Sunk In Sorrento

37 Seaward Loop

Sorrento 

http://www.realestate.com.au/property-house-wa-sorrento-107214231 

Bought 11-09-2007 for $2,175,000 

Desperate Sale all offers by May 13th 2011 Considered 

(Still Wants over $2.68 Mil?)

Bought by professional home renovator & property Flipper Sasha de Bretton to live in for 12 months & then sell & make a $1 million dollar profit.{TAX FREE} Or so the plan goes. 
{See her web page: http://www.milliondollarmakeovers.com.au/index.html}

However 3.5 years later she is stuck with a property she cannot shift 
(Has been for sale for 2.5 years)

No doubt Sasha has been successful with this strategy in the past but even this

"Professional Renovator / Flipper" is going to get smoked in this market!

Bought for $2.175m &spent $200K renovations plus other costs = $2.5 mil 

She brags on her website that it is valued at $3.5mil to $3.7mil but in the end is only able to advertise it for $3.0 mil when she lists it for sale 12 months after renovating it. 

Still not a bad profit however between buying it & listing it for sale the housing market changed. No longer could speculators flip property for massive profits.

Sasha has been holding $2.5 mil debt on this property for close to 4 years. However if her strategy  worked all she intended to do was flip it in under 12 months!! 

So now  the interest on this has cost her $700K Plus!! 

Yes she has had a house to live in but she could have rented a house just like this in Sorrento for under $150K for the same period.

So her actual holding / speculation cost has been over $500,000 This is why she needs $2.68mil to try and break even. 

On top of the interest bill she has had to fork out for advertising etc for 3 years of marketing the property.

First Advertised for sale 23-05-2007 for $2,500,000

Property then Bought by Sasha 11-09-2007 for $2,175,000

(Approx $200K Spent on renovations)

Sasha then lists this house for sale 20-07-2008  as "EOI"

{Listed 3 months to get $3.5mil price. Clearly nobody willing to pay target price of $3.5 mil Plus?}

 

Price wanted advertised 18-10-2008 $3,000,000 
{Interest rates in 2008 were 9.5% & the GFC has just hit so price reduced}

Price reduced to attract buyers 10-01-2009 $2,990,000  

(Another 3 months pass lets reduce it $10K that will pull in the buyers?)

Further Price reduction 28-03-2009 $2.59 mil to $2.89 mil (Still No Takers)

20-02-2010 Advertised as "EOI"

(No takers so property rested for a few months.)

Back on the market 6-03-2011 $2,680,000 

So what do I think this property is worth in this market?

Sorry but I would not pay more than $1,850,000

So why do I think this property will only sell for $1.85 mil. ? 

Follow this Link & watch 2nd last video story on Sashas web page, look at the "Cost Saving" techniques like a "GRANITE TRANSFORMATION" in the kitchens & Bathrooms instead of doing it properly & replacing the tops completely. Remember she only intended to "FLIP" the house in 12 months all it had to do was look like a Million Dollars. Makes you wonder what other shortcuts have been taken to achieve a  maximum return? 

http://www.milliondollarmakeovers.com.au/videos/videos.html

Before

 

AFTER

 

 

Woodvale Train Wreck

7 Parkwood Ave 

Woodvale
http://www.realestate.com.au/property-house-wa-woodvale-107281953 

Bought for $860,000 Oct 2007 

Owners spent $100,000+ Renovations

Currently for sale for $799,000 

Never go wrong buying quality?

 Look at the history of this house

Owners can expect to take a "Haircut" of $200,000 

Over 3.5years this works out to a loss of 

$5,000 Per Month (Brilliant!!)

Sold 12-05-2001 $322,000

Sold 17-02-2006 $612,000 

*up 90% in 5 years remember property should only double in 10 years?*

Sold 22-10-2007 $860,000

*up another 40% in 20 months remember property should only double in 10 years?*

Total Rise in 6.5 years?= 167%

So even if you subscribe to property "SPRUIKERS" hype that property should double every 10 years this house should only be $644,000 today !!! 

In 2007 these owners should have only paid $531,000 NOT $860,000


Forget about adding the $100k for renovations because this is already factored into the property always doubles equation.Spruikers overlook this expenditure when the say property doubles they forget to deduct this cost?  Because remember every house gets remodelled / extended / renovated  etc.

BTW there is nothing wrong with this house in fact it is great we would buy it tomorrow but we would never pay more than $650,000 !! 

Why? Property ONLY doubles every 10 years even with renovations & extensions etc!!

If you are buying property as a "Investment" treat it like a hard nosed investor would!!

Now is the Best Time to Buy?

Now is the Best Time to Buy? (Oh Really!!)

 { Thanks to Tasmanian Real Estate Trouble for Highlighting the subject: ttp://tasmanianrealestatetrouble.blogspot.com/2011/03/heard-it-before.html}

 

Remember a Realtor has a vested interest in convincing you that everything is OK & now is the perfect time to buy. Because if they don't they Starve!! Just think about this or keep it in the back of your mind when you read stories from Banks / REIWA / RP DATA etc they all form part of what I call "PROPERTY INC" ......

The biggest players in "PROPERTY INC" are Newspapers & property Websites .....  
Property advertising revenue sways what they report & how they report it !!!
  
 In 2006 Sales in the American Real Eastate Markets had slowed down & were STAGNATING.

The National Association of Realtors (The NRA  is the same as our REIWA or REIA) decided it was time for action. The Mainline Press were no longer reporting the Property Myth as the would like it reported. Facts were drowning out the REHTORIC put out by the NAR so they decided to pay millions to put out the MYTH that now was the perfect time to buy property? Really?

In 2006 USA  property was falling & 5 years later in 2011...  80% of commentators expect US property prices to fall a further 10-15% .... but this is the PAID ADVERTISING the NAR  placed in all the major US Papers. ... Why pay? ... Newspapers could no longer credibly report the RHETORIC the NAR wanted them to report so the had to resort to PAID ADVERTS??

 

     



NAR Campaign Negates Bubble Hype, Encourages Buyers And Sellers
by Blanche Evans  Published: November 3, 2006
{ http://realtytimes.com/rtpages/20061103_campaignneg.htm}

"If you don't tell your story, someone else will," Joe Williams, co-founder of Keller Williams said recently about the media's disinclination to quote real estate brokers as sources for the myriad stories written recently about the so-called housing bubble. Imagine the frustration, ignored by journalists and unable to peddle nonsense to the gullible.

Instead they turn to anyone but people who buy and sell homes for a living -- stock analysts, economists, media pundits, authors, and so on. The effect on buyers has been paralyzing. Many brokers say buyers are concerned with more than rising home prices and interest rates -- they're scared of being the next greater fool. The media turns away from the vested interests to cover the story, balance emerges and the buyers, given a taste of actual analysis and break from relentless spruiking, begin to baulk.

With enormously improved conditions -- interest rates comparable to 40-year-lows and rising inventories that provide greater selection, pending sales are already beginning to rise. Even the former Federal Reserve chairman, Alan Greenspan said he thought the "worst of this may well be over." This could cause many buyers to miss a golden opportunity -- home prices and sales expected to rise again in the spring. Of course things can only get better in real estate land and falling knives don't cause cuts.

Conditions are also improving for sellers. With the number of households expected to increase 15 percent nationwide in the next 10 years, demand will continue. In addition, 2006 has hardly been a failure for housing -- so far, it stands as the third-best year on record. Don't forget the ever-present demand.

Now the NAR is doing something about the negative hype -- running full-page newspaper advertisements in six of the nation's leading newspapers beginning yesterday. The ads are designed to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes. Not coincidentally, the newspapers chosen -- Wall Street Journal, USA Today, New York Times, Washington Post, Los Angeles Times and Chicago Tribune, are among those most guilty of hyping the housing bubble to the point of scaring buyers to death. The rent-a-quotes became so unreliable, so on the nose, they had to buy their own advertising to con the suckers. 

NAR's first-ever newspaper blitz features the headline, "It's a great time to buy or sell a home." The advertisement points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year. Yep, sales are always likely to pick up, these conditions won't last because buyers will come to their senses (or we'll get our manipulative hooks into them) get used to hearing that one.

"Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought ten years ago, has increased 88 percent," points out the NAR. With prices having risen 50 percent over the last five years, including a longer timeline circumvents criticism that the housing market traditionally only barely beats inflation by a point or two. It's done that and more in the last five years, but keep in mind, that previous to the boom the nation was recovering from a housing slump. Actually, home-ownership proved to be an assured wealth destruction tool with prices down over 50% in some markets since this campaign.

In addition to the newspaper ads, the NAR is blitzing network television and radio with ads directed at buyers and sellers. These begin airing in the second week of January -- the start of the spring selling season in the warmer parts of the country. Pity the fool who fell for this con job.

"The market is much better than you might hear or read," says Tom Stevens, NAR's president. "Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change," Over 4 years later and time is still on the side of the buyer.

And NAR's 1.3 million members and state and local Realtor associations are being encouraged to adopt the message in their own advertising and communications to consumers, beginning with this news:

• Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR's existing home sales report.
• The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000.
• According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.

The time to buy or sell is now. I bet those sellers were damn happy.

The Mortgage Game

Please take the time to browse other articles I have put up.

Forward links to this site so that a counter message to Property Spruikers Hype gets out! 

(Comments & Feedback always welcome Good or Bad)

 

A 7% home loan interest rates in 2010 is equal to over 22.5% interest rate in 1990 .... 

In 1975 only 24% of average income was needed to service a typical Australian mortgage. 


This was with a prevailing interest rate of 10.38%---------


By 1985 it was still steady at 24% of average income needed to service despite interest rates soaring to 13.5%--------


By 1990 Interest rates went to 16% plus but you still only had to use 34% of average income to service a mortgage.-------- 


By 1995 you needed to use 29% of average income to service a mortgage (10.5% Interest rate)--------


By 2005 it had soared to 40% (7.3% Interest Rate)-------


Now in 2010 it takes a staggering 50% of average income to service a typical Australian mortgage despite HISTORICALLY LOW interest rates of 7.79% (Norm 10.11%)- Despite this REALTORS continue to say Australian property prices will double every 7-10 years??? --------


How will anyone pay for it? ----- 


Historically interest rates have averaged 10.11% over the past 30% ---- 


Just 3 years ago in 2008 it was 9.5% ---- 


A 7% interest rate is equal to paying a 22.5% rate in 1990 in comparative terms.Think about that when house hunting. 



In Jan 1990 interest rates hit a record high of 17% & people managed to keep their homes then so how would this compare in todays housing market?...

The 1990 Median house price was $100K with a 20% deposit & a loan of $80K payments @17% interest over 30 yrs would be $1140 pm or 32% of wages with average family wage of $42K pa...so in 1990 @ 17% the worst interest rates in Aust history payments only ever got to 32% of average family income...

Fast Fwd to 2010 Median price is $500K less 20% deposit & a loan of $400K payments @ 7% interest over 30 years are $2661 pm or 43% of wages with average family wage of $75K...

In 2008 interest rates were 9.5% this would work out to payments of $3365 or 54% of current wages .... Now historically for the last 30 years interest rates have averaged 10.11% this would works out to payments of $3545 pm or 57% of wages going to mortgage payments ....

So summing up current housing mortgage payments @ 7% is still worse than when rates were at 17% but just imagine what will happen when rates rise? AFFORDABILITY will not allow future CAPITAL GROWTH & investors will D*U*M*P __ P*R*O*P*E*R*T*Y because without MASSIVE CAPITAL GAINS Property investment WONT WORK!

  

Note: Although My Figures & Figures from the image extracted from the West Aust 6/01/2011 

Vary slightly but concur the same general information 

 

If home ownership is twice as hard now than it was for the last generation, what chance will home buyers have in 2020?

It is an issue many fear as they watch current entrants to the property ladder mortgaging themselves to the hilt for the chance at the Great Australian Dream.The previous generation of first-homebuyers certainly had no expectations of the drastic slide in housing affordability that would meet their children.


About 35 years ago, loan repayments consumed only a quarter of a full-time income.


According to the Australian Bureau of Statistics, in 1975 local home loans averaged a paltry $17,800, which was about three-quarters of the value of a median-priced home at the time.This was enough to buy a home in the suburbs, complete with exposed beams, clinker bricks and a sunken lounge.


The interest rate in those days was a hefty 10.38 per cent and most families relied on a single gross income of $690 a month or $8,280 a year.


While single-incomes and double-digit interest rates seem harsh by today's standards, families starting out in the 70s had it much easier when it came to buying their own homes.These days, repayments for the average-sized home loan currently eat into half an average full-time wage in WA.


The average loan is now $389,000, according to Australia's biggest mortgage broker AFG.
Just as in 1975, this is equal to about three-quarters of the value of a median-priced home.Interest rates are lower these days at only 7.8 per cent, and the average gross monthly income for a full-time worker in WA appears generous at $5844, or $70,000 a year.


But the monthly mortgage repayments are $2948, which is half a full-time average wage. As the cost of homes continues to rise more quickly than incomes, there is little wonder that single-income families are fast becoming a relic of the past. 

The problem raises questions about how affordable - or unaffordable - homes will be in 10 years.

Will repayments on the average home come to consume three-quarters of the average income?


Where will it end?


Housing groups believe smaller blocks and homes will come to the rescue, halting the slide of affordability with an array of cheaper options on smaller blocks.


In 1975, Perth blocks were typically 750sqm, but homes were much smaller, with about 150sqm of floor space.


WA's biggest land developer, Nigel Satterley,  has forecast that block sizes would drop to as little as 100sqm in 10 years, though these small blocks would be part of a specialised sub-market, with the average plot size settling at 350sqm.


This is a hefty drop from today's average block size of 465sqm, which is down from 580sqm in 2003-04.
Even blocks in the country are shrinking, at 667sqm this year compared with 710sqm in 2003-04.
A study of aerial photographs from Landgate by _The West Australian _shows that blocks have been shrinking for many decades.


People are paying more & getting less land for their money!!!

Historical interest Rates

PROPERTY SPRUIKERS use HISTORY to support their position that PROPERTY ALWAYS DOUBLES every 7-10 years. As PROPERTY SPRUIKERS are so fond of their history here are HISTORICAL FACTS that you may wish to consider regarding Interest Rates. 

The average bank variable home loan interest rate over the past 59 years in Aus is 8.05%. Standard variable  rates were above 9% from July 1974 to August 1993 when they dropped to 8.75% for 1 year then stayed above 9% till November 1996. 

JUST THINK for 22 YEARS of the last 36 years interest rates were WELL ABOVE 9% not that long ago. 

But lets not go back all the way to 1959 lets go back only 30 years which is what the average length of a home loan  & you will find the following..... 

AVERAGE HOME LOAN INTEREST RATES FROM Feb 1980 to Feb 2010 WAS....10.11% ... 

So if you cant afford a rate above 10.11% should you be in property at the peak of an inflated market? 

Property Spruikers use history  as a guide, as you should & budget on an average interest rate of 10.11% ... Go ahead disregard history after all property always doubles HISTORY SAYS SO. 

Want proof on interest here is the Link..  http://www.loansense.com.au/historical-rates.html 

 

Bankwest Property Survey said Perth median house price is too expensive for key workers (Police / Nurses / Teachers) to get a foot on the property ladder. Survey in July 2009 found Perth is unaffordable for key workers with the median house price 6.3 times the salary of a key worker. Perth was the third least affordable capital city in Australia.  In 40% of Perth’s suburbs key workers face house prices which are more than ten times their salary. These are the essential workers WE ALL rely on every day to provide important services. The unfortunate reality is many are locked permanently into the rental market and are unlikely to get the keys to their own home unless they are willing to commute for long distances. Think about this if  Police / Nurses / Teachers are being locked out of the property market by prices rising out of their reach ? So who is going to buy these houses in 5 / 10 years time when property doubles as Spruikers would have you believe??? Here is a link to the report read it for yourself  

http://www.bankwest.com.au/library/scripts/objectifyMedia.aspx?file=pdf/52/23.pdf&str_title=Key%20Worker%20Housing%20Affordability%20WAv2.pdf

Extracts from: http://au.news.yahoo.com/thewest/a/-/mp/8601792/home-ownership-getting-tougher/

Perth Property Mistakes

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#5 Lolium Court
Woodvale

First Listed 19-11-10 Advertised as Mid to High $800K's (Tossers)

Stuck on the market for 4 months no takers!!!

The agent advertises it as " NEW PRICE" 6-03-11

But the price is still $849,000 Plus 

(Who are they kidding? Themselves!!) 


But look closely at the advert . I don't know if the agent makes this statement with tongue in cheek ? Iknow what she really has in here cheet but in the interest of good taste I will keep that to myself!!!

No wonder people have a low opinion of agents when they say...

" For Collectors of Fine Homes " 

WTF is that supposed to mean? 

This agent clarifies it by saying 

" One of the finest homes in Woodvale is now available to become a part of your collection " 

Clearly this woman thinks the property market is just a GAME to be played?

 

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# 7 Risdon Court
Woodvale


Bought 22nd April 2009 for $625,000


Now listed for sale 2 years later for $695,000


Another property bought by a pool of investors combining their resources to buy a investment property when interest rates were around 5% now they are up 50% to around 7.5% this property is for sale. $695K so many optimistic investors in Woodvale {Sucker born every minute} Firstly will be very lucky in this market to get this price & if they do they will just scrape in covering Stamp Duts / Selling Costs & negative returns for the last 2 years. 

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#127 Ellen Brook Drv

The Vines 

First Advert by original Vendor October 2006 for $860,000

Purchased by Current Vendor 3 rd Feb 2007 for $795,000 

{No Doubt thought they were pretty Smart getting $65,000 or 7.5% discount off the asking price at the Peak of Perth property market? ... Well done you!!} 

Then Listed for sale 1 year later Feb 2008 for $1,075,000 

{Up 35% in One Year GREED IS GOOD!!! property player no sympathy here!!!

Withdrawn from sale 10-05-2008 after 3 months with no takers  $3-$5K Wasted}

 Then Re Listed 19th April 2010 as Express Sale Price???

{Agents hint at over $1 mil Price tag when asked in April 2010 No takers after 3 months}

Advertised again 10th July 2010  @ $999,000 + 

(Wishful Thinking but Greed is always good)

Price Reduced again 11th September 2010 to $960,000 

(You never know there just might be a sucker at this price point?) 

Price reduced again 29 Jan 2011 to $890,000 

(Still no takers but they have to recover stamp duty & selling costs???) 

Listed as up for Auction 13-02-2011 bids starting from $650,000  

Finally Sold prior to Auction Feb 2011 for $730,000

 So after 4 years exactly these canny SPECULATORS in Perth property  sell for $65,000 less than they paid + Stamp Duty $30K + Agent Fees $20K + Advertising / Marketing costs for 3 campaigns $15K ... 

Estimated total loss over 4 years $130,000

This is a good example that property can turn around & bite you. I have no doubt when these people looked at buying this property in Feb 2007 they thought  "We could hang on to this house for 12 months live in it & then sell it for a packet making a healthy tax free capital gain?"  After all property had just gone up in the previous 3 years by close to 100% & they were getting this property  off the previous owners at a 7.5% discount what could go wrong???

This is our market in Perth TODAY some properties appear to be cheap 
@ 5% / 10% / 14% off but they are not!!!! 

It also is a timely reminder to Vendors in today's market.... 

DON'T BE TOO GREEDY

Just imagine if they advertised this property for $895,000 in 2008 instead of being greedy & trying to get $1,075,000 they would still have made $100K & they would be $165,000 better off than they are today????

Learn for these peoples mistake!!

Page # 2 of The Sunday Times Property Liftout had this Story about a property investment gone wrong in Ellenbrook / The Vines

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#28 Sandgate St
South Perth

First Sold 17th Feb 2008 for $1,390,000
Then Listed for sale 3 years later
 4th Dec 2010 for $1,450,000 (Some luck required here?)
Reduced 29th Jan 2011 down to $1,325,000 
(Now Under offer Feb 2011 what price?)

The speculators / fools on this Gem will be lucky to get away with a loss of $150,000 after stamp duty / selling costs etc.
Just think South Perth is a Gem in Perth Property?

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# 2 Gullima Court
HUNTINGDALE

Bought 2-11-2009 for $350,000

Listed for Sale almost exactly 1 Year Later 

14-11-2010 for $499,000 (Dreamers)

March 2011 reduced to $479,000 (Good Luck )

 My guess they were are FHB buying with a $21K FHBG GOVT Gift. ?

Who AFTER 12 MONTHS OF RISING INTEREST RATES  are unable to keep up?

 These owners will be luck to get their price in this market. But remember these are the people that either kept prices up or pushed prices up during the GFC (2008 / 2009 / 2010 ) Now this market segment is starting to crumble as these new owners come to the realization that home ownership is far more expensive than the rents they were paying before?
(Home ownership Interest /rates/ maint etc= $500 PW Min or Rent the same for $350 PW).
Now the rush is on to get out before they are trapped, increasing stock on the market & driving prices down after all they have $21K of Kevin Rudds dollars to just discount away!!

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# 9 DRESSAGE GRN, 

BALDIVIS

Bought 23 Dec 2009 for $350,000

Put up for sale just 4 months later 

April 2010 for $399,000 ??(Dreamers)

On the Market 12 months 

March 2011 reduced to $365,000 (Good Luck)

My guess they are FHB buying with a $21K FHBG GOVT Gift. Who Panicked in Dec 2009 to get in the market before FHBG reduces & it is too late. 

Then 4 months later rising interest rate start CRUSHING THEM? 

These owners will be luck to get their price in this market. But remember these are the people that either kept prices up or pushed prices up during the GFC (2008 / 2009 / 2010 ) Now this market segment is starting to crumble as these new owners come to the realization that home ownership is far more expensive than the rents they were paying before?

(Home ownership Interest /rates/ maint etc= $500 PW Min or Rent the same for $350 PW).

Now the rush is on to get out before they are trapped, increasing stock on the market & driving prices down after all they have $21K of Kevin Rudds dollars to just discount away!!  

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#45 Castlegate Rd 

Woodvale

Bought June 2007 ------ $815,000

Listed for sale November 2010  ----- $875,000  

New Price March 2011 ---- $799,000 - $849,000

Owners Paid too much in 2007 when they paid $815,000 its true value in 2007 was closer to $600,000  but at the time property prices had just jumped 50% in the previous 3 years so it did not matter what price they paid,{Or Did It?}  because no doubt the owners thought they would be able to sell it for what ? $815K + 50% = $1.2Million? ... Well in 2011 they are struggling to attract any interest at $799,000 

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# 8 Ragamuffin Point 

Halls Head

Bought Sept 2007 for $1,800,000

Listed for sale by Tender May 2010(No Offers)

Prices then REDUCED  monthly to 

1st Jan 2011 Seeking a price of $1,350,000

Currently listed March 2011 $1,050,000

(What The _ _ _ _ !!! OUCH! $300K in Just 2 months what do they know is going to happen)

Dont forget with Stamp Duty & Selling costs these people will be lucky if they only lose only 50% OR $900,000k 

WHO CAN AFFORD TO LOSE THIS KIND OF MONEY?

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#38 Phillips Fox Tce
Woodvale

Sales History

First Sold Feb 2006 ---- for $1,240,000
Sold Again Dec 2007 ---- for $1,800,000
Then Sold March 2009 ---- for $1,500,000

So In Dec 2007 some  IDIOT pays 50% more for the property  than what it sold for previously just 2 years earlier? This Idiot went on to spend a further $200,000 up grading it to their liking & by the time the property is listed  for sale in early 2009 the property owed them $2,0000,000  + Cost of Stamp Duty & Selling costs of $100K


In March 2009 they sell the property for $1,500,000 
A loss of $600K!!!
That's a LOSS of $40,000 a month!!!
{Think about that? $40K a Month Loss}


Have the new owners have picked up a bargain?....
In my opinion this property is still not worth more than $1,000,000 
but time will tell who is right?

Just look at my previous post about 
#8 Ragamuffin  Mandurah $1.8mil down to $1 mil ??    
I don't think I am that far off the Money do you ?

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#1 Ullinger Loop Marangaroo

Bought Jan 2007 $360,000 --- Sold Dec 2010 $335,000

#1 Ullinger Loop Marangaroo Bought Jan 2007 for $360K rented out for almost 3 years Sold Nov 2010 for $335K a loss of $25K + Stamp Duty $15 + Agent Fees $10K + Negative rental return {Even after Tax Deductions}(3 years $5K pa) $15K = Total loss this Canny investor incurred ? = $65,000 Brilliant !!... Now dont forget the Tax Office says that the average investor claiming deductions for Residential property has a reportable taxable income of U*N*D*E*R $70,000 . No doubt in 2007 this investor thought he could not go wrong property had just doubled in price in the previous 5 years so he could sell & make a M*O*T*Z*A* even if he lost $5K pa after Tax! .... No doubt they were just trying to get ahead, with what they thought was a sure thing learn from their mistake ..... So what if Today you take $30K less for your property now than you could have got 6 months ago? In another 6 months with investors flooding the market to escape you may have to take a loss far greater than $30K. Unless of course you think this is a one off example & that your property is unique & you will find a GREATER FOOL in 2011 to Buy?

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#9 Donabate Rd Ridgewood

Bought March 2007 for $510,000

Sold January 2011 for $420,000

You can never go wrong buying property in Perth? ... or can you? ....  Bought by a Fool in March 2007 for $510,000 + Stamp Duty & selling costs it would owe them about $550,000 to break even??? .... 

This just house sold 21 / 01 /2011 for just $420,000 ..... 4 years paying twice as much as what it would cost to rent & the purchaser of this property sells it for $130,000 less than what it owed him!!! ..... MIND BLOWING? .... 2007 was a peak in the market & we are back at that Peak again today ....

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 # 20 Tuam Street VICTORIA PARK

Sales History 

Bought 15th October 2009 $950,000

First Listed for sale 24th April 2010 @ $1,079,000 {Good luck with that}

Price reduced down 13th Feb 2011  $949,000

•  

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# 86 RICHMOND ST, LEEDERVILLE 

Sales History :

Sold : 

8th Jan 1990 $196,000, (Median Wages=$31,000)

7th Feb 2002 $367,500,  {up 86%} (Median Wages=$48,277 up 55%)

2nd Oct 2003 $480,000, {up 31%} (Median Wages=$51,298 up 6%)

19th April 2006 $710,000, {up 48%}  (Median Wages=$57,496 up 12%)

3rd Feb 2008 $1,025,000, {up 44%} (Median Wages=$63,154 up 10%)

Currently For sale Feb 2011 $1,095,000 {up 7%} (Median Wages = $69,085 up 9%) 

Currently this property is on the market for $1,095,000 . The owners will be extremely lucky to get this price in the current market. After paying $1,025,000 3 years earlier.  But lets say they do? After 3 years they will be Lucky to break even in fact after stamp Duty & Selling Cost they are likely to lose approx $50,000 & 3 Years!! .... Mortgage Payments & cost of ownership (Rates/Maintenance Insurance etc) would have been close to $90,000 PA yet they could have rented this property for under $40,000 pa. Had these owners rented instead of buying in Leederville they would have saved $150,000 (3 Years Rent Vs Mortgage Payments) & $50,000 (Cost of Stamp Duty & selling costs not recovered in selling price) ........ So these CANNY buyers have clearly paid too much in 2008 getting sucked in by the HYPE that property prices always goes up so you will be better off buying than renting? .... Well here is their $200,000 mistake to learn from !!!! .... Learn form these peoples mistake how many of you can afford to lose $200,000 . .................... Now also look closely at how prices & wage growth diverge from each other?.... In 1990 this house was 6.3 times wages (still very high & probably at the very extreme limit of affordability) yet in 2008 this idiot was willing to pay 16 times median wages or 26 times rental return!!.... { I Call them IDIOTS!! because people like this force everyone to pay higher prices competing with their stupidity } Property has always been priced at 3-4 times wages or 11 times rental returns. Think things through & examine all your options, what harm could it do to wait & see just what is going to happen in this market before making your own $200,000 mistake?