low return)
    - high exit costs (marketing, commission, capital gains tax).

    There are a lot more negatives to residential property investment than I realised.
     
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  3. THX

    THX Well-Known Member

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    Tenants ;)
     
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  4. barnes

    barnes Well-Known Member

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    Good. You are getting there. When I calculated all these expenses I found out that it's not worth my time anymore.
     
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  5. barnes

    barnes Well-Known Member

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    Yes I have been there a very long time. Too long for my liking, should have left it 10 years earlier. But late is better then never.
    And by the way I don't teach newcomers. I only warn them. :)
     
  6. Perthguy

    Perthguy Well-Known Member

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    Well I have learned a lot from your posts, it just too me a long time to realise it ;)

    Consider yourself a teacher :)
     
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  7. barnes

    barnes Well-Known Member

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    Thanks - I do what I can. Unfortunately I don't have a lot of time to help everyone, trading needs my attention.
    Teacher - nope, guru is a lot better. :)
     
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  8. Perthguy

    Perthguy Well-Known Member

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    Just be patient with your students who are slow learners ;) :)
     
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  9. turk

    turk Well-Known Member

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    As a Guru could you please explain to me how an leveraged investment such as property is limited to 15% yearly gains tops?
     
  10. KayTea

    KayTea Well-Known Member

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    I'm hearing you - I only bought my place late last year, and in the past 3 weeks I've had to replace the kitchen tap, buy a new cook top, and now get the spring on the garage door fixed. All up, the positive cash flow that I was supposed to make in this first 12 months has now gone down to $0.

    The thing that makes me the saddest is that I've lived with a dripping kitchen tap and almost completely non-function cook top in my own place for over 4 years, and my tenants now get new ones within a week of there being a problem!

    I'd love a new cook top, but then people would expect me to cook edible food. At least while the cook top is cruddy, I can keep blaming the dodgy meals on that, I suppose :rolleyes:………...
     
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  11. barnes

    barnes Well-Known Member

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    What kind of explanation do you need? Look at stats. What real estate market (capital cities) in Australia gave you more than 15% yearly capital gain every single year for the last 6-8 years? I'm talking about buy and hold.
    Development, renovations, flipping and so on it's another matter. You can't do it only by pushing buttons on your keyboard.
     
  12. turk

    turk Well-Known Member

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    The type of explanation that explains how a leveraged investment is limited to 15% yearly.

    I have bought buy and holds using 105% borrowings, what are my returns on a year of 15% growth?

    Let us also no forget the beauty of compounding growth.
     
  13. joel

    joel Well-Known Member

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    With a 10% deposit, just 1.5% growth in value equates to a 15% gain on your initial investment
     
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  14. barnes

    barnes Well-Known Member

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    Ok, I got it. I never borrowed a cent for property investment, so I don't know how it works. I only use my own money.
     
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  15. 2FAST4U

    2FAST4U Well-Known Member

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    Now the house is under contract (I didn't end up buying it) I'll give you some figures on the place.

    It last got sold in 2008 for 325k.
    In 2015 it got put on the market for 360k but they had no interest.
    Eventually it got sold to a young couple for 317k, but they did a building inspection on it and the report came back saying there was hazardous asbestos in the ceiling, which needed to be treated immediately. The cost of replacing the roof was 22k so their finance fell through.
    The agent put it back on the market for 290k because it would've cost 22k to fix the roof so they did a 5k discount for the inconvenience. As I said it didn't fit my strategy so I passed on it.
    It was a nice place though- old 1940s character home with high ceilings etc.
     
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  16. Sackie

    Sackie Well-Known Member

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    @2FAST4U So I'm guessing its under contract for 290k or less?
     
  17. 2FAST4U

    2FAST4U Well-Known Member

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    Yep:D

    Edit- Yields in that suburb are 4% so considering the expenses associated with owning (interest, water, council rates) they would've been better off renting this whole time.
     
  18. Sackie

    Sackie Well-Known Member

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    hmm.... sounds like you know more than your telling... :D

    Well done on the 290k mate (wink) :cool:
     
  19. 2FAST4U

    2FAST4U Well-Known Member

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    Nah I got my eyes on another property (just waiting for finance to come through touchwood).
     
  20. Sackie

    Sackie Well-Known Member

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    Good stuff. Good luck mate. Give em hell :)
     

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