Pay off all your debts, then save up for what you want. Live it up 'cause you're not going to live for ever.

Real Estate is like Sex.

You should get as much of both as you possibly can while you are still young.

^ slum lord = tenants don't pay on a regular basis, and they break s**t because it's not their own.

For once in my life I have to agree with the doctor.
I would have to assume that means I must be wrong, but I still agree with him.

Buy an old house in a good place.
Look at holding it for at least 10 to 20 years.
On the coast is the best because we only have so much coastline and we can't add any more.
Whereas we have acres of other land and we can always develop more.

The value is in the land so a big block with a crappy but rentable house is the best option.
If there is the possibility of it being rezoned to higher density that is even better.

Make sure the house is rentable though because it's the rent that helps pay the mortgage.
Again, on the coast makes it easy to rent for a good price because lots of young people don't give a toss about the house so long as they can walk to the beach.
Also, if it's a mediocre house you don't get so stressed about tennants not lookng after it. And they seldom do.

I know the price of houses by the beach seem expensive. They always do.
But they still appreciate more than houses elsewhere so if you can stretch things to a coastal property, do it.

But it is hard work cleanng up after the yobs have left the place in a mess so don't go into it thinking it's all just easy money. It's not.

Shares - I'm no expert but some general priciples: best time to buy in was during GFC. Now is probably ok but the big gains have been had. Europe at 5 year highs, US up n down with shutdown/debt ceiling etc but generally at post-GFC highs and doing well. So - not a terrible time to buy but don't expect big gains either. People want secure, dependable growth/returns in turbulent times, so secure stocks become very expensive. Small share trades not really worth it, as you have $20-30 buy and sell costs for each transaction to overcome before you make profit. So you need to chuck in the equivalent of a house to make those costs irrelevant.

Property - for investment I would aim for something very low maintenance and essentially unbreakable. Unit or a small, neat, simple brick house on a small tidy block. I don't know where the doctor is but don't expect 150 applications. Tenants don't really care but if you buy right, they can't do all that much damage.

Re Doctor vs Battle's comments - both are very valid.

Property is good if you can buy at the right price. If you buy a slum and don't at least make it respectable (ie; try to rent it to the lowest denominator), you'll be very lucky if it doesn't get trashed. If you spend too much on it - you will struggle getting a return.

We have a couple of different long-term rentals, my old workshop and a newly designed/built 'Access' townhouse (wheelchair compliant) which I designed and helped with the build (ex-chippy). Although (like Battle) at this point of time they are meeting mortgage repayments - they were both vacant for nearly a year, so we had to reduce the rent in order to get them occupied. That year completely shredded our savings, and if a buyer came along, I'd be happy to offload them. Although I still believe that property is a good investment, I'm very cautious now about over capitalising.

On the flip-side, many people I know have 'cheap' rentals and don't maintain them to a high standard - they get bottom-feeders as tenants and each time the tenants vacate or get evicted due to not paying rent, there's a massive clean-up needed, renovations to repair damage and it costs them more than they make on rent.

For your first property investment - look for;
1. A good location away from the bronx - a MUST (although ex-housing commission areas can be attractive investments if all houses are privatised.)
2. Somewhere you can keep an eye on it, without getting involved or being a nosy landlord.
3. A small and well-maintained house/unit requiring minimal ongoing maintenance.
4. A RE agent with a good rep in property management (for the cost of their fees & the sh!t they deal with, it's not worth DIY).
&
5. Possibly a place that you & family can stay at when vacated for a holiday or for a change of scenery.

Its hard to say whether property is a good investment now. Property prices seem quite high around Sydney. However rents are high too. If you can buy a two bedroom walk up flat for around $300K to $350K it should be almost positively geared with today's low interest rates.

I bought an investment property on the Central Coast of NSW a couple of years ago. The house is a bit of a dump but we were able to renovate a granny flat underneath. We did most of the work ourselves except for plumbing, electrical and gyprocking the ceiling. This kept the costs down. The combined rent now makes the place profitable which is handy. The rent for each is place is lower than the market rates so the tenants are happy to stay there. I'm happy too with the rent received. I have to do a few repairs every now and then however the tenants are happy when I do it. Repairs probably cost me about $1000 a year.

I think the key to successful property renting is to do the minimal amount of work as possible and have the property in an area of high rental demand. Its also a good idea to do a lot preventative maintenance before a tenant moves in such as change batteries of fire alarms, replace tap washers, replace light bulbs. Stuff like that because it sucks getting calls from the agent or tenant because a tap is dripping or the light doesn't work.

sausage said..

kiteboy dave said..

............... People want secure, dependable growth/returns in turbulent times, so secure stocks become very expensive. Small share trades not really worth it, as you have $20-30 buy and sell costs for each transaction to overcome before you make profit. So you need to chuck in the equivalent of a house to make those costs irrelevant.

Umm how do you figure that a $30 trade needs to be negated with a share purchase equivalent to the price of a house e.g. if I purchase 300 shares in say BHP at $37.50 ($11,250 total cost) my $30 trade through Commsec only equates to less than 0.3% of my total holding or 10cents per share. Don't know where I can buy a house for $11,250, do you?

To a degree you're right, comment was there as a lot of people think they'll get rich buying $500 of this one month and $500 of that next month. $12,000 lots are far more realistic.

If you'd purchased 300 BHP shares in '95 you'd have doubled your initial $6000 . (round figures)
If you'd put it in the bank term deposit with compound interest at 5% you'd have $14,500 (round figures)

Not saying shares are bad, just that you need a significant trade size to make them work, and then it's a gamble.

FlySurfer said..

I've been SO wrong with regard to investments... I've lost on everything even my hedges. I mean FFS why have coffee futures 1/2 in the past 2 years?

Anyway... property. Australia has the most inflated property in the world after Canada, Singapore in 3rd... but they have fundamentals.

Canada and Australia have huge bubbles created by the Chinese trying to divest from the USD... go to an auction is Sydney and there's a good chance the auctioneer will bilingual Mandarin/English and everyone will look Chinese.

There's an existential risk that the bubble could pop at any time... losing $300k in a year won't be funny.

I also see a lot of Chinese developments (apartment blocks) in and around Sydney... there are 4 within 1km of where I live. This will have keep a sealing on rental income + there's been no wage inflation.

But like I said, I've lost on EVERY investment of mine. I predicted the GFC down to the month, and I've done ok in the past, but I haven't got a clue any more... I'm just going to sit it out.

I recently lost out on a property in London (GBP135k) ~ $250k with all fees for a 2 bedroom unit in Uxbridge (close to Heathrow)... an equivalent property over here would cost $600k.

Not disagreeing with you Fly, but from my experiences with property investments located in small cities/towns (ie; away from the city lights) is that they are not 'over-inflated' and there's no huge bubble to pop. The downside is that although a steady income can be gained - it's hard to go full-cappo on a small investment in the country. The upside is that any downward movement will be steady and it gives 'slickers' somewhere away from the bustle to get away from it all when the property is vacated.

Done/doing both.....

Gotta say that shares are more exciting and "fun" than property but then I haven't had the experience of seeing a property dropping in price substantially from my purchase price - I've seen it many times with shares and if you are a nervous type of "investor" then put it in the bank/super fund.

Most people are not as good as they think they are or will be at investing (including me) so unless you are willing to lock your money up in super until you're able to access it then................spend it now !!!! Industry super funds are good when you're in your 50's + because the length of time to access it is short.

I've made money (not large amounts) both ways but I will say that if your aims are short(ish) term then go for shares because they're always easier to sell than houses but if you are able to see the long game then go for Industry Super is my advice - for what it's worth....

I have houses and shares and I have found that the have houses have outperformed the shares investment i made in the last ten years, though saying that i wouldn't say that either have knocked my socks off, I have coastal property and properties in the city, the coastal properties have been better for capital growth but they have been harder to find good tenants for than those in the city, I generally buy mid range houses in Rockhampton on the CQ coast which are not yet overpriced but have a really good tenancy rate, Capital growth is lower but the loans pay for them selves, I buy older timber walled homes which are more solid and the tenants cant punch holes in the wall. I have often wondered if I would just be better off saving money in the bank and working on compound interest, one of the financial gurus might have an idea on this one.
good luck, Oh and the shares I buy have been BHP, they have still performed ok, Good Luck

I like property.

You can drive past it. Even if the market crashes that house will still be there. You cannot say that about shares. Potentially bigger gains in shares but also possibility of losing the lot.Your retirement funds are to important to gamble with on shares alone. Buy property as the main investment and then give yourself 10 grand to play with on the sharemarket and see how you go and get it out of your system.
As others have said buy on the beach side of the main arterial road. I.E in Perth, northern suburbs buy west of Marmion avenue. This translates well to any Australian Coastal city pretty well

Property has a great record and tax deductions too.

^^^A bit of pessimism there beagle?

To date I've had most types of tenants and none have done what you describe. Also, be very mindful that 'holiday accommodation' attracts commercial costs in Aus which will devour your profit.

Real Estate values are always relative, always cyclic and in the long term, always rise.

It is like the customer who went into a Real Estate agent's shop and said he was looking for an investment property.

The agent asked "Would that be a long term investment?"

The customer asked "Is there any other kind?"

worst house in best street