pros and cons of building new

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It’s one of the oldest – but never ending – debates when buying property: Is it better to buy old or build new?

There are positives and negatives to each approach and there is no definite answer.

Here we take a look at the pros and cons of building new.

Building new – advantages

A blank canvas and new everything

One of the most obvious advantages is that everything about the house is new. You don’t need to worry about how previous owners treated the place and it won’t require any upfront repair or improvement costs. As everything is new, the buyer has the assurance that everything should be of a good quality and in perfect working order.

There’s also the major drawcard of having a blank slate – you can create your home exactly how you want it to your own specifications, from the floor plan to the fixtures…

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Rental Snapshot 14-3-17

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THE 80/20 RULE

What could an Italian economist from a century ago have to do with successful investing today?

Vilfredo Pareto noted back in 1906 that some 80% of the land of Italy was owned by just 20% of the population.

He then developed his principle by observing that 20% of the pea pods in his garden contained 80% of the peas.

This observation eventually led to what is now known as the Pareto Principle or more commonly, the ‘law of the few’ or the 80/20 Rule: that 80% of the effects or outputs are often derived from 20% of the causes or inputs.

All fields of life

The 80/20 Rule is a gem of a principle because it appears to occur in so many fields of life.

In business? You might find that 80% of your sales (and complaints!) are derived from 20% of your customers.

In health and safety? Do 20% of the hazards that cause 80% of the injuries or accidents?

In customer service? Microsoft found that by fixing the top 20% of the most reported bugs, 80% of the errors and crashes could be eliminated.

Wealth? Does just 20% of the population hold 80% of the wealth of a nation? Often.

The same applies to the wealth of the world.

The law of the few even seems to apply to subsets of the income range: the world’s richest 3 men own as much as the next 7 put together.

The implication of all this?

Focus on getting the big decisions right.

How do we apply this to investment?

Warren Buffett once said that we don’t need to make too many great decisions; we just need to limit the quantum and the magnitude of the bad ones.

Another way of saying this is that if we lose too much we can’t win overall. This is well demonstrated in the table below:

% asset falls in value % recovery to break even
10 11
20 25
30 43
40 67
50 100
60 150
70 233
80 400
90 900
100 Impossible to recover

If an asset falls in value to zero, it is worthless: it can never recover.

The implication of the table above is to seek assets with which show proven growth over the long term, and leave the speculative vehicles to the speculators.

Less can be more…

The best property investors are often those who make fewer decisions.

What do I mean by that?

Well, the most successful investors I have seen are very often those who have bought and held on to prime location properties over a long period of time, rather than those who are constantly buying and selling in order to time the market.

The high transaction costs and the effect of capital gains tax ensure that high-frequency trading is usually an impractical approach to property investment.

Remember that 80% of your outputs are likely to come from 20% of your inputs.

Successful property investors should therefore concentrate on making fewer but bigger decisions. Due to the use of leverage, property investors can often make a huge difference to their net worth even by only acquiring a handful of assets.

It’s all about the power of focus.

Best Regards
Linda & Carlos Debello
“Your Local Property Management Specialist”
LJ Gilland Real Estate Pty Ltd (http://www.ljgrealestate.com.au)
PO BOX 19
ZILLMERE 4034
(07) 3263 6085

Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

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We put a clause in that says that the agent has to give the seller details of all persons introduced to the property during their listing period. That way, if the listing runs out and you’re going with another agent, you’ve got a list of names that you can give to the second agent … and say ‘if one these buyers come back, you’re going to have to do a conjunction with the first agent

ljgrealestate

While some of Australia’s markets are firing on all cylinders, many are not, meaning properties can languish on the market for much longer than the standard agent appointment lasts.

If a property doesn’t sell, often the vendor will choose to go with another agent, who may end up securing a sale.

Sometimes this buyer has already had dealings with the first agent, as well as the second but does that mean they’re entitled to the commission, too?

“There is a plethora of case law dealing with agents’ entitlement to commission in circumstances where they have introduced a buyer to a property, who subsequently purchases the property after the agent’s appointment has expired,” Carter Newell Lawyers partner Michael Gapes said.

“The cases demonstrate that the agent will have to establish a causal connection between their introduction of the buyer to the property and the ultimate sale of the property.”

Gapes said that it is clear that by…

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The experts you may need when buying your first home

ljgrealestate

A buyer’s agent is different from a real estate agent in that they don’t look after the seller of the property, but you, the buyer. They’ll work with you to find suitable properties based on your needs and preferences and can also negotiate the often emotionally-draining purchasing process on your behalf. While you can do all of this yourself, a buying agent has access to a wider range of properties that may not be advertised yet, can offer valuable insight into long term growth areas and take some of the hassle out of the property search and buying process.

http://blog.homesales.com.au/news/experts-may-need-buying-first-home/#.WC1B3qdOe28.gmail

photo Linda Debello 姬琳达珍
LREA, LJ Gilland Real Estate Pty Ltd
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What does it mean by ‘returns of over $1 ljgillandrealestate.wordpress.com/2016/10/19/wha… via @GillandDebello

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Interest rates remain unchanged

November 1, 2016

At its meeting today, the RBA decided to leave the cash rate unchanged at 1.5%.

The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued. Economic conditions in China have steadied recently, supported by growth in infrastructure and property construction, although medium-term risks to growth remain. Inflation remains below most central banks’ targets.

Commodity prices have risen over recent months, following the very substantial declines over the past few years. The higher commodity prices have supported a rise in Australia’s terms of trade, although they remain much lower than they have been in recent years.

Financial markets are functioning effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields have risen, but are still low by historical standards.

In Australia, the economy is growing at a moderate rate. The large decline in mining investment is being offset by growth in other areas, including residential construction, public demand and exports. Household consumption has been growing at a reasonable pace, but appears to have slowed a little recently. Measures of household and business sentiment remain above average.

Labour market indicators continue to be somewhat mixed. The unemployment rate has declined this year, although there is considerable variation in employment growth across the country. Part-time employment has been growing strongly, but employment growth overall has slowed. The forward-looking indicators point to continued expansion in employment in the near term.

Inflation remains quite low. The September quarter inflation data were broadly as expected, with underlying inflation continuing to run at around 1½ per cent. Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time.

Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.

The Bank’s forecasts for output growth and inflation are little changed from those of three months ago. Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years.

In the housing market, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. Turnover in the housing market and growth in lending for housing have slowed over the past year. The rate of increase in housing prices is also lower than it was a year ago, although prices in some markets have been rising briskly over the past few months. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.

Taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

 

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