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. 

Contract crash

So we were looking at house in Caboolture. Put in an offer. Three weeks. Hear back and they say valuer said worth more,  so they back out. Now,  it will continue to stay in the market for 6 month and probably sell for the same price we offered. Hmmmmmmm.

Sweat Sweat Sweat, Toowoomba Edition!

Wow, this latest heat wave has really hit home here in Toowoomba and even I, the official air con Nazi, has had to yield. 

I just finished saying how climate doesn't really influence house prices, yet, here we are in a town often referred to as "the fridge on the ridge" melting like snowmen taking in a sauna. So I suppose the climate up here on the Toowoomba range is no different to anywhere else is South East Queensland, although I do have to say, the humidity is not as high as it was in Brissie when I was down there a few days ago. 

On the plus side to all this warm weather is the fact that my front garden, the one that will ultimately provide SOME street appeal  come sale time (I say 'some' because the house is only kind of appealing form the front, no matter what gardens will be in place) is going great guns. My hedging plants are doing well and I'm contemplating putting up a small  hedge boundary, as we have open council strip front gardens on my side of the street and I don't really like this concept much. 

"Permission to land in Toowoomba."

I wish it was a bit cooler so I could go and do a bit of gardening outside...maybe after New Year. 

In other news, it dawned on me that my little nuclear family is staying in this house for at least another year, if not longer. Not a bad thing, but it does mean that I can go ahead and try to make our house a bit more homely for the year ahead. I'm installing more permanent storage, looking at setting up the backyard for the kiddies a bit better and generally trying to fit into this house a lot more. 

Ciao. 

Humid, humid Brisbane

The City of Sweat

I'm staying in Brisbane tonight, on the northern side, not far from the Bruce Highway. I can just hear the cars, the trucks, the slightest echo of travel wheezing by at breakneck speeds, wondering what important places people need to be at this time of night.

The thing is, I like this place. It's handy to everywhere, the house is small but nice and it's been a place we have visited over and over again for almost 16 years now. What I don't like is the humidity.

Every time we come here, it feels like a sauna. Not that saunas are bad; I love to sweat now and again and I love the feeling that comes with cooling down after such a sweatfest. I do however hate sleeping in the heat and Brisbane unfortunately gets to the uncomfortable humidity level more often than not.

Yet many many people choose to live in this city. Do they like the weather? Do they like to choose to either sweat continuously until they become a sticky mess, or, choose to rather pump air con which, let's face it, is killing the planet. Neither really appeal to me, and it's times like this I love Toowoomba again.

I then get confused as to why houses prices are so much more here than in the town I call home right now. The climate, in my opinion, is 10 times better in Toowoomba, you can actually see four seasons and really, it's quite an awesome place. But obviously this isn't a factor for most, as if it was, Toowoomba would be the capital by now. So the obvious conclusion is that climate, while important for some people, has no bearing on house prices.

In other news, I think finally conditions might be right for a bit of movement in house prices in Queensland. The recent rate drop, the strength of the job market, the flatness in real estate all point to a buying frenzy. I do hope it happens, the markets need a bit of a boost.

Brisbane Property Market: The Outskirts

And the winner is: Housing Commission House of the Year, 2012

Recently I've had a fascination with trying to secure a cheap property in one of the fringe suburbs of Brisbane. When I mean 'fringe', I mean fringe. I mean 'fringe' like Caboolture, Moronfield, Kingston or Woodridge. These aren't technically "Brisbane" but they are not far away. It's the type of suburbs that are chosen by those who couldn't be bothered; just a place to live, no McMansions around here. 

And the entry prices are dropping. I mean $220,000 dropping. This is good news for me, as I'm in the 'couldn't be bothered' category at this stage of my life and I live in a Toowoomba suburb in such a house. So the question is, should I buy? Are these properties worth it? Is an investment NOW in one of these 'burbs  going to pay dividends in, let's say, 5 years? 

All very tough questions with unfortunately ambiguous answers. Stay tuned, I may be reporting a new acquisition soon.

Are we all just idiots?

As I'm sitting here, sipping my Lipton English Breakfast, I'm on realestate.com.au looking at cheap houses in Queensland. Here is what I found:

http://www.realestate.com.au/property-house-qld-quilpie-107942021

This appears to be the cheapest, 'liveable' house in Queensland. It lives here. 

Wiki says this about Quilpie. It looks like an alright kind of place to live.

Upon closer inspection, the ants had become quite technologically advanced.

So the obvious question is, why am I paying a mortgage that is much much larger than this, spending less time with my family and/or doing the things I like, when I could be 'living' in such a place? Furthermore, why are people, some of whom are paying enormous mortgages much larger than mine, making ends meet, living beyond their incomes, doing what they do?

I suppose it's how we have all become; we live in cities, we watch television shows like 'Modern Family' and 'How I met Your Mother', we are lured in by the conveniences of urban life. With this comes a job, and a sizeable mortgage, and if you have kids, less and less time to actually be involved in their lives. OR, if you have a hobby, less time to devoted to this. Or if you want to get fit and healthy, finding the time to do these things regularly becomes a bit of a challenge. 

Questions: Can I do what I do here in Toowoomba, in Quilpie? 

Watch television: Yes, albeit it may be Imparja. The internet could help here tremendously though.

Access internet: Yes, worse case scenario is satellite.

Outings with the family: Yes, but seeing relatives is much more difficult, as they live in that other world far away.

Play badminton: Yes, but not like it is in Toowoomba, there would not be many players and the standard would be questionable. There'd be tennis as a n alternative.

Live: Yes

Get a coffee: Yes

Funny thing this 'living' is.

There is a little Facebook/Twitter/other social media sharing options thingy underneath this post. Spread the word. As much as I love writing on this blog, it would be great if I had more 'followers' or 'disciples' who read the word of the great Andrew. 

What is my PPOR worth in today's market (according to www.realestate.com.au)?

Purely out of boredom (and the need to kill some time before my next iRacing race), I decided to go on www.realestate.com.au and perform the obligatory search for suburb, house, bedroom, that fits the description of my house. Looking past the outliers (i.e. busy road or weatherboard mainly these days), the cheapest one is $289,000. It does look a little nicer than ours, AND it's in a cul-de-sac, but is it possible that I have just made a quick $30,000 at the purchase of our house? I know, I know, I'm jumping the gun a bit, but the suburb has an aweful lot of potential and the prices, as far as I can see, are on the increase right now. Is it possible that finally we have stumbled onto a winner? Our last one was way back in 2005 when we bought our Miles property, which made a beautiful quick little profit, but it's been a dry patch since. I think though there is one important thing to keep in mind here; we like this place, it suits us nicely and as I had predicted, the smaller block size, while keeping me busy, is easily manageable. After the reno is finished (yes, it's still going), I think it's a place where my little family can put down some roots, a place to call our own, a place for my kids to grow up. Toowoomba is slowly growing on me day by day, I am loving the convenience, the drive to work is quite enjoyable and the climate is currently cool, but bearable.

So, it's a keeper is what I am saying. I'm toying with the idea of rendering the place, but how would that work when all other houses in the street are brick. The cheapest rendered house on the market is $342,000 and for the effort and minimal cost, it could be added to my list of things to do. Anyone with thoughts? I will post this dilemma on Sumersoft, see what responses I get.

Ciao for now. 

Thoughts on Toowoomba

As you may or may not be aware, we are making the move from what I like to call my 'rural posting', departmental provided accommodation, to a house of our own. You can read about our adventures about the process so far here, here and here. While we are waiting, and while I need to kill a few minutes while my little boy is sleeping, I bring to you a quick review of Toowoomba.

Actually it's not so much as a review, but more of a 'my impressions so far'. Toowoomba, if you have ever been, is a unique city. For one, it's not actually on a river, which means it is much easier to transverse the city, rather than having to 'get to a bridge' if you know what I mean. There is an annoying airport towards the western end (where we bought our house), but it's tiny and I think in about 10-20 years, it will be moved away from the city, somewhere out of the way, but still close enough. The city itself is a reflection of the location of the place; there is no major city centre mall, although there are a few shopping centres dotted around the place. There is ample parking, a sign of the rural need to cater for the farmers coming in for a visit from the bush. Toowoomba caters for A HUGE area of land mass, and it's not uncommon for travelers to make the trip from as far out as Charleville just to do some serious shopping.

The people are a mix. As they are everywhere else. Walking down Ruthven Street, you get the feeling the place is becoming cosmopolitan, a few cafes, fashion outlets, boutiques and general shops, this certainly is not a dull shopping experience, albeit no different from any other regional hotspot. Passers-by range from the chick and classy, to working class and the odd suit and power dress here and there. The streets are lined with Commodores, Falcons, Hiluxes and Nivaras as well as the occasional BMW and Mazda 6. What you also see a lot of in Toowoomba, is people movers. Maybe it's because I'm in the market for one, but I see a lot of Carnivals, Territories, Taragos, Foresters and Captivas. Somewhat alarmingly, and I suppose I should have expected it, a large number of these vehicles have occupants with Cowboy hats; wearing them while driving. This is always a clear sign that you should be on attention as a driver.

Toowoomba has many schools, too many really, as the city caters for the boarders from farms far far away; money rolls through the city I think, mainly because of these places. There is apparently crime, but you wouldn't really notice by the way the majority of houses are neatly displayed, small gardens and fine manicured council strips and front yards. The city is proud of it's 'garden city' title, and it seems a lot of the locals embrace this notion with two hands.

I will weigh into the debate about the bypass. Toowoomba's main arterial road turns into a four way, non divided street, called James Street and it turns sharply right as you head west, to Tor Street. The number of trucks and semis on this road is a joke; a necessary joke. Toowoomba is THE MAJOR thoroughfare for getting produce etc. from the west to the east and only an idiot would not see the need for a bypass road/tunnel to be built; and let's not forget the dangerous range road. I think people may say that it will be bad for business, but I disagree. What is missing in Toowoomba? A central area, not invaded by traffic. Toowoomba could have it's 'country ambiance' back without the city turning into a truck yard.

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.

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...

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.

Chillin and chattin...

I've been enjoying a well earned break from my day job and in the two weeks of R&R, I've had a few chats about RE with my family. Not only had my sister and brother-in-law FINALLY bit the bullet and bought a 4 bedder (congrats by the way), but now my parents have began looking for a decent do-er-upper. I on the other hand have SOLD SOLD SOLD! That's right, finally out Toowoomba property has sold, and it was about time too...many delays with finance and banks doing valuations and paperwork and blah blah blah, but finally, it's all finished. So, I have now had a unique experience of owning a piece of property, had NEVER seen it in real life, and have now sold it!!! Did I make money? Not really, but it was a fire sale and ultimately for the greater good. Now the time has come to contemplate the next step, a step into maximisation, either to increase cash flow further, or, spend some dosh on our little Invermay property in Launceston. Either way, good time are ahead for finances for my little family.

My parents are looking for something on the Sunshine Coast that they can quickly kit out and on sell. I hope they go through with it, it will be a great learning experience for them. Dad can do the painting (oh, and if you need any painting done on the Sunshine Coast, give him a call, he is a perfectionist - 0438940634, qualified) and Mum has an eye for style.

Anyway, life is good in investment circles atm...ciao for now.

Well who would have thought...

It's kind of weird, but my sister has crossed over to the dark side and has become a REAL ESTATE AGENT!!! AAAGGGHHHH!!!!! It's like I've crossed over into some unjust parallel universe, where the world has gone topsy turvy and things just do not seem the same. Anyway, Andrea Appelman is her name and she has a few listings around Beerwah on the Sunshine Coast in Queensland, a VERY competitive market for agents at the moment. It's cut throat getting listings, but she is battling on and starting to get places. Thought I may help her out a bit so here is a link of her listings...

She is trying to carve out a nieche for herself and if you're a successful agent, please send her an email or give her a call, she could use a few more tips to really get things moving (not coming from me of course)...

Could this be cf+???

Could this property be cash flow positive??? Listed for $180,000, could probably be had for much cheaper and only needs a handyman for a general "clean up" as far as I can see. It's in Ingham, North QLD, with all the pleasantries of a decent sized town, and only 1 hour to Townsville. Would probably rent for...$250/week???

Market news on the thin, and, property managers need to get a grip!

Once again we can see the calm before the storm, as the media give property a bit of a breather before, no doubt, a full out attack at the next interest rate rises.

I've noticed a funny occurrence on www.realestate.com.au the other day. In one of the places I invest, in Queensland, when you search for property in the "City" part of the town, you only get a handful of properties. Not that there isn't a crap load for sale, but because of the boundaries as set by the website I presume. One of my properties that is on the market falls within this boundary and as such, I wonder how many searchers do find it. It is still getting a stead ten hits or so per day, but none the less, I asked the agent to change the search term to the towns name, rather than just "Atown City".

I am now going to have a good old whinge about property managers, just because some of the silly ones I have now, defy belief. I ask you PMs, what is your job? Why am I giving you 10% of the rent? Seriously...why? I would think that amongst your job description it would say "manage maintenance" and "good customer service". But NOOO, one of my places still has a wall leak, one that now has not been attended to for a few months. Come to think of it, I'm shooting off another email. And in another property, a slightly sagging section of ceiling, once again, nothing. Get a grip on reality, property "managers"!!! Get your shit together and DO YOUR JOB!!!!

Another bargain in Toowoomba...

UPDATE: Finally SOLD on the 23rd of October...

I don't know why this place is being over looked. I would have snapped it up very quickly if I had the equity. Oh well, some lucky bugger will get to invest in mixed residential/commercial....

Cheap Queensland towns....

Someone on my favourite Somersoft forum recently bought up this topic. Below are the top ten cheapest suburbs in QLD...the red is my opinion:

Charleville: $140,000 Far removed from a lot of places.

Tara: $151,000 Possibly the worst socio-economic town in QLD

Gayndah: $155,000 Meh...

Mount Morgan: $160,000 Meh now...

St George: $187,250 From what I hear....dump.

Rockhampton City: $195,000 I don't know why Rocky is so cheap.

Harlaxton: $215,000 ???

Oakey: $216,750 Undervalued, being so close to Toowoomba.

Home Hill: $219,500 Needs more infrastructure.

Stanthorpe: $225,000 I'm biased, but I like this town.

A bargain - Toowoomba

This property is a bargain. At first, I didn't think much of it, but on second inspection this property is a good buy in my opinion. 4 bedroom means it will always be rented, it has a patio thingy out the back, is a bit of a blank canvas in the backyard and Harristown is an OK part of Toowoomba. Come to think of it, I often wonder why this awesome largeish regional centre is not worth more. I think it's due for a price correction....

I feel false positivity....still, it's positivity.

Well after the last few weeks I have become more and more confused by, what else, but the lovely media reporting an overwhelming number of positive news about property prices. While this in essence is fine and is finally showing a leaning towards positives rather than doom and gloom, there is one eency weency tincy little problem. I am STILL NOT SEEING IT!!!! The Brisbane suburb that I watch (where I have an IP) called Ferny Hills, as well as Ingham in North Queensland, where I live, property is ticking along.....stable, not earth shattering, not idle, just moving.

What I am noticing is the number of stock coming on the market. In Ferny Hills for example, A LOT of houses are coming on the market and are hanging around for a while. They are your typical, highset built in underneath neat 3brm base stock houses. This is unfortunately doing something to our market, it's keeping it low. These are the entry properties, people flogging off stock, it's not the type of properties that are overpriced, the type that usually drive up the suburb profile.

I can conclude two things form this scenario. Either people are seeing this as an opportunity to get out, in fear of the interest rate rises, OR, investors/owners are ready to upgrade and are flogging off stock to open up cash for upgrading. For months, hardly any activity and now, it's all on all of a sudden. I hope this scenario is not being repeated around Australia, as I see it as detrimental to future prices. What I do like though, is how neat these places are inside, it's quality lower end stock.

Ingham, while being a very different market is doing a similar thing. Lots of lower end stock available, quality a bit low but acceptable, but there is also a small section of expensive, overpriced houses that are being listed. This gives me hope.

So yes, while the long term does indeed look rosy for investors/home owners, currently I wonder whether the interest rate rises we are heading towards are keeping prices low. Oh well, back to my ponderings....