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!

UK/Belgium holiday in planning

Very busy the last few weeks, which is why the blog has been so quiet.

Long-time readers would know that I like to write about my interstate and overseas holidays in almost excruciating detail. Well brace yourself for another one – I’ve got a European holiday in planning for later this year.

It’s looking like England, Wales, and Belgium, with catching up with various family scattered around the place being a key priority.

It’ll be the first big family holiday in many years, and my first time in Europe this century — previous trips were in 1999 and 1998.

Eurostar hadn’t even opened the last time I was there, so you can be sure we’ll be using it to get to Belgium! It’ll be my first journey on an actual High Speed Rail service (I used the Brussels to Amsterdam high speed “Thalys” in 1998, but it was at regular speed due to flooding) and my first time using Oyster card!

Daniel’s 1998 Europe trip highlights from Daniel Bowen on Vimeo.

Obviously the terrible events in Manchester this week (and previous incidents in London, Brussels and elsewhere) are a concern, but ultimately you can’t cower at home because something might happen.

On the list of touristy things already are various sights in London, Cardiff, Brussels, probably Bath and perhaps Stonehenge or Avebury since we’ll be visiting relatives in that part of the country.

Any must-see suggestions?

More notes as I ponder:

  • London transport accepts most overseas PayPass cards, which will save us buying Oyster cards for everyone.
  • I’m wary of Britrail passes – it sounds like roughly the same cost if you prebook flexible fares a few weeks in advance.
  • We’re looking at Air B’n’b for places we’ll be staying more than a day or two, as it’s useful being able to easily cook some meals and do laundry. Hotels for 1-2 day hops.

    The perils of comparison studies

    On Friday a number of UK publications posted news articles about a Deutsche Bank report saying that London’s public transport fares are the highest in the world.

    The comparison was of a monthly public transport pass.

    Most of the news reports listed only the top three most expensive cities; London, Dublin and Auckland, and the cheapest: Mumbai.

    I wondered where Melbourne ranked. The BBC report was the only one to list beyond the top three; it showed Melbourne at number 9, with a monthly Pass costing £82 (US $106).

    It was also the only one to link to the source Deutsche Bank report. The report is not about public transport specifically, it’s about cost of living in numerous categories, in 47 cities. (Note: 47 cities is not the entire world.)

    Looking through the Deutsche Bank report, they’d got figures from various places. The public transport fares had come from a web site called Expatistan, which compares cost of living indicators — indeed, Deutsche Bank credits them for most of their pricing data:

    Most of our price data is collected from Expatistan (www.expatistan.com). We would like to give special thanks to the founder Gerardo Robledillo for permitting us to use this data and for assisting us in collating historical data from the website.

    Clicking through to have a look at their page about Melbourne, I found they had a monthly public transport pass listed at A$136.

    The problem is, this is wrong. A 30-day Pass actually costs $147.60 (excluding the cost of the Myki ticket). It looks like their price is about two years out of date.

    Edit: It’s been pointed out that a 28-day Pass is about the right price. But 28 days isn’t a month (usually!)

    Expatistan’s information is comprehensive… but it’s also crowd-sourced. This can be problematic — Deutsche Bank notes:

    Much of our data is from sources that utilize crowdsourcing techniques to collect and aggregate price data. While this methodology provides them with regular data updates from a large sample, there may be issues with data quality and consistency over time. … Do note thus that prices, changes and ranks should be considered representative with considerable room for measurement and sampling error.

    A few clicks and I was able to update the Melbourne price on Expatistan, but it’s not being accepted until I guess others enter the same data.

    Trains at Milsons Point station

    Sydney was ranked 7th most expensive by Deutsche Bank. Expatistan says it’s A$147, but it’s not clear how this was calculated given there is no monthly pass available. The weekly cap on Opal is A$60, so a monthly cap would be at least $240 for four weeks.

    Even the provenance of the London figure quoted in all those articles is uncertain. The Deutsche Bank figure quoted is US$174. The Expatistan figure is UKP £134, which matches the USD figure. But £134 doesn’t match anything on the current official price list – the closest logical match is a zone 1 Monthly ticket, which is £126.80.

    Zone 1 only covers central London. The New York City price doesn’t match the official price (USD $121) either, perhaps because it changed in March. But even if it did, that’s not really a valid comparison, as the NYC fare covers the entire subway and local bus network.

    So really the fare comparison part of the study is problematic.

    Perhaps I’m over-thinking it, but when I did fare comparisons in the past for the PTUA, I went to official sources of fare information, and I was as careful as possible to ensure I was comparing apples with apples.

    In this case, the media quotes Deutsche Bank, who used Expatistan, who trust in their users and their algorithms. And data points I’ve checked are wrong, and/or, in my opinion, not equivalent enough to be compared.

    The lesson here is: Don’t believe everything you read.

    And when a study boldly states a conclusion, do a little digging, to understand how they got there.

    Old photos from April 2007

    Another in my series of ten year old photos.

    The old Olympic Doughnuts caravan, well before the shops along Irving Street were demolished to make way for additional station platforms.
    Olympic Doughnuts, Footscray, April 2007

    Footscray station snapped from the old (uncovered, ancient) overpass. This is platform 1, which has now become platform 3.
    Footscray Station, April 2007

    Despite The Met having been long since gone, this sign still survived as a guide to which buses departed Footscray from where. In summary: they’re all over there.
    "The Met" bus routes sign, Footscray Station, April 2007

    Footscray bus interchange. It’s still pretty much the length of Paisley Street (a not-very-handy 3-5 minute walk from the station, whose major renovation a few years ago didn’t touch the bus stops). The biggest difference is that these days most of the buses are decorated in PTV orange.
    Footscray bus interchange, April 2007

    The PTUA Office is rarely staffed nowadays, but is still in Ross House in Flinders Lane. From time to time, space became available in the window, and we’d decorate it with our propaganda. I don’t know how many members we ever got from it, but I guess you’ve gotta try. (Want to support PTUA? Join Now.)
    PTUA display at Ross House, April 2007

    V/Line Sprinter trains at Southern Cross Station.
    Southern Cross Station, April 2007

    It might be hard to believe, but the old tram stop at Spencer and Bourke Streets was even worse than the one that’s there now. The exit was constricted (though only with barriers on one side, so at least people could spread out if there was no tram present). But no platform, virtually no shelter, and not enough capacity for more than one tram.
    Spencer and Bourke Streets, April 2007

    Bourke Street Mall during the Comedy Festival. I see there’s an Armaguard van parked there. Nothing changes.
    Bourke Street Mall, Melbourne, April 2007

    Free Hugs in Swanston Street. Does that still happen anymore? Note the “3 Mobile” shop sign — they merged with Vodafone in 2009. There’s also a tram Passenger Information Display — at the time, this was still the northbound tram stop.
    Free hugs in Swanston Street, Melbourne, April 2007

    This scene hasn’t changed: pedestrians crossing at Flinders Lane against the traffic, despite the oncoming cars. (Snapped for this blog post.)
    Flinders Lane, Melbourne, April 2007

    A walk along the river. Perhaps the skyline has changed a bit.
    Melbourne, April 2007

    Ormond: the Stacks Of Slax shop made famous by The Late Show was finally closing down. Nowadays the left hand side has been painted over, so all that’s left is “Of Slax.”
    Stacks Of Slax, Ormond, April 2007

    “Evict Connex!” said the protest banners. I don’t think it worked, as Connex got their contract renewed in August 2007 until November-2009. After that though, they got replaced by Metro Trains Melbourne.
    Anti-Connex Trains protest, 12 April 2007

    Yes, even back in 2007 I was narked off by motorists blocking pedestrian crossings.
    Blocking the pedestrian crossing, April 2007

    Finally, the fare gates in the Campbell Arcade underneath Flinders Street Station seemed to be left open a lot of the time. The year before, I’d documented it and turned it into a PTUA call for them to staff the gates properly, and a Herald Sun article based on that. Connex hadn’t listened, and continued to prefer to give fare evaders an easy time. Also notably, the number of gates hasn’t been increased despite crowding at peak times.
    Flinders Street Station - Campbell Arcade, April 2007

    So darling share this wine with me, we’ll be together on the eve of World War 3

    Friday night concert! I was sold on Things Of Stone And Wood – though my compradres were really going for the support act, Club Hoy.

    It might be cruel to call TOSAW a one-hit wonder, though none of their efforts charted as well as Happy Birthday Helen. But the song was on an album called “The Yearning” (1993) which I really really liked back in the day… perhaps apart from the title track, which seemed overly earnest and solemn. I liked it so much I had both the album on CD, and the EP of the single. Listening to the album today, it’s still terrific.

    Friday night’s concert was a full performance of “The Yearning”, a near 25th anniversary performance. I admit, the last two concerts I’d been to were similar setups: Ocean Colour Scene’s Moseley Shoals, and Deborah Conway’s String Of Pearls.

    A nostalgic Gen X-er and his money are easily parted.

    Northcote Social Club, 24/3/2017

    M and I made our way to Northcote and met up with Tony and Elizabeth. We found some dinner and as we chatted over some food, which gave Elizabeth and I a chance to hear Tony and M’s tale of being shushed for talking at a concert many moons ago by a fan of the support act. Don’t talk over Dave Graney!

    A notice in the window of the Northcote Social Club gave us the running times of each act (and a song lyric on the sign above), and we opted for dessert over Rick Hart (sorry Rick).

    We headed into the club at about 9:30 and found a spot close to the stage.

    Club Hoy at the Northcote Social Club, 24/3/2017

    Club Hoy came on, and were really good, despite two blokes behind us talking incessantly about the other concerts they’d been to (and presumably talked through).

    After a few songs, another bloke trying intently to listen to the band turned around. “Shhhh!”

    “Sorry mate”. They disappeared. I laughed and laughed (quietly). Thank you, defenders of support acts everywhere.

    They finished up, and suddenly from nowhere, TOSAW fans filled the room, with the two biggest blokes in the place crowding out some of our view. Alas, Tony and Elizabeth bailed at this point to return home to their respective families before it got too late (it was about 10:30pm), which was a great pity because I think they missed a great show. (But I would say that; I accept I’m a Club Hoy newbie and a TOSAW fan.)

    Things Of Stone And Wood, Northcote Social Club 24/3/2017

    Lead singer Greg Arnold doesn’t look a day older – his long hair, beard and moustache probably help, and I was left wondering if he’s had them since 1993 or if he just grew everything out for the anniversary tour.

    No matter. They rocked. It was a great show, with TOSAW tragics singing every word, but everyone present in the sold-out club seemed to enjoy it. And let’s face it, a good deal of what makes a great show is whether the crowd gets into it.

    There was some nice band repartee as well. They seemed genuinely delighted to be there in front of such an appreciative crowd, and don’t seem to mind being known popularly just for Happy Birthday Helen (“it took us around the world”).

    They answered something I’d long wondered: was The Yearning (track 7) meant to lead straight into Single Perfect Raindrop (track 8)? Why yes! But due to a miscalculation of sorts, on the cassette the effect was ruined, because you had to turn the tape over. No such problem on the CD.

    After the 14 tracks of the album, they went on to play a few later songs, including one that sounded very familiar when I heard it: Wildflowers — which they remarked is unfortunately relevant again.

    …as well as the B-side “She Will Survive”, with its very memorable lyrics about Jane Austen.

    And then it was over. What a great show, and a great night out for $40.

    If you remember them from back in the day, and have a chance to catch them (that show was sold out, but they’re on in Geelong this weekend), I can thoroughly recommend TOSAW.