New Year’s Resolution – Be Smart on the Deal!

 115 Page Street Albert Park - Olly Bruce - not my best photo - but it was that really crowded - I couldn't get a true sense of the home, so many people - at least 50 at the time I was there - I will have to go back again.

115 Page Street, Albert Park – Olly Bruce – not my best photo – but it was that crowded – I couldn’t get a true sense of the home, so many people – at least 50 at the time I was there – I will have to go back again.

MC

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We were out and about again today – this time with Gina.

It took time to find parking at all Open for Inspections as there were plenty of buyers window shopping – yes, all February auctions are online, but also most schools have started back this week too. The next 2 weeks should see March listings hit the net which may satisfy the high levels of buyer enquiry reported by the agents I spoke with today. Across the board, agents were enthusiastic about new about to come on and the year ahead despite the current lacklustre listing numbers for February. We see Boroondara has choice, Stonnington is doing better than last year but Bayside has a dearth of good homes.

53 Bridge Street, Hampton – $3m buyers – there’s wow here and the relaxed yet stylish vibe sits well in this beachside location. Who is the buyer – possibly those with older kids only. Who inspected this home – many, many people, so good thing there was a full house of  agents on hand. With very few properties on the market in Brighton, I asked Kate Strickland about stock levels and buyer choice and she said although it’s usual for Bayside to start slower in February, they have a full book of auctions for March.

.. Stanhope Street, Malvern – $5m buyers – quiet listing on big land with a single-storey Victorian with good car access. Only a few select buyers here, but agents Marcus Chiminello and Nicole French have more in Toorak off-market at the moment.

25 Myrtle Road, Canterbury – high $2m to $3m’s buyers – good numbers at this ‘country estate in the city’ feeling home. People seemed to like the unique features of this property, such as a soap making workshop over the barn. Agent Dale Edgcumbe says he has been working (and selling) through January due to buyer .

19 Avenue Athol, Canterbury – $3m buyers – likely a land opportunity. Agent Sally Morrison feels the market has started well and there’s more on the way for March.

29 Rubens Grove, Canterbury – $4m buyers – another land opportunity with Doug McLauchlan. This was mentioned last week.

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7A Millicent Avenue, Toorak – $6.5m-plus buyers – plenty of buyers inspecting this 1960s home. Agent Oliver Booth said March will have more than February, but for now there’s off-market deals to be done he said.

12 Sussex Street, Brighton – $4m buyers – another land opportunity, consistent with the lack of family homes in Brighton thus far. Agent Tracy Tian Belcher says they are busier away from the auction scene at present.

Agent Quotes

Stanhope – Marcus Chiminello  - ‘Enough coming up. It’s buoyant and generally same across our whole agency. If people aren’t selling now then realistically it’s in May’.

Myrtle – Dale Edgcumbe – ‘Pleasantly surprised with the start. Enquiry level is good and we had a few sales over the Christmas break’.

Rubens – Doug McLauchlan – ‘A comfortable amount of stock matching demand at the moment’.

Avenue Athol – Sally Morrison - ‘Supply is building. People are realising that we are still going along okay in 2017 (after Brexit and the US election of last year)’.

Sussex – Tracy Tian Belcher – ‘I was under the impression that the year would be slow starting but it is quite active’.

Bridge – Kate Strickland - ‘We have the biggest March coming up’.

Summary

Stock –  Little on offer, same as last year – but this year agents are more positive about what is coming on publicly prior to Easter.

Feb Pep in the Step – The market feels like it has lost nothing – there is a buzz, crowds were stronger than last weekend.

Auctions – Very little being auctioned over the next two weeks – it will be a month from now, before we have an idea if there has been any market change.

Away from auctions – Properties are being bought and sold – deals are happening – yes, not as strong as at the end of last year – but the off-market is not dead by any means.

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OM

James Buyer Advocate’s fastest growing service in 2016 was BUY/SELL …at the same time.

Is this you below?

I just want to get it done………….I’ve had enough…………. please I just want it over………… only three more weeks to go…………no more rooms to tidy………….not sure I got the deal I wanted.

Why? Why does it have to be like this when you are buying and selling a home?

It actually doesn’t – or more to the point it actually shouldn’t.

Let’s talk the talk – Let’s talk loads of money – love it – who doesn’t.

We make our money, by our clients getting more of it.

Before we begin, a little secret, my favourite comic of all time is Scrooge McDuck – that was fifty years ago – the image of the old guy, swan diving into the money pool was the best…..I used to love reading about his views on life and I loved his dive!

Scrooge McDuck. Acknowledge Walt Disney, Carl Barks and Wikipedia

Scrooge McDuck. Acknowledge Walt Disney, Carl Barks and Wikipedia.

Anyway back to the serious stuff – numbers matter.

THE GOOD OR BAD BUY/SELL

You are buying a $4,000,000 home and selling a $2,000,000 home.

Making a good buying decision, means buying at $3,600,000 and a bad one is buying at $4,400,000.

That doesn’t happen Mal!

I’ve bought over 1000 homes and missed quite a few as well – it happens.

Part of making the good decision on buying – is not just the price – it’s the position and the property as well.

The 3 P’s – that’s what James Ratings are all about!

Anyway sticking to the numbers.

Making a good buying decision is buying at $3,600,000 and a bad one is buying at $4,400,000, if the home could and should be bought at $4,000,000.

AND

Making a good buying decision – is a home that grows at 2% above the normal growth rate – a bad decision is a home that grows 2% below the normal growth rate.

AND

Selling your $2,000,000 home well is $2,200,000 – selling it poorly is $1,800,000.

Is this sort of scenario common?

Yep.

So what does poor decision making mean to you, to your family?

It means if you buy and sell well you make a difference of $1,200,000 in your pocket IMMEDIATELY.

Did you get that – do the job well and its $1,200,000 in your pocket at the start – right now.

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AND NOW TO THE FUTURE – the good home grows at 8% on the $4,000,000 base – 2% above the norm of say 6% growth and the bad buy grows at 4% on the $4,000,000 base.

In 10 years time the difference is $2,302,000 on a good buy and sell ($7,996,000) versus the bad buy/sell ($5,693,247) and that’s tax free.

$4,000,000 $4,320,000 $4,665,600 $5,038,848 $5,441,956 $5,877,312 $6,347,497 $6,855,297 $7,403,721 $7,996,019
$4,000,000 $4,160,000 $4,326,400 $4,499,456 $4,679,434 $4,866,612 $5,061,276 $5,263,727 $5,474,276 $5,693,247

Oh Mal, that’s rubbish, the figures are nothing like that?

Actually, you are right – they are a lot worse for the Bad Buy/Sell decision maker.

And this is not taking into account whether you’ve spent money unwisely on a renovation on the bad home, if you did the numbers are even scarier.

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So it gets worse for the bad decision maker as you have to pay interest on the $2,000,000 you borrow – well actually, the bad decision maker is borrowing $2,600,000 ($4,400,000 – $1,800,000) and the good decision maker is only borrowing $1,400,000 ($3,600,000 – $2,200,000) – remember there is a TAX FREE immediate difference of $1,200,000 on the buy/sell.

Over the next ten year’s the good and bad buyer/seller has choices as to how to pay off the MORTGAGE.

The Bad Buy/Seller pays off his $2,600,000 loan at the rate of $26,700 per month with $611,000 in interest to bring him to a zero mortgage balance.

The Good Buy/Seller pays off his loan at the rate of $14,400 per month with $329,000 in interest to bring him to a zero balance.

You can put these figures into a Mortgage Calculator such as NAB’s. We’re not making them up – click here.

Maybe the bad buy/seller only wants to pay off his home loan rate at $14,400 per month like the good buy/seller.

Great, he or she can pay off at the same rate of $14,400 per month, but after 10 years the Bad Buyer/Seller still has a loan balance of $1,887,000 on a 25 year loan. We’re not making this up – click on Aussie Home Loans Calculator here.

After 10 years

The Bad Buy/Seller’s home is worth $5,693,000, with a mortgage of $1,887,000 – giving home net equity of $3,806,000 – call it $3.8 million

The Good seller’s home is now worth $8,000,000, with no mortgage AND that is a TAX FREE difference of over $4,000,000 in 10 years.

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How hard to do have to work for $400,000 tax free, each year for the next 10 years.

OR

Do you just make a smart buy/sell decision.

BUT WAIT there is more!

You know the interest you pay on the loan, you take out to buy the new home. You have to earn money to pay that interest – you have to pay tax on the money you earn, BEFORE you pay the mortgage interest.

So lets say you and your spouse both work.

The other one of you is paying the living expenses – your only spousal job is to just pay the mortgage.

You have more choices, but either way you are in the top tax bracket.

Bad Buy/Sell Family: You need to earn approximately $520,000 per annum or $200 per hour for 50 hours per week for ten years to pay off your loan and interest.

Good Buy/Sell Family: You need to earn approximately $285,000 per annum or APPROXIMATELY half the hourly rate or approximately half the hours worked.

So with a Good versus a Bad BUY/SELL decision you can work half the hours of the other AND you have an extra $2 million in your pocket AND you are living in the same home type in the same suburb as the BAD DUDES.

Can I repeat this. So many people spend gazillions with their financial advisors – many sleepless nights worrying over their super and investments AND working double the hours they need to work all to achieve NOTHING, ABSOLUTELY NOTHING – compared to the family that made just one good HOMEBUYING decision.

Please, this comes from you – no investments expertise, no lucky lotto win, no years with your financial planner, tax accountant, super advisors and bankers.

You just need to buy and sell your next home well.

FACT: We’ve bought over 1000 homes. Last year the number was 72, at an average of $3.2 million with the Top 3 at an average of $16,000,000 AND last year was the first time in 15 years that one of our male clients took the day off work to focus on a deal that was going down.

Got an auction next weekend and you’re too busy at work to put the yards in on the due diligence?!

Mmmm, you must earn over a million dollars a day (after tax)!

But wait there is more – oh please Mal, when will this all end!

It doesn’t end, the good news just keeps on coming.

You are living in the same home type, same area as the Bad Buyer/Seller and yet you are only working approximately ½ the time.

All of sudden you have 15 weeks off a year to go travelling – or you can pay for the school fees or you can simply spend time with your spouse or they can stop working altogether to support your .

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You can also use that equity to help you buy your children’s homes or you can sell your GOOD home in 20 years – pay off your school fee debt for free; buy a downsized home and put a couple of million into super.

And the best, most reliable super, you can have – family homes with rent from the tenants.

So have we made a case for at least thinking about a good buying and selling decision(s).

Yes, great – well let’s discuss how you actually do that.

This is what we do when buyers engage James Buyer Advocates to buy a home and help co-ordinate with selling agents to sell their home…………….

Stay tuned for next week on how to buy and sell well at the same time.

I love you Scrooge McDuck – thank you for teaching me about life and the Money Bin.

OHS

Want some good news stories on Homelessness? There are plenty, plenty!

This is not to belittle the fact that the issue is a real and growing one – but it is not a hopeless, unfixable one either.

Since 2006 Launch Housing (formerly Hanover Welfare Services) have worked to prevent people from entering the homelessness system, with vital work conducted through their Homelessness Prevention Private Rental Support Program.

This program offers practical support for people who face losing their homes by providing rental subsidy payments on a sliding scale. This helps prevent homelessness by getting them back on their feet.

It is a brilliant program because it is preventing and reducing the homelessness situation, which is very real in Melbourne, as has been highlighted over the last few months.

Yes it can be a complicated matter with some and there is not an easy solution to everyone’s experience of homelessness.

Why not focus on those that you, yes you, can help. 

It is a relatively easy matter for you to help a number of and children in difficult circumstances.

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Here is Felicity’s Story

Background

Felicity (37) is a single mother with two daughters, Jessica (7) and Bridget (6). Felicity and her daughters have lived in their private rental property since February 2016, and she was managing her tenancy well until she lost her job. With no regular income, Felicity applied for financial support at Centrelink and was approved for Single Parenting Payment and Family Tax Benefit.

However, as her Centrelink income was now considerably less than her previous income through paid employment, her rent became unaffordable. By October 2016, Felicity had accrued rental arrears and was close to receiving an eviction notice when she approached Launch Housing for assistance.

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Support provided

The Homelessness Prevention Private Rental Support Program enabled Launch Housing to provide Felicity with the financial assistance she needed to sustain her tenancy while she searched for new employment opportunities.

The Launch Housing Support Worker linked Felicity in with her local employment service provider to support her job search. Felicity was very keen to return to the workforce. The Support Worker also contacted Felicity’s real estate agent to contribute $595 towards her rental arrears, and to advocate on her behalf for an achievable rental arrears payment plan to be implemented to salvage her tenancy and prevent eviction.

Outcome

As a result of this advocacy, and access to financial support through the Homelessness Prevention Private Rental Support Program, Felicity’s real estate agent accepted the new rental arrears repayment plan and confirmed that they will no longer proceed with issuing an eviction notice. Felicity has since diligently paid her rent on time, meeting her payment plan obligations, and has also been supported to maintain a positive relationship with her real estate agent for a sustainable tenancy into the future.

Felicity has also engaged well with her employment service provider and we are pleased to report that she has since secured casual employment, and will be commencing her new role in February 2017. Felicity is extremely grateful for the opportunity to manage her rent arrears, and for the breathing space to continue to provide for her family while she searched for new employment.

This would not have been possible without this generous support. Launch Housing, through the Homelessness Prevention Private Rental Support Program, committed a total of $1,499 to support Felicity over the three month period from October to December 2016. Felicity would like to express her sincerest thanks for this incredible assistance during a time of crisis.

The Program

The Launch Housing Homelessness Prevention Private Rental Support program offers practical support for people who face losing their homes by providing rental subsidy payments on a sliding scale.

This helps prevent homelessness by getting them back on their feet.

Financial support is provided on a sliding scale covering 50% of the tenant’s rental payment in the first month, 37% in the second month and 17% in the third month. On occasion, the payment structure is tailored to meet the person’s immediate short term needs to enable a positive outcome.

The lack of affordable housing available to people on low income is intensifying. Home ownership is becoming less affordable and the high demand for public housing has meant that this stock is required for those most critically in need. This has led to the private rental market becoming an increasingly important housing option for people on a low income.

There are literally hundreds of positive stories like this since 2006.

As it has involved a large amount of money from our company we have been pretty insistent on a few checks and balances:

1.     There is a contractual arrangement between James Buyer Advocates and Launch Housing that 90% of the money flows directly to the end user, on the money we put in.

2.     There is contractual arrangement that the money provided is direct to the real estate agent for rental arrears or bond.

3.     There is a contractual arrangement for a quarterly report and since 2006, we have never not been sent one – you see where every cent goes.

AND YES it is tax deductible! Yippee.

So you can help and you can help now in a very real manner by:

1. Regularly donating to the Homeless Prevention program – e.g. make a substantial commitment by contacting Andy Grant, the Fundraising Manager at Launch Housing on 9288 9810, or by emailing him at andy.grant@launchhousing.org.au.

Hey, this is not about $10 – keep that for the appeals. This is if you want to be involved in significant ongoing change for families living in poverty. Significant please. Last year we were $40,000 plus, just with Launch Housing, to give you some perspective.

2. Make a one-off substantial commitment of say $10,000 – tax deductible. That can help Launch Housing ensure that up to eight families will NOT become homeless.

3. Attend a one-on-one briefing session on Homelessness issues and see where your support can go. For substantial donors this includes having first hand contact with the issues and solutions.

We have been involved with Launch Housing (formerly Hanover) for over 12 years now and it has involved hundreds of thousands of dollars and hundreds of families have NOT become homeless.

This is not about a few dollars ‘band-aid solution’ to make you feel good – if you want to help with their brilliant Homeless Prevention program contact me for a chat on 0408 107 988 or better still ring Andy at Launch Housing direct on 9288 9810.

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