I bought an investment property

As you grow older, you find yourself doing things you genuinely had no idea you’d be doing. At least I do. Perhaps other people have all their plans worked out way further in advance.

When I was growing up, we had little money, and I couldn’t dream of owning my own home.

At age 30 I found myself living alone for the first time, it still wasn’t on the radar. It took me until 35 to get to the point where I could buy.

Through my 30s and into my 40s, things have really come together moneywise. Good steady job + low interest rates + house appreciated markedly (roughly doubled in value; I couldn’t afford to buy in Bentleigh now).

Last year I wrote about money, and that I was pondering buying an investment property. This came about via refinancing my home loan at the suggestion of my sister, and chatting to a mortgage broker about it.

My house was revalued by the bank. It’s worth just on double what I paid for it. Based on that, the mortgage broker said I’d have no trouble borrowing enough for an investment. Rent could be expected to be roughly in the zone of the interest payments.

Virtually any other type of investment would have to be self-funded. I’ve dabbled in shares (disastrously), and the bank wouldn’t lend to me to buy a race horse or gold!

10+ year objective: boost my retirement fund, and help my kids buy when the time comes.

So I decided to try an investment property. But where to buy?

Daniel’s theory of property investment

Let’s assume I want something in the same city where I live, rather than some far-flung location.

First of all, I’m aiming at something within walking distance to a railway station, shops, parks, other amenity. Similar factors to where I would want to live — it seems to be a good formula.

If one assumes the jump in prices has started in the inner-suburbs and is steadily working its way outwards (with gentrification etc), then the strategy is to buy just ahead of that wave. To go with a stereotype, as the CBD gets busier and the commuter population gets larger, then you aim to catch the next lot of CBD white-collar workers moving in.

In the Frankston line corridor, this wave of house price rises has obviously already gone through Bentleigh (where I live), Moorabbin, Highett, Cheltenham, but then you get to the beachside suburbs like Mentone which have been expensive for some time. I’ve missed that wave.

One could look in other directions, such as west, but what about along the Dandenong line? Oakleigh, Clayton, Springvale have already gone up or are doing so now.

For bonus points, look for government infrastructure upgrades in the area to provide a boost, a rejuvenation of some kind. For instance, level crossing removals.

So I ended up targeting Noble Park, which has the following going for it:

  • Still affordable for townhouses/units (which I’d prefer over apartments… a house would be ideal of course, but out of my budget)
  • local shops including a Coles supermarket (unlike nearby Westall, Sandown Park and Yarraman)
  • quite a walkable suburb
  • 37 mins from city on the train – making it much closer to the CBD than the booming outer suburban fringe
  • By 2018, will have local crossing removed and a shiny new station, which is likely to spark urban renewal
  • Also new trains coming on line about then
  • From 2026 the Metro tunnel will mean direct access to Domain and the University/Hospital precinct
  • Possible future airport rail link in the next couple of decades
  • Fairly close to Monash Uni

Down sides? Well despite being close to Monash Uni, the public transport links to there aren’t very good. In fact all the local buses are fairly appalling.

The area has a reputation for crime, though perhaps undeserved. Parts of the suburb seem a little run down, though not really worse than anywhere else.

Remember, it’s about investment potential. I’m betting that the whole area will get nicer over the next (say) ten years.

Investment property. No "Sold" sticker. And tags on the sign. Hmmm.

Unknown: Will the impact of skyrail be positive, or negative? I’m betting positive. If the open space isn’t totally dominated by car parks, and if they keep it clean, it’ll add to the neighbourhood rather than detract from it.

In contrast to areas like Carnegie, where it’s seen as controversial, it seems pretty accepted in Noble Park, in fact I even saw one real estate ad crowing about it.

I started hunting for a property late last year. Scoured the web sites, and drove down regularly on Saturdays with M, whose patience never seemed to wear thin.

I went to a few auctions, even placed some bids. Gradually it became apparent that some types of property were probably beyond my financial means, if I wanted something in the area most desirable.

Finally in May I found something up for private sale, put in an offer, haggled a bit, and it was accepted.

A unit, with two bedrooms, at the back of a block of four. Brick, with a bit of a back garden, and very close to the station. So that skyrail had better work out!

A great deal of paperwork has followed, including applying again for the loan, even though it was “pre-approved”. But it’s done. I’m buying it.

It’ll be rented out to tenants. (I’m hoping to be a good landlord, not a git landlord as some were back in the days when my family rented.)

This is going to be interesting. Will the rental return be as healthy as forecast? Will it keep abreast of any interest rate rises? Will the area appreciate like I hope?

We’ll see what happens next!

New phone: Motorola G5 Plus

A reminder that despite how it may sometimes seem, not all my blog posts are about transport. If you want to view only the transport posts, try here. For convenience, this link is also on the menu at the top, under Transport.

Over the years I’ve had many mobile phones.

Here’s an update to that old list:

November 2013: Google Nexus 5 — I did that Apple-like thing of preordering this before I’d actually seen it in the flesh. This was a terrific phone. Fast, good camera, great features, no bloatware, and being a Google device, got updates really quickly.

I loved some of the features I only discovered well after I got it, like the pedometer which is now tracking my steps, and NFC, which has all sorts of uses such as checking public transport smartcards (in smart cities like Sydney and Singapore where this is enabled) — see below.

Then the phone died in late-2016. The power button got stuck, and it continually switched itself on and off.

I replaced it and then stuck it in a drawer until a couple of weeks ago when my son Jeremy needed a phone to use while his was being repaired. He found a way to repair the power button, and it’s still going strong!

Opal NFC phone app

October 2016: Google Nexus 5X (which cost me $489 at the time) — the spiritual successor to the 5. I really wanted to like this as much as the 5, but I didn’t. It was a good phone, but not a great phone. It feels a little laggy at times.

Perhaps that’s one of the perils of buying a phone that was released 12 months earlier.

There’s also probably a point at which (for all phones, tablets, and other devices) you should stop installing major upgrades to the operating system, which often bring major new features requiring perhaps more horsepower than the device can provide. Instead, it might be better to just install the security patches… at least until they run out.

Daniel buys a new phone

Having a good, fast reliable phone is more important these days than it has been in the past. I’m not sure that back in the day, any of us Gen Xers really appreciated that by the 2010s we’d literally have such a useful computer that we could carry around in our pockets all day.

I decided last week to get a new phone, and after some research settled on the Motorola G5 Plus (currently retailing for about $380), for three main reasons:

Get something faster. The 5X was released in 2015. Interestingly, you can still buy it new through some dealers (though Google themselves no longer sell it, having moved to the Pixel — at about double the price). I think there are now better value phones in the $400-500ish range.

Fear of the boot loop. I don’t know if it’s common or not, but a known hardware problem with the 5X phone is that occasionally they will get into a state where they continually boot, and (barring hacks to fix it) have to be sent back for repair or replacement. This is something I could deal with at home, but there’s no way I’d want it to happen while on our overseas holiday later this year.

Dual SIMs. I’d like to have mobile data for maps and so on while travelling, but I’d also like to be reachable on my usual phone number. Telstra international roaming isn’t cheap: $85 for 300 Mb or $160 for 600 Mb.

In contrast, a Three UK prepaid SIM, including 1 Gb data and texts and calls for a month, costs 10 pounds (A$17), or 12 Gb for double that cost, and it includes roaming in Europe. (I’m still looking at the options, but this appears to be one of the best.)

The solution to cheap local rates + keep your usual number? A dual-SIM phone. Use data and outbound calls on the cheap local SIM, and still be able to receive calls/texts on my Australian number. And the money savings will help subsidise the new phone.

(I wonder if the phone companies dislike this?)

In fact I suppose I could even choose to use a second SIM at home to get cheap data and/or try and get around the Telstra capacity problems on peak hour trains between Malvern to South Yarra — though from what I’m told, the other carriers are no better.

Motorola G5 Plus phone

So I bought a new Moto G5 Plus, and sold the Nexus 5X on Gumtree over the weekend. (eBay won’t let me sell a mobile phone, due to Paypal having a grudge against me, for reasons they’ve never been able to explain.)

I listed it for $220, and got all sorts of cheeky offers from as low as $130. I refrained from telling them they were dreaming. Eventually accepted an offer of $180 from a bloke who had a Sony phone he quite liked, but dropped it and smashed the glass. Whoops.

And the new phone? So far so good, apart from the wallpaper, which I’ve changed to my own design, and the “Hello Moto!” audible greeting, which was the first thing I switched off!

In the town where I was born

I don’t have “get rich quick” schemes.

I kind of have “get moderately well-off, gradually” schemes.

The worst one has been buying shares. I got a tip that shares in Xero (the online accounting software company) would skyrocket. And they did, from about $6 to something like $40. But that was before I got around to buying them. By the time I bought them, they’d dropped to about $25. They subsequently fell to $15. Currently they’re sitting at $18. I didn’t buy a huge number of shares, but I’ll hold onto them for now rather than sell at a loss.

Here’s one of my crazier schemes:

Before Christmas I spotted this at one of the local toy shops: Lego set 21306: the Beatles’ Yellow Submarine.

Ooh. Alas, I didn’t get it for Christmas, but I thought maybe I’d go buy it for myself.

My mate Josh used to talk about Lego as an investment. Some Lego sets are very limited runs, and over time become quite valuable, especially if in the original box, unopened.

It got me thinking… maybe I should buy two? Keep one for myself; keep the other for, say, five years, and sell it on. I might make my money back, meaning the set I keep is free.

It had vanished from the toy shops. All the toy shops. Chains like Big W and Target had it listed on their web sites, but out of stock. I checked a bunch of them, including checking with a friend who runs a shop that sells Lego. No luck. All gone. No more coming.

Yellow Submarine Lego

My last hope was the official Lego online shop. The catch is you pay an eye-watering $25-35 for shipping.

But wait! Go above $200 and they waive the shipping fee! The set is $80, so including shipping I could order one for $110, two for $195, or three for $240. So I ordered three.

(Checking again now, the web site offers conflicting information — one page says $200, another says $100.)

The sets arrived today.

This may be my silliest investment scheme yet, though even now the set is listed on eBay at a “Buy it now” price of around $120. Who knows if they’re actually selling at that price.

I’ll let you know how it went in about five years.

How do I pay the electrician?

A couple of years ago I got a ceiling fan fitted in the kitchen.

The electrician was pleasant, competent, and did a good job.

He said he’d send me an invoice. He never did. A couple of months later I emailed him and asked him to send it. He acknowledged the email and said he’d send it. He never did.

A couple of weeks ago I got a ceiling fan fitting in one of the bedrooms.

The electrician was pleasant, competent, and did a good job.

He said his boss would send me an invoice. He hasn’t so far. A week ago I emailed him and asked him to send it. No response.

I don’t seem to have this problem with other tradies. Plumbers and painters seem only too keen to bill me.

I want to pay for the work they did.

Some questions spring to mind:

How do electricians stay in business if they’re so disorganised?

Is it just me?

When do my obligations cease? How many times do I have to remind them to take my money?

Update: I realised the second electrician sent me a quote before the work commenced, which included bank deposit details. It’s not an invoice, but if I don’t get an invoice, I can just pay that amount.

Update 2: He rang me and said he’d been on holiday, but would be sending an invoice. Either that or he reads my blog…

Banking paperwork

I used to bank with Commonwealth Bank of Australia, who had a habit of sending me lots of letters on the same day, though gradually everything moved online.

When I bought my house in 2005, I switched to St George (which morphed into Bank Of Melbourne), and it was mostly online.

Letters from Bankwest, which all arrived on one day

Now I’ve refinanced my home loan, and switched to BankWest, a CBA subsidiary. They’re keeping up with their parent company’s tradition: the other day I got no less than five letters from them in the mail.

I’ve now switched everything to online statements, so hopefully that won’t happen again.

The plain envelope had my new credit card. Inside was a letter, a brochure, the card, and a CD-ROM.

Bankwest credit card terms and conditions come on CD-ROM

Yes, the terms and conditions come on CD-ROM.

Thankfully I still have computers in the house with optical drives. Firing it up you get a big menu where you can choose which specific BankWest card you have.

BankWest terms and conditions

I found my card, and it showed me links to the following six documents:

  • Terms and conditions: 44 pages
  • Account access: 56 pages
  • Rewards terms and conditions: 24 pages
  • Complimentary Credit Card Insurance (on and after 1/7/2016): 64 pages
  • Complimentary Credit Card Insurance (on and after 1/7/2015): 64 pages – not relevant to me I guess
  • Concierge services: 8 pages – I’m not sure I’ll ever want to use this?

Plus another was “useful forms”.

Do they really expect me to read all this? Perhaps I’ll take a day out of my weekend to take a look through it all.

And note the fine print at the bottom of the menu, which points out that there are other terms and conditions not on the CD!

The value of refinancing

I can’t emphasise this enough: if you have a mortgage and it’s been more than a couple of years since you looked at it, take a quick look now.

Interest rates are very low at the moment, but the laziness tax applies — for established customers, the rates have crept up. If you’re willing to switch, you’ll save a bundle.

I went through a mortgage broker, who explained some options and took care of all the paperwork. Really easy.

So, have a look at your rate. If it’s more than about 4.4% it’s probably worth switching.

At the very least, contact your bank and ask them what they can do to convince you not to switch. My friend Tony did this and they gave him a 0.8% rate cut on the spot.

Personally, by switching banks I’ve gone from 5.2% to 3.8% (ish), saving me about a third of my interest bill. Even with the fees involved, after about one payment, I’ll be saving hundreds of dollars every month.

Do it.