The real estate blog.

I’ve often stated that one of the most important factors in your success as a real estate investor is your ability to select, screen, and retain quality tenants. This is something that I think I’m pretty good at, which has helped me as an investor.

I was going to write an article about this not to long ago when, bam, I ran into a problem: tenants who stopped paying.

The tenants were a flaky young couple that I knew I might be taking a chance back when they signed the lease in May. But I decided to rent to them and mitigated my risk by signing a short lease (six months, with renewal contingent on timely payment), charged them first and last month’s rent upfront, plus one month’s rent as deposit. I won’t go through the boring details, but they ended up breaking the lease and abandoning the property while they owed me money. If you find yourself in a situation like this one here are some points to keep in mind.

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It is expected that the Australian real estate investing market will continue to grow in the near future, however, the rate of growth is expected to slow in NSW and Western Australia where the markets are expected to correct themselves.

Although, some regional areas of NSW such as the Newcastle / HunterValley area will probably continue to grow at a steady rate and Western Australia is still experiencing a high demand which is largely dependent on the resources boom.

Queensland, particularly South East Queensland, is expected to maintain strong capital growth in the residential property market as a result of continued migration from other states. However, rental yields are not expected to increase substantially despite low vacancy rates.

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I got some interesting emails from readers responding to my recent posts on real estate fraud. Here’s one of them (posted w/ permission from the author, with names and minor details changed):

________________________

Chris,

I was approached by an acquaintance, Phil, to invest into a get rich quick scheme. I was to be the buyer and mortgage holder for two houses, but all documents and paperwork would be mailed to Phil’s residence and Phil would be responsible for all mortgage payments and monthly maintenance fees. I was promised a gift of cash in exchange for using my good credit. All was good for several months, and then I started receiving calls from American Servicing Company for non-payment.

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Yesterday I posted a YouTube video about a sting operation busting some shady “Investment Advisors” who had defrauded a group of investors using a common tactic.  This was a variation on the standard buyer-seller kickback scheme that I previously wrote about.  Here’s how it works:

I love real estate.  There are millions of honest, ethical investors out there making prudent, informed responsible investments to secure their financial future, but there are also a brigade of scumballs busying ruining it for the rest of us.  Keep your eyes peeled. 

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Sub-prime mess, foreclosures, sliding home prices - today’s market conditions are causing sleepless nights for some but others are smelling the opportunity to make a quick buck.  That’s great for enterprising investors because in markets like this one opportunities abound.  But, unfortunately, it also creates a fertile feeding ground for hucksters and sham artists waiting to defraud novices. 

Your mom’s advice, general speaking, was pretty good: if it looks too good to be true it probably is.  But it’s worthwhile to understand the mechanism of the basic real estate swindle.  There are many variations to this general scheme, but if you’re considering a deal that in any way resembles this shell game then hold on to your wallet. 

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Travelling to the west this time…

Australian real estate investing in Perth has continued to show excellent results in terms of capital growth and good rental yields.

In the final quarter of 2006, ending 31st December, median house prices in Perth rose by nearly 5 per cent to $325,000. Over the past year, Perth house prices have increased by 18 per cent and rents have also risen by 25 per cent. The supply of new homes has slowed although demand is still strong.

Perth vacancy rates for rental accommodation have stayed steady at about 1.6 percent for the second quarter in 2007. The median rent in Perth has risen by approximately $44 per week since 2004. Perth has the fourth highest median house prices of Australian capital cities, with Sydney first followed by Melbourne and Canberra in that order.

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 Following on from my last post…I wanted to give you a better idea of the Queensland market…

Queensland has enjoyed the largest population growth of all Australian states and territories over the past decade, most of which has been centered on South East Queensland.

Almost half of last year’s population growth in Queensland was the result of interstate migration. Most of these were from NSW and Victoria and reflected the desire of individuals for a sea-change or tree-change in their lifestyle.

Australian real estate investing in South East Queensland is therefore growing and every indication is that it will continue to grow into the future with high demand and excellent capital growth.

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I grabbed this YouTube video from Chris Lengquist’s real estate blog.  This one is a little different from the real estate scam that I recently wrote about but you could consider it a variation on the general theme. 

A couple of rules of thumb:

If it looks lucrative and easy then you’re about to be taken for a ride. Beware of “package deals” where an advisor delivers the property, the lending, the appraisal and the tenants.  These (more…)

The SunshineCoast, to anyone that’s ever been there is an ideal place to be with or without real estate investment opportunities.

Australians look to the sunshine coast as their dream destination. With so many Australians looking for improved lifestyle choice and suddenly realizing that it can be done, the SunshineCoast once considered to be just a holiday destination is now becoming a choice destination for families wanting to build a better life.

For Australian real estate Investing, it is only the beginning. More than 2.8 million people call this area home, which is roughly 1 in every 7 people in all of Australia and permanent residency to the area is rapidly growing. Don’t forget the ever growing tourism, all in a world of its own just 50 km away from Brisbane.

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There’s a conventional wisdom out there that higher-end properties bring good tenants and lower end properties bring problem tenants. In my experience, this isn’t necessarily true. Ask most buy-and-hold investors about what makes a good tenant and many will respond by recalling a specific tenant that they wish was the model for all their properties.

In my case, my example was in one of my most inexpensive properties; the tenants were a young family with no credit and not a lot of resources, but their references checked out and I rented to them, more or less, based on gut feel. And they were the best tenants I ever had: took great care of the place (flowers in the front yard), made minor repairs on their own and never were late paying the rent. Plus, they were a pleasure to deal with.

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