How coronavirus has snapped Australia's fragile rental system

Post to Facebook on 29/6/2020 11:22 PM
Commenting on “How coronavirus has snapped Australia's fragile rental system”
https://www.domain.com.au/news/how-coronavirus-has-snapped-australias-fragile-rental-system-965317/

Once again, my advice is proven correct. I always go against investing in property banking on negative gearing. No sensible business operators want to make a loss in order to offset tax reduction, unless the benefit is so much greater than what one can earn in opportunity loss.

Most properties these days cost too much to give any good rental return. If property value does not appreciate more than the overall loss during the life of the mortgage, then it is time and effort wasted to invest in that property. As I put it bluntly, one might as well pack up and go home for a good rest.

There are far too many property investment gurus running get rich quick seminars, whose intention is to sell you courses costing thousands of dollars. If the return on investment is so good, why don’t they raise money to do exactly what they have been preaching and make millions of extra dollars?

I work on 75% to 80% of the expected annual rent as an average of the gross income after management fees. The reason is that I expect certain maintenance and contingencies need to be accounted for. From the balance, I deduct other expenses. I only expect the two to two and a half years that the property not breaking even in the worst case.

Another word of caution, “do not go crazy investing in additional properties if you have not paid off your own home”! Your own home is your security blanket, and it is so comforting when the bank manager hand you the house title after you have discharged your lmortgage.

Thank you for reading.

How coronavirus has snapped Australia's fragile rental system

Multiple $4 million sales but auction results still weak in Sydney and Melbourne

Post to Facebook on 22/6/2020 1:23 PM
Commenting on “Multiple $4 million sales but auction results still weak in Sydney and Melbourne”
https://www.domain.com.au/news/multiple-4-million-sales-but-the-auction-results-are-still-weak-in-sydney-and-melbourne-963856/

Read the linked article very carefully before you continue reading this blog. Can you tell me why you should not buy a property the same way like one of the buyers mentioned?

You should never jump in to buy another property, just because you sold yours just a day or week before, unless you have extra money lying around.

Even if a property is sold at auction, which is an unconditional sale, anything can still happen before the title is exchanged and settlement money is received in your bank account. The buyer of your property could become bankrupt, die or for other reason that the final settlement is deferred. The buyer could have owed money to ATO or asset frozen.

This report, like many other real estate reports published recently, reinforces what I have been writing about the downturn and possible doom in October.

Thank you for reading.

Unlivable unit sells for nearly $70,000 above reserve

Post to Facebook on 20/6/2020 6:31 PM
Commenting on “Melbourne auctions: Unlivable unit sells for nearly $70,000 above reserve”
https://www.domain.com.au/news/melbourne-auctions-unlivable-unit-sells-for-nearly-70000-more-than-reserve-963768//

There are people claiming to have made a killing by buying a run down property, doing some cosmetic renovation on it, and then putting it back in the market. This kind of quick turn around renovation for profit is known as flipping.

Like many gamblers or regular Tatts buyers, they normally don’t tell others how much they have lost before they finally win some money.

Unless you are a handy person, and prepared to breakeven or make a loss for your first couple of projects, just to gain some experience, I do not advise you to venture into this.

Those renovation programs on television in a way are just make-believe programs. There are teams of qualified and experienced tradespeople on hand to carry out the major work, while the contestants seem to handle the less dangerous and less laborious tasks. Any disasters are likely to be fixed up. by some technical experts behind the scene.

I am very concerned that readers of newspaper real estate articles may not have weighed up all the pros and cons before they dive in to undertake such a major project. They may incur financial loss, as well as suffer physical injury. If you are unemployed, and financially unstable, please DO NOT lure by such hype, thinking that you can do better than someone else.

It is advisable to do some small home renovation projects first before attempting something big like flipping.

You must be mindful that there are many other associated costs involved, eg. agents commission, marketing fees, stamp duty, capital gains tax, bank interest on borrowing, and opportunity loss on your holding cost, etc.

Thank you for reading.

Options for first-home buyers narrow as listings below $700,000 drop

Post to Facebook on 17/6/2020 10:23 AM
Commenting on “Options for first-home buyers narrow as listings below $700,000 drop”
https://www.domain.com.au/news/options-for-first-home-buyers-narrow-as-listings-below-700000-drop-data-962161/

As long as the community is not completely free to move around, and there remains great uncertainly about employment prospect, potential sellers will continue to hold on to their properties.

The question is why sell unless one has a reason to do so. When one sells his property, he needs another one to live in, whether you call it downsizing, upsizing or right sizing.

The prices will not drop, as I mentioned in several blogs. Unfortunately, due to scarcity, the price may even climb a bit higher.

The critical time is around the end of August and September, when the mortgage repayment deferral and Jobkeeper payment will discontinue, unless the government changes its heart.

Many landlords are facing financial trouble too, with tenants not paying rent during this period.

All these unfavourable conditions can lead to only one conclusion, that is, many property owners may have to put their properties in the market reluctantly, not by choice.

In recent weeks, a lot of activities have been going on with many mortgage holders looking for brokers to refinance their mortgage, in order to lower their repayment burden.

Thank you for reading.

Home Loan Pre-Approval: How To Apply

Post to Facebook on 5/6/2020 12:19 AM
Commenting on “Home Loan Pre-Approval: How To Apply”
https://www.canstar.com.au/home-loans/get-home-loan-pre-approval/

During the pandemic lockdown, the real estate market went belly up. Many property owners held back their properties, because most potential buyers were not game enough to buy a property by taking a virtual tour inspection.

Although some real estate agents tried hard to adopt new technology and conducted online auctions, potential sellers were not that keen, and withdrew their properties from auction, or changed to private sale instead.

Now that the lockdown is relaxed, more and more properties are coming onto the market. I cannot foresee many sellers are prepared to lower their prices yet, and agents are not prepared to advise their clients to be realistic, or else the agents will miss getting the listing on their books.

The real estate market is a bit erratic in the next few weeks on the upward climb, but the trend is likely to reverse after September when Jobseeker scheme stops, and reprieve on mortgage repayments discontinues.

With that in mind, if you have saved enough deposit for a target property and are ready to buy, then it is time for you to contact a lender, be it a bank or mortgage broker to get an idea how much you are eligible to borrow.

The following is a very good article on what pre-approval is about and how t get one.

Thank you for reading.

Government to hand out $25k grants for housing construction, renovations to bolster industry

Post to Facebook on 4/6/2020 3:33 PM
Commenting on “Government to hand out $25k grants for housing construction, renovations to bolster industry”
https://www.abc.net.au/news/2020-06-03/government-coronavirus-construction-stimulus-renovations-25k/12317786

I anticipate new home prices will rise by $25k, and more bunnies will commit themselves to even greater unsustainable debt.

This is an opportunity for smart handy people to flip properties, further pushing up prices for the end product.

So far I know two highly paid ”personal friends” and several other in middle management have been retrenched. It is important to know your financial situation and job security in this uncertain time before you commit on taking up a big loan, even if you have offered one.

Thank you for reading.

Home values fall slightly in May amid COVID-19 crisis

Post to Facebook on 1/6/2020 3:30 PM
Commenting on “Home values fall slightly in May amid COVID-19 crisis”
https://www.domain.com.au/news/home-values-fall-in-may-amid-covid-19-new-figures-show-959558/

As predicted, the coronavirus pandemic has definitely a serious negative impact on the real estate industry. A lot more property owners are still hanging in there hoping for that light at the end of the tunnel.

Unfortunately, miracles do not happen, and that is why I am such a pessimistic optimist, advising against negative gearing and encourage saving, especially at early stage in working life. I experience losses too, but that does not cut into my life that much that I can't sleep at night.

Many parents are too afraid to "advise" their children about their life experience because their children do not want to listen to hardship, and just want to live for today, as the words "old age" and "retirement" are not in their vocabulary.

Advice is NOT nagging, and being a bit conservative is NOT unwise. It is important to remember if "it's too good to be true, it is".

Is my free advice too good to be true? Well, you'll be the judge. If I start asking you to invest in some scheme or donation, then you better get out of this group and don't have anything to do with me. Otherwise, stay tuned.

Do you think the fall will continue?
When will the fall pause and the climb resume?
When will it fall again after the rise?

I have blogged about this before, and these questions serve to test your memory? I shall discuss this later.

Thank you for reading.

Victorian residents left in limbo after builder Archiblox goes bust

Posted to Facebook on 1/6/2010 at 1:24 AM
Commenting on “Victorian residents left in limbo after builder Archiblox goes bust”
https://www.9news.com.au/national/melbourne-news-archiblox-collapse-residents-left-out-of-pocket-thousands/a70dc623-77fd-4fcc-a82d-d33a05d82a8c

I have been warning about buying off-the-plan investments. Unless you're a brave gambler, investing such big sum of money without knowing or touching the finished product, or recommendation from reliable satisfied customers is definitely risky.

I hope you do think carefully before you put your bet on. As some of you have noticed, this a Private group, and I do not share my posts in other groups as often as before because some members complained that I spammed their groups. If your friends are interested to know more about real estate, ask them to check out this group before they make that big investment decision.

Thank you for reading.