State of Affairs, October 2014

They say variety is the spice of life and so it has come to be for my family over the last few months. Throughout the last 4 years or so I've often blogged about the tiny little insignificant thing called 'life' that often gets in the way of my ambitious investing strategy and again, it has proven so.

A few thing then. We have sold our PPOR in Toowoomba. Sentiment in the Garden City boomed after the airport announcement and, when news of the bypass started spreading, the proporty market went into a sort of weird piranha-like eating frenzy where everything, and I mean, EVERYTHING, was getting snapped up quick smart. We jumped on the bandwagon and surprise, surprise, we ended up about $20,000 ahead of my best-case-scenario amount when it came time to order the removal truck. It took a grand total of 3 days to sell our comfortable home and I have to thank Ray White Toowoomba for the wonderful job they did for us. 

Just prior to this, we also bought a modest, tiny little three bedder in Caboolture. Remember that little thing called 'life' I was talking about? Well, when the planets aligned nicely for me to leave my job, this little Caboolture residence was (somewhat) ideal to shift into. And, it came to be, that after a short stint in a govy provided residence, we moved again. 

Kicking out the tenant was a whole new world of pain. I won't go too much into detail, but let's just say that SOME property managers have no idea what they are doing (shock horror) and in reality, since we began our investment journey back in 2004, this was the first time we were left with a very sour taste in our mouths. Luckily it all worked out satisfactorily in the end, but it was a close call. 

Caboolture is an acquired taste. The house itself is tiny and we are surrounded by EVERY neighbour having a dog, which of course is not a real confidence booster. On the plus side, we won't need a dog. The clientèle is very much mixed, low and medium socio-economic families, single mums and a lot of renters. Our street seems leafy enough, quiet so far and, the best part of it all, it's a hell of a convenient location. Besides, we've lived in Kingston in the Logan area south of Brisbane and we survived that experience. 

So where does this leave our portfolio? 

We are still in the process of consolidating. We have:

PPOR: Caboolture (QLD), 3 bedroom brick and tile, small suburban block.   

IP 1: Launceston/Invermay (TAS), 3 bedroom plus sleepout, tiny historical block of 405sqm, weatherboard, competitively rented with some renos completed mid last year. On the market, but no bites. 

IP 2: Ingham (QLD), 5 bedroom typical fibro, undesirable street, on the market, DEFINITELY no bites, but we can hang onto it as it's also strongly rented. Both of these IPs are just negatively geared. 

IP 3: Glen Aplin (QLD), small block near Stanthorpe, on the market but again, no bites. There has been some movement in the area where our block is and if the street is finally developed from dirt to asphalt, we may be in luck to make a tidy little profit. A lot of little houses popping up around our block. 

All of these are becoming very hard to move. Ingham is floody, Tasmania has a job crisis and the Glen Aplin block has it's challenges to develop. Hopefully we have a win on one of these soon. 

Are prices getting cheaper or are we paying too many peanuts?

When it comes to house prices across this great brown land, there are many sources of confusion in today's mad media world. Are prices going up, are they stagnant, are my farts stagnant? Unfortunately there are contradicting thoughts coming from different commentators and nothing is as clear as they were lets say 10 years ago.

Prices get an erection, prices go limp...

The suburbs that I'm watching are no help either. One suburb in Tasmania seems to be on the up up and away, yet another suburb in Brisbane is probably THE definition of 'stable'. Reading into these two suburbs is a bit silly, it does however show that different markets still operate amongst not only our states, but within our cities and even sometimes within a suburb on different streets. 

If I try to sum up all that is going on with buying an investment property right now, I would say do A LOT OF RESEARCH. I don't mean like hours and hours on the internet, I mean days and days and weeks and weeks until you realise that you are doing the "haven't had a shower for a while and the skin on your arse is starting to rot from your computer chair" type of research. 

There are bargains out there everywhere at the moment, it's just a matter of picking the right suburb to go with it for future growth. 

Happy hunting.

A relative bargain 3 bedroom home

http://www.realestate.com.au/property-house-tas-invermay-107524471

I have been keeping my eye on this suburb mainly because I have one of these in my portfolio, but this one seems just that little bit nicer. A bargain I think, and probably a little bit negotiable.

UPDATE: Well what do you know, it's under contract!

Cheapest 'livable' 3 bedroom houses in Australia!

It's that time of year again, when we do the rounds and find the cheapest livable (depending on your standards) stand alone homes across Australia (as searched on www.realestate.com.au). This year, I will rank them by price, by state. You will notice that NT and ACT are not represented; it must be bloody expensive to buy an 'entry' home in those territories. Enjoy:

6. MINNIPA, South Australia - $65,000 South Australia is the most expensive place to buy a crappy house! Who would have imagined! Terrowie took out the title for the cheapest place to buy in 2009, but in 2011, SA has become THE MOST expensive; go figure. Anyway, this house in Minnipa is actually quite cute and looks ready to move into today! I don't know much about this area, but this looks like a genuine bargain!

5. ZEEHAN, Tasmania - $59,500

Quite suprisingly, Tasmania did not take out the number one spot this year, considering the myriad of bargains that usually pop up in Queenstown. But in a strange twist, Zeehan has produced what must be the worst looking house on this list, at a relatively expensive $59,500. Let's face it people; crappy shed with windows and the usual mishmash of interior linings. LOVE IT!

4. MITCHELL, Queensland - $50,000

A lovely little town, Mitchell is just down the road from Roma on the way to Charleville. I won't say a lot about this one, except, that blue door ALONE is worth the money.

3. TINGHA, New South Wales - $45,000

Nothing says quality like a piece of miss-matched, ripped, green shade cloth hanging off your balcony, and you just know that the owner of this wonderfully crappy looking house has been watching Better Home and Gardens for styling cues. But, for $45,000, who cares! The town itself actually looks well positioned and it's rented!!! Jump in today!!! (PS. I bet it's gone within a week!)

2. BERRIWILLOCK, Victoria - $38,000

Alarm bells must ring when you look on a map and all you see are straight roads leading to this town, but this little gem in Berriwillock is just $38,000! You will probably catch asbestosis just by looking at it, but with the right attitude this place will come up a gem (to enjoy until you die from said asbestosis). Realistically, this place doesn't look all that bad, maybe I need to investigate further.

1. NORSEMAN, Western Australia - $35,000

Norseman feautured in the 2009 list and it's back again! The house you see below can be purchased for less than most new cars, but we still have people complaining about affordability! Yes, Norseman is in the middle of nowhere, and when you consider that you have to travel to Kalgoorlie just to do your shopping, it isn't a stone throw away from anywhere. Yes, the house looks like it was assembled by a blind drunk, but it's still standing and is an absolute bargain. The winner for 2011, NORSEMAN!

Time to stocktake the portfolio

It's the end of financial year 09/10 and it's time for my little "business" to have a stocktake. So, let's see what we have now:

Bought this year:

1. Ingham (north Queensland) 3 bedroom highset. Currently our PPOR.

Continued to hold:

1. Ferny Hills (north Brisbane) 3 bedroom brick and tile. This was supposed to be our PPOR one day. Mortgaged. Rented. CF-

2. Invermay (Launceston, Tasmania) 3 bedroom + sunroom, dodgy weatherboard in an excellent location. Mortgaged. Rented (sort of...in the process of eviction). CF-

3. Glen Aplin (near Stanthorpe, south Queensland), 810 square block in an old small subdivision. Sitting pretty. Not mortgaged. No income.

4. Lachlan (40min from Hobart) 29 acres of splendid mountain/valley/river/town views and about an 8 minutes drive to New Norfolk. Sitting pretty, but looking to do SOMETHING to derive income. Not mortgaged. No income.

Sold this year:

1. Toowoomba (1 hour west of Brissie) 3 bedroom colonial in a historic estate. Was a dog when it came to cash flow.

So overall, our portfolio has entered a "consolidation" phase. By buying Ingham to live in (in town, better for missus and myself), our earlier Toowoomba purchase had to go. Cash flow this year reduced thanks to my beautiful little baby boy arriving and allowing my missus to be a stay at home mum, which far outweighs the benefit of additional cash flow. This does hurt our ability to maintain a negatively geared portfolio though. Balancing act anyone?

So how are we travelling? With the sale of the Toowoomba dog, we are OK. Capital gain (CG) has, according to valuations, dropped, but I am putting that down to the bank being cautious. I think at worst, we have increased our CG by approximately 2% this year. In my day job, I have yet again received a pay rise, so things are comfortable, but that bloody Rich Dad, Poor Dad book is still fresh in my mind. Look out for news around a business I may be buying.

Where to in 10/11? The portfolio is negatively geared and our serviceability is low. There are a number of scenarios, such as further down selling, which could increase our ability to service another property or two, but do I really want to? It would involve selling Lachlan, the block which I think has so much potential. I can't bear the thought of "little short term gain" over the "massive capital gain" that COULD occur. It's all a question of time. I will probably put it on the market, mainly because I see bargains EVERYWHERE at the moment and I want to jump in...BUT CAN'T!!!!! I have found some very good properties, close to CF+ and in great up and coming areas....what to do, oh what to do???

PS. Don't forget to vote on the right, some clear patterns are developing, but it would be great to get a few more people's opinions.

A quick shout out....

I have recently had a really positive experience with Andrea Bonner, at LJ Hooker Launceston. She is selling my little house in Invermay, an inner up and coming suburb of Launceston. Andrea has been very professional, even seeking feedback on the re.com.au ad and is an excellent communicator via emails and on the phone. She has never pressured me to do anything and was very patient waiting for us to list after a few months of to and fro-ing on our behalf.

Well done Andrea, it's people like you that give re agents a good name, instead of the usual crappy service and constant pressuring.

I have to be honest, I can not say this about other agencies I have worked with in the past. Rude, arrogant, even going as far as giving me a "put down" about how much I bought the property for...the kind of idiot we can all do without. Anyway, well done Andrea....

Another one on the market.

The time has come to offload another one of our properties, this time a very well positioned little gem in Invermay. It needs a bit of work, I'll be the first to admit, but it's still an excellent bargain for an investor. I think the price is right...it's renting quite strongly and the recent improvements and maintenance means it will be a solid performer for an investor.

PS. I have my eye on an absolute bargain. I won't give away details, but lets just say it would be what I like to call a "low risk gamble."

Until next time fellow investomites...

Why I like Tasmania...and so should you!

Tasmania is a great little piece of paradise at the bottom of Australia, albeit a very cool and miserable paradise for most of the year. It is filled with old growth forests, mountains of green, boundless plains of rolling hills and areas of drought. Amongst all this are a mix of quaint, little villages, deserted mini towns, a few sprawling urbanised towns and the jewel in the crown, Hobart. Perhaps more pertinently for us investors, Tassie represents the cheapest real estate entry costs found anywhere in Australia.

Why is Tassie soooo cheap? I mean seriously, you can buy a decent 3 bedroom house with minimal work required in Queenstown for $40,000! Queenstown has shops. It has minimal infrastructure, but it does have a new hospital, it has awesome windy roads, it has chilling Roaring 40's winds, it has barren environmentally catastrophic hills surrounding it and the creek is yellow, but why wouldn't you want to live there? When you consider all the facts, I wonder if the weather is just THAT BAD, that people hate it THAT much. If that is true, perhaps with a bit of climate change, it would scrub up nicely in about 50 years or so, but that's a separate story.

Other parts of Tasmania offer unbelievable real estate bargains for investors too. Launceston, Burnie, Devonport and Cygnet. All low entry, excellent properties, some almost CF+ with great potential.

Hobart is thriving, just think Brisbane 30 years ago, the catch up is imminent. I hear great stories of developments and "refreshing" and "updating" and "modernising", verbs that have me thinking there is hope for MASSIVE capital gain in the not too distant future.

I currently have two tiny chunks of this wonderful State. My block of land not too far from Hobart is virtually my dream come true. It will one day make me a millionaire, if not a multi-millionaire. My other one is a renter, almost CF+ hidden in an area that could boom massively. If only the AFL would allow a Tasmanian team into the league. I have seen growth and I am sure I will continue to see growth as long as the rest of Australia keeps heading to the 1million plus club, Tassie will continue to be the little engine that could.

New contender for cheapest house in Australia.

For just $40,000, that's right, 40 thou, you could buy this house in Tasmania. Surely one of, if not THE cheapest houses in Australia at the moment.

Dammit!!!

The media has found cheap houses. Queenstown, in Tasmania, has long been my dream investment town and now it appears the prices will begin to climb again.

Yes, it is miserably cold, rainy and I would have to assume, very low socio economic, but then so is England. Still, this sleepy little town on the somewhat remote west coast of Tasmania provides some of the cheapest investment properties you can buy in a town. It has all the facilities, it's on the major tourist route for the apple isle, and the town will not disappear, it simply can't with that numerous residential properties there, a new hospital etc. etc. This town is my next target for investing. Maybe, just maybe, I can begin a movement to make this little town a gem.

A bargain...GONE!!!

I found this chapel above on re.com.au a few days ago, so I innocently sent off an agent enquiry email. It was listed for 90,000. The next day, I receive an email stating that he has already received 4 offers, one being CASH! Admittedly, this did not surprise me, it was a bloody bargain alright....chuck in a few dividing walls and she'd come up cash flow positive no worries. 50km from Hobart's CBD, it's the type of place I am looking for...cheap, little work to do, WAY under priced. I'm thinking I may find a few more of these and with a bit of luck, the financial planets will align for yet another acquisition to the portfolio...