Contract on PPOR

After a quick calculation of funds, and having frequent visits from mouses and rats at our current govy rental, we have put a contract on a suburban home in Toowoomba. OK, it will mean a 40 minute drive each way to work every day, but it's still a lot better than many, and it also opens others doors for my little family (which by the way, is expanding to 4 members).

It's a nice house, an ex rental with a bit of work to do, but as I posted earlier, the smaller block will mean less maintenance and allow smaller internal and external projects to materialise. I have recently acquired a nail gun which means I will be having a go at a deck and external feature screens and other Better Home and Gardens pieces.

We played what I like to call 'halfsy-halfsy' with the agent. Negotiations went:

On market for $268,000, which was already a drop from the initial $274,000.

We offered $250,000 (which we thought was a reasonable low offer)

He/they countered with $260,000 - (first halfsy)

We countered with $255,000 - (second halfsy)

They countered with $257,500 (third halfsy)

At this point we stayed resilient, as every thousand saved here, was money that could be spent on renos. So we said $255,000 we believe is a good price. (A firm halfsy resistant counter, based on the other halfsies.)

He/they countered with $256,000, which we accepted.

I believe successful negotiations, and the right price for this property, in this street, in this suburb.

I'll write more when the contract finalises.

Bad News

Housing Finance Falls

Bad news for investors I think. Or is it positive? Hard to say...

realestate.com.au: PLEASE WORK!

I don't know about you, but I love the 'Map' feature on re.com.au, which has now been around for quite some time. What I ABSOLUTELY HATE about it, is when I choose to limit to 4 bedrooms, that's right, 4, and i get a gazillion 3 bedroom properties. That's right, 3. So what gives?

Please fix this re.com.au, I love the new functionality, but something this simple needs to be addressed.

Buying a PPOR - emotional stuff.

The time has come to buy not a house, but a home. A place that we will live in for a while, a place that we can shape and mold over the years to make it our own. To give you an idea, I'm already looking at iPad wall mounts for our kitchen so that Melinda can use it as a recipe book. THAT SERIOUS.

So we've been looking around Toowoomba and to tell you the truth, house prices haven't changed much since we put a contract on a rental back in 2007. Luckily the sale fell through, I doubt we could get much more for it now. We're in the market for a 4 bedroom place, not a big yard, somewhere near a park and easy commute to my work. We are also thinking that this may still be a 'transition' house; a house that we will be in for about 3-4 years, before buying something even more to our liking.

I have made peace with one aspect of my current stage in life. I do not want a big back yard. Not now. I am busy enough. I have other stuff to do on the weekends, rather than spend countless hours gardening (even though I do love it).

So this one decision has taken a huge factor out of buying a house; the size of land.

We will most likely end up on a 600 square block, which, now, is fine with me.

Reflections on a Broken Strategy

Back in 2009, I posted about a strategy that got me very excited about an early retirement.

Basically, it involved an acquisition phase, followed by an LVR equity draw-down phase. It all seemed so simple back then. The GFC had just hit, but the housing market stayed resilient and there was no suggestion of the 7% annual growth pattern subsiding. How wrong I was.

It's now 2011 and my properties have performed dismally. When I mean dismally, I mean DISMALLY. There had been virtually no rental increases on any of the properties and CG has, instead of the 7%, been on average 1-1.5% per year. DISMAL.

What else has caused a deviation from this 'plan' I hear you ask? It's only been two years after all, hasn't it?

The answer is cash flow. Without boring you with details, I have had to unload two properties; one, a money hungry beast with some maintenance issues the other just came along at EXACTLY the wrong time.

Rather than point the finger, I think it's basically a combination of a few factors, and probably the weird alignment of some planets, that has lead to this scenario.

So where to from here? Cash flow is now looking better thanks to the sales, but we are now looking for a PPOR, which will 'lock away' more cash flow. Will the market return to the 7% days, I honestly can't tell you, but what I can say is that in Queensland anyway, the $400,000 psychological price ceiling is still well and truly alive and wages just aren't going up fast enough. So, for an average investor like me, it's just not happening. I am looking to hold on to properties, but when rents are not going up, and prices are staying stagnant towards the bottom end of the market, it's not looking pretty.

Until next time...