Do not buy without a proper inspection

Do not buy without a proper inspection

During the week, I had two long conversations with my industry peers - a property manager who works with a family owned agency, and an owner of a licensed estate agency.

I have known the property manager’s boss for more than 30 years, and the other has been my industry "buddy" for about 10 years.

I chatted with each of them for over an hour. With the property manager, she discussed her background, her own property investment portfolio, how she achieved it, and the market trend around the surrounding area.

I have not met her before, and that was the first time I had verbal communication with. She has a very cheerful voice, which is an important asset for anyone who works in a service industry.

One of the secrets of success in real estate investment is to start young. It must be a coincidence that my previous blog with an attachment was about a young lady at the age of 19 managed to buy / build her her first home.

The property manager married and started her family not long after. She could return to the workforce when she was still very energetic. Her daughter is in her final high school year, and she works two part time jobs.

As you may heard me saying many times, save, save and save, and both she and her husband did the same in their early days.

They are in their early 40's now, live on an acre block in an outer suburb, worth about $1.5 mil, and also have other investment properties. As I am not a "qualified" financial adviser, I could only give her a general friendly advice - DO NOT put all the eggs in one basket.

In order to minimise land tax, it is better to invest in interstate properties, preferably in regions with employment growth potential.

Some members who had attended my video meeting a few months ago, would have heard my explanation the importance in investing in multiple lower price properties than just a single very high price property.

I prefer to adopt a risk minimisation strategy.

With the other agent, we went more in depth about the demand and supply of the property of past months, and the coming months.

We also talked about some of my former "students" that we both know mutually. One has already retired, another in LA, and the rest still in Australia. The two I mentioned earlier were brilliant real estate agents professionals.

My buddy is a very friendly guy. Unlike many real estate representatives or agents, he has the right attitude in marketing properties. In a way he strikes a right chord with me, because he "markets" positives rather then negatives of a property.

The first time I worked with him, I spent almost an hour interviewing him at a client's kitchen. He appraised the property close to $100,000 more than the lowest figure quoted by another agent.

We worked together to map out a marketing strategy, and the property was sold at the price as he quoted.

The difficulty in prediction the trend is due to the changing government policy on JobKeeper, and my assessment is that there will be initial surge but the decline will follow as reality sets in. I shall have a better assessment after restriction is relaxed.

The latest national and by state employment rates are too rubbery to make any sense, because the definition of someone being employed is completely nonsensical. One is considered employed if he/she is engaged in an hour of paid job during the survey period.

Hang in there, do not buy without a proper inspection.

Thank you for reading.

Australian teen buys her first human at 19 working at McDonald's

Australian teen buys her first home at 19 working at McDonal's
https://www.dailymail.co.uk/news/article-8743659/Australian-teenager-buys-home-aged-just-19-working-hard-McDonalds.html

If this young lady could do it, so can you. It is a matter of hard work and determination. It’s about mindset and seizing the opportunity.

A group member contacted me during the last few days asking whether this is the right time to buy her first home.

There is a big difference between a home and a house just for rental investment. If it is a first home, there are government first home grant and building grant. The building grant applies home-and-land package or building a new home.

Buying an existing property, in the present context implies house, townhouse and apartment, has advantages and disadvantages. A buyer knows that the property is there, and hopefully with building inspection and pest inspection, the risks of buying a lemon is minimised.

Of course, the first thing for one with a sharp mind is these inspections cost money.

A flipped property may look very clean and nice and one can move in without any renovation to worry about, but this can be short term. Do keep in mind many of these properties were purchased and then undergo renovations, some are extensive while others are just superficial. It is difficult to know how good the conditions of the wall and floor are behind the new coat of paint or tiles.

Many excited buyers love the fresh pine barks or gum chips around the flower beds, or new artificial and real lawn laid over the “garden”. Not well prepared ”groundwork” can lead to backbreaking chores to remove the weeds.

If you have been reading my blogs, you would have understood my sentiment about buying off-the-plan, or new construction. Especially during this difficult time, many businesses are facing financial difficulties, compounded with possible material supply problem.

Property owners selling their properties at this unprecedented time are likely experiencing financial difficulty or with health issues. Are the properties kept to acceptable standard? Without physical inspection, it is extremely difficult to know whether the real condition is as good as the digital images depict.

I do a lot of editing with my travel photos; I can brighten, make more contrast, increase or decrease the colour intensity, etc to enhance the originals. Furthermore, a photographer may use different types of lenses to enlarge or elongate a room or living area giving a more impressive view.

By the way, the approach used to distort the real object is challengeable, because it is deceiving and misleading.

Many renters do not realise owning a property incurs more than just rent. Besides their missing out paying council rates and park charges, fire levy, and water rates, some councils also charge annual garbage bins fee. On top of that, living in a multi-townhouse or unit compound or apartment, also incurs owners corporation fee.

Replacement of fence is another cost. On an average the long side of the property incurs a share cost of over $1,000, and the short side is about $900 to $1,000. Normally, the property photos never show the run down fence. Even with physical inspection, many excited buyers never bother to check out the fences around the property.

On top of and electricity usages, the utility companies add supply charges to the bills.

Saving enough plus the government’s generous grants to raise a loan to purchase a property is only the first step. If you are on hands-to-mouth, make sure you are going to look for another income source to pay for the extras, and leave some money in the piggy bank.

Thank you for reading.

Australian teen buys her first human at 19 working at McDonald's

An apology from Domain

An apology from Domain

It is important to use commonsense and be aware of what some “interpretation” really mean. If something sounds too good to be true, then it is more than likely so.

Real estate investment is a long term investment, and more than likely your investment will grow in years to come. The simple logic is that once a block of land is occupied or owned, total remaining area of land available is reduced.

Can a property depreciate in value? Yes it can, especially properties purchased at peak time. Due to all the hype and Fear of Missing Out or FOMO, property prices are pushed up artificially. the margin of over-valuation not only have to incur all extra rates and charges, but also land tax if it is in Victoria, the value is added to the rest of the properties in Victoria.

A property depreciates in value because the building and the contents within are badly run down. However, it will reach a point that these factors can no longer affect the true value of the land it is built on.

Why am I not confident in buying a property without inspecting it? Not knowing where it is situated, I have no idea about the surround, and its growth potential. Furthermore, it is important to ask the agent point blank whether the property is on reclaimed rubbish dump. Under some of the negative physical factors, property value can fall and may never increase at all. The out-of-pocket costs can be enormous and the sooner to cut the losses, the better.

The Capital Improved Value CIV stated in the council rate and valuation is a reasonably guide of the property value. In recent years, there are a lot of Apps and fly-by-nighters promised to give you a ‘valuation” within minutes, and even in seconds. Indeed they do, but how accurate are they? Why do these Apps and free “valuation” exist?

The reliability of the “guess” based on just the address only without taking into all the physical, environmental and emotional factors into account is as good as believing a pig can fly. Similarly, many gurus give free seminars must be as saintly as mother Theresa. It is not cheap to hire a conference hall, free “lunch” and surrounded by a team of staff or contractors, some of them may have to travel long distance.

Surely, there is no free lunch, and if they are making so much money, why don’t they use the same method or strategy to make more instead of creating competition?

If you have doubt or unsure about what I have blogged to date, please ask for clarification.

Thank you for reading.

An apology from Domain