Queensland Unit Purchase

[Don and Liz]

Ramping

I have details of a local broker (oz) who can assist with finance if anyone wants - or I could post here if people think it is appropriate. I don't own the business or get paid referrals.

It may be easier for Aussie brokers only because it is their bread and butter. I remember when I first started investing in NZ I used nz solicitors, nz brokers, nz agents, nz finders, nz valuers etc etc.

There seems to be a trend of people trying to get their local (nz) team to do a crash course on international law/accounting/finance etc and then use them for foreign investments.

This may not be the way to go as you would be putting your faith in someone who only has a few months experience at what they are doing.

There have already been some fancifull claims about capital gains tax made on this forum so who knows what other dodgy advice is getting thrown around.

People need to be really really carefull about ramping.

It is a technique that some people use. Secure your own interest in something and then sing its praises until you have artifically increased the price. You then get out before the market gets wind of what you were up to. It happens alot with penny stocks and high risk real estate like time share, otp resorts, otp apartments etc etc.


I saw a guy do this to a bunch of aussie investors in the Buffalo Real estate market a few years ago. It was one of the most unethical things I had ever seen at the time. A few years on these forums and I have seen alot worse since then.

[rustica]

There seems to be a trend of people trying to get their local (nz) team to do a crash course on international law/accounting/finance etc and then use them for foreign investments.

There have already been some fancifull claims about capital gains tax made on this forum so who knows what other dodgy advice is getting thrown around.

People need to be really really carefull about ramping. It is a technique that some people use. Secure your own interest in something and then sing its praises until you have artifically increased the price. You then get out before the market gets wind of what you were up to. It happens alot with penny stocks and high risk real estate like time share, otp resorts, otp apartments etc etc.


A few years on these forums and I have seen a lot worse since then.

Hi Liz and Don

I second that 100%!

Ps Love the dog!

[Dean@Massiveaction]

Provided you stick with quality developers/developments and by at or below average sqm. rates you won't have a problem.
Buy the Midwood report and stick to stock being marketed at or below median rates.
Especially in areas like the Gold coast where I am investing, with 19.4% growth in the last 12 months and more predicted over the next 2 years it is very difficult to not make money. AS LONG AS YOU STICK TO THE RIGHT DEVELOPMENTS IN THE RIGHT LOCATIONS

As for finance, you are better to use an Oz accredited kiwi broker as a lot of Aussie ones don't understand the NRWT issue and many of them aren't able to assist with restructuring of your NZ stuff if required.

We have had many clients declined through OZ brokers who were easily approved when we processed it from the NZ end.

[Don and Liz]

We have had many clients declined through OZ brokers

That's because they know the risks!

Also you have to be really really careful about an investment if when you try and finance it outside of the "circle of interested parties" the wheels fall off.

If you can't get finance locally it says a huge amount about the way the local banks value the security your are offering them in the market place.

[Dean@Massiveaction]

Actually Don all it means is that most OZ brokers are way too busy and inexperienced to be bothered helping off shore clients. They don't understand NZ company structures etc., especially as they relate to property investing structures in NZ. It has zero to do with risk or the property. They just struggle to understand our LAQC and trust structures etc. But I'm sure you know as you invest there as well as here. Our broking industry is much more switched on than Oz's.

[Don and Liz]

it could mean that but i doubt it

surely that apartment block must be sold down by now

[Dean@Massiveaction]

Do you do anything in Brisbane Don?? There's a lot of comments over there about infrastructure slowing growth but prices just seem to keep heading up.

[Don and Liz]

Ps Love the dog!

Hi and Cheers - she is 5 year old jrt "tiny".

[Trisha]

Hi,
Some intersting comments over the last week.
I have recently returned from South East Qld - where I did some research while there.
Interesting on the comments re steel/building prices going up – obviously makes the new construction more expensive but does it make existing apartments a better price for reselling???

It seems to depend on the property!!
RP Data recently released new property statistics based on Capital growth of apartments. Their research found that of the 87 developments analysed, Brisbane had four in the top 10 performing projects, Perth with 3, 2 in Adelaide and Sydney just one.
Tim Lawless, research director with RP Data, said “All of the top 10 developments enjoyed locations either on the waterfront or were located in areas very close to the waterfront. In most cases the projects were smaller, boutique offerings less than 100 units in the building,” Also “A little surprising is the fact that of those developments, which were the top performers in Queensland, all were located in Brisbane with none coming from the Gold Cost.” Tim Lawless also noted the owner-occupier market was the target for the top performers rather than investor market and long term rather than short-term accommodation.

A further comment was “Developments that recorded low levels of growth, or in some cases negative returns, showed some interesting commonalities – each of the 10 worst performers offered short-term, serviced apartment-type facilities.”

We made several visits to Real Estate agents & Developers offices that were interesting – one such company offering apartments in NZ would not discuss a particular project – had to speak with only one individual along with a particular broker – one has to wonder what they have to hide??? Would the valuation stack up? As the Lenders in Australia will not provide a copy of the independent valuations to purchasers, is the broker providing the information to the purchaser? Is the broker there to make the deal happen for the vendor, for themselves or in the best interests of the purchaser?
The free boat trips and free meals were around 10 years ago which raised the question then & again now – who is paying the cost – it must presumably be factored into the purchase price of the properties.
An article from afr.com had the following headline which in my opinion would also have an effect on short term holiday accommodation:-
Trouble in the land of Tourism
The $85 billion tourism industry is losing market share to the Asia-Pacific region and more Australians are travelling overseas than tourists are arriving here for the first time in nearly three decades, according to Tourism Minister Martin Ferguson.

As I said before, research saved me from being $36,000 down if settlement had occurred on my first attempt to purchase in Australia (took 3 months to get the $1,000 deposit refunded but made $6-00 due to the exchange rate at the time!!). Since that first venture other properties have been purchased after extensive research with success.

Experience has shown that Body Corporate fees do have a bearing on the overall cash flow of the investment – dealing with the Body Corporate can also be a long drawn out procedure – again from personal experience. If the rent is $320 per week and the Body Corporate is $41-00 pw once the management fee and BC are taken off the rent - it has an impact on the amount left to pay the mortgage!
Some properties rent quicker than others in different locations and capital growth will also vary just as it does in NZ– so from my experience and opinion it is imperative as a New Zealander when buying into the Australian property market to know the market and the relevant information regarding structures, tax & accounting issues from long standing experienced qualified owners.
Don I agree in part with you that local brokers know what the locals also know in regards to some apartments, however some NZ brokers are also aware of the situation when they take the time to attend seminars put on by the funders in Australia as well as in depth on the ground research. I use Mark Uden for that reason alone.

From my own experience I have learnt that facts and in depth research are more important than listening to and relying on emotional sales hype.

[rustica]

Interesting facts

I saw some sales statistics of sale prices on individual apartments in recent developments on the Gold Coast.

1. Apartments, irrespective of the time 2,5,7 years, did not sell for much more than the original price. Even if it sold 1,2,3 times

2. What happens is as new developments are built, the price of those apartments are higher. They are then compared to the older developments as 'proof' of capital gain.

3. Go back to point 1

I agree with Dean, and have said it before, be very careful of who and what you invest in in Aus.

As a Senior Manager at a major bank commented recently after seeing Mark Uden this month, 'I liked him, all the facts with non of the tinsel' Tinsel (boat trips, meals, 5 star hotels I guess) I love it

[rustica]

Secondary Market

My parents were involved in the last round of Queensland sales people in NZ 10 years ago.

They mentioned the 'secondary market'. Ask any agent on the Coast about it (and Margaret Lomas's article in the Jan Aus Property Investors Mag) and that is what they wait for off the plans. So I have a couple of questions:

1. Does anyone have a definition of this 'secondary market?'

2. How is this different from '2nd tier'

[Dean@Massiveaction]

My research from the likes of Midwood shows that most stuff bought off plans sells on title for considerably more than original, butit varies widely from developer to developer. Merriton is known for high prices which he subsequently discounts so you wouldn't go there. But look at Juniper on Soul. Apartments selling for 950K off plans have now resold for 1.9 mil and they aren't built yet.

The cost per square metre to physically build them is a driving factor as well. Build cost for quality high rise is getting up to 10K per sqm now. You can buy in some good developments still for 8k. They will sell for considerably more on title.
Or Jade is another good example for a small development. Off plans for 3.8 mil. Last sale on completion was 5.9 mil.

I think a lot of people remember the late 80's without realising that PAMDA put all the shonky developers out of business. There is fabulous money to be made there off plans. I've bought 20 million worth myself, and will buy more. I watch the sqm rising and could cash out of some of mine at a profit now but wouldn't because of CGT.

I'd transfer my entire portfolio into the Gold Coast if God would let me. Once the airport upgrade is complete and the dream liners start flying there are 5 new countries flying straight in to the Gold Coast. There's a lot of money to be made there in the next 5 years.

Re your questions "second tire" was when agents were selling developments and getting a kick back for m the developer. PAMDA outlawed that so it can't happen now. All interested parties are fully disclosed.

On the Gold Coast a secondary market would be foreigners who can only buy new so they have limited options on purchase. Also there is a big secondary market on the Coast from the USA. Americans typically will only buy product that is built so they are an established secondary market for on-sells in new buildings.
They don't like ot wait for OTP stuff apparently.

[Don and Liz]

I've bought 20 million worth myself

Do you mean optioned of have you gone unconditional on 2o mill worth of property.

Someone emailed me something recently saying that you had paid 14k for options on 18mill of otp apartments.


If that is the case it is a massive hyperboly to say you have purchased 20mill worth - however my info was second hand so if you have gone unconditional on 20mill worth then I will admit that is pretty impressive.

I could see why you would be invested in helping others into those projects.

[Dean@Massiveaction]

I'm unconditional on almost all of that Don yes. I initially optioned stuff but have since proceeded with purchasing. The more I research it the more I like the market. Growth follows infrastructure as you know and man is there some development going in in SEQ and the Coast.

I consider it way less risky than buying house and land here at the moment.
I don't think the market will tank here for long but the immigration into GC is such that it guarantees growth better than we will see here for a year or 2 at least.

I think a lot of people are put off by what happened 20 years ago, but it's a very different market there now as long as you stick to quality.

I think it's fabulous and I wouldn't recommend it unless I was putting my own money in there.

[rustica]

Another question

So, is an unsolicited letter of offer from an Aussie developer for $48,000 a 'kick back'?