When looking at property that you intend to rent out, Australian property investors really should take a long hard look at the chattels and gadgets included in the property - some of them are just too much trouble to be bothered with. Here’s some of my least favourite household chattels:
Swimming Pools
Sure everyone wants a pool- but no one actually wants to maintain it! If your property is executive level - sure include a swimming pool and include the pool man in the rent, but most tenants won’t want to pay extra or pay for the maintenance. If you are stuck with one see if you can run it as a salt pool rather than a chlorinated one - a lot less maintenance.
Old Style Air Conditioners
The old evaporative air conditioners are expensive to run and not work well, and cost a fortune to replace. Make it a negotiating point on the sale, and then replace it and get a better rent and a guarantee to boot!
Fancy “Gold” Taps
Usually installed by someone who is in love with the instant makeover your home TV shows. They look fantastic - for about 6 months and then they look old, scratched and well fake. Replace with stainless steel ASAP.
This is my new favorite, number one thing to avoid though as a property investor: the Water Gurus Air-To-Water generator. No this is not a joke - really I couldn’t have made it up -here it is features on Australian news:
You can have one of these lovely devices installed in your home - complete with hot and chilled water options for $2000(+GST). The generator is so noisy it has to be installed outside. As a landlord I can see the maintenance bill now, and the tenant complaining about the power bill. Oddly most Australian houses already come with clean drinking water installed: its called a tap!
Easter and other long weekends can often be a good time to be out looking at property- because most people won’t be, instead at home with the kids or on holdiay. It can be a great time to grab a bargain for the switched on investor.
The prime time in any market to make your own buyers market is long weekends, The Christmas/New Year break - when most of the country goes AWOL (check you can find a solilcor or conveyancer open in January though) and Easter. Easter generally coincides with the start of school holidays and the end of summer in most of Australia and most local property investors will have their attention elsewhere.
While many city real estate agents will avoid running open homes on long weekens, agents at popular weekend escapes will sometimes take the opportunity of many more city people in town than normal.
Denmark is a pretty little town on Western Australia’s southern surf coast known for fine wine and food and fishing. On Easter Saturday Lot 101 Eden Road goes under the hammer. The name is a clue, The property is a 54ha conservation-zoned block overlooking Denmark’s main fishing and swimming beach. The block is at the ridge of the peninsular and includes 950m of ocean frontage and 320m of inlet frontage. Its being marketed as like living in your own national park and the auction will be held on site - with courtesy 4WD transport for bidders.
Denmark Ocean Views, Western Australia
Photo Credit: Australia Today
Macquarie Groupis probably one of Australia’s best known of Australia’s commercial banks. Now it might also be the first financial group to be bailed out by the Federal government’s guarantee to commercial property investors.
No 1 Martin Place, Sydney
According to The Australian Macquarie is having problems re-financing its flagship office at 1 St Martin’s Place in Sydney, a building which also houses Australian Securities and Investments Commission. Once the ornate Victorian-era GPO of Sydney the building was redeveloped in the 1990s to a a high rise office tower and Macquarie is now having trouble refinancing nearly $129 million on the property. The property has been on the market since late 2008 and so far the best offer is nearly 25% less than the June 2008 valuation.
The “Rudd Bank” - as the opposition likes to call it - is designed to ensure that commercial property is not sold off in fire sales which may potentially undermine the entire economy, or at least the superannuation funds which invest heavily in it.
The problem is establising the value ofthe property in a thin market. There have been no sales of commercial property of over $100 million since the financial crises hit in the second half of 2008 - only 10 early in the year and they probably reflected 2007 values. It really is hard to know that commercial property has dropped over 20% in a year - but if no one is buying surely that is what its worth?
The only offer on No 1 Martin Place so far is $480 million - which based on current market rents would represent 8% yield - which is why the property may become the first “asset” of the Rudd’s bailout plan.
Photo Credit
Over $25 million worth of property was sold by Colliers International at a large Sydney auction recently. Many of the buyers appeared to be private investors looking for a safer haven for their retirement savings than the fickle stock market or abysmally low money market rates.
Capitan Torres Restaraunt, Sydney
Spanish restaurant Capitan Torres, Liverpool Street sold for $7.7 million after a long auction which had six seriously interested bidders.
Several mortgagee in possession properties were also under the hammer. A vacant block in Darlinghurst, sold for $2.35 million, $700k over reserve, after a heated fight between 5 interested parties. Obviously none of those people had heard about the real risk of seriously over-paying for mortgagee properties at auction!
Overall the sale had a 50% clearance rate which is good enough to get the press positively excited these days, especially in the Sydney market. The market commentators are picking that investors are finding the current low interest rates attractive, just hope they stay that way for a while and people keep their jobs and tenants to keep paying the rent.
Meanwhile there are still fears for what will happen after the end of June’s cut off for the increase in the first home buyer’s grant….
