7 Parkwood Ave
Bought for $860,000 Oct 2007
Owners spent $100,000+ Renovations
Currently for sale for $799,000
Never go wrong buying quality?
Look at the history of this house
Owners can expect to take a "Haircut" of $200,000
Over 3.5years this works out to a loss of
$5,000 Per Month (Brilliant!!)
Sold 12-05-2001 $322,000
Sold 17-02-2006 $612,000
*up 90% in 5 years remember property should only double in 10 years?*
Sold 22-10-2007 $860,000
*up another 40% in 20 months remember property should only double in 10 years?*
Total Rise in 6.5 years?= 167%
Total Rise in 6.5 years?= 167%
In 2007 these owners should have only paid $531,000 NOT $860,000
Forget about adding the $100k for renovations because this is already factored into the property always doubles equation.Spruikers overlook this expenditure when the say property doubles they forget to deduct this cost? Because remember every house gets remodelled / extended / renovated etc.
BTW there is nothing wrong with this house in fact it is great we would buy it tomorrow but we would never pay more than $650,000 !!
Why? Property ONLY doubles every 10 years even with renovations & extensions etc!!
If you are buying property as a "Investment" treat it like a hard nosed investor would!!
My Calculations estimate this owes the owner around $1.2M. WHY? because when you factor in either the COST of the money to buy it OR the TIME value of money / opportunity cost, add on $100k of renovations(and this cost/time value), then to be fair, deduct the savings they have made by living in the house and not paying rent, well the result is this house OWES the owner at least $1.1M to $1.2M.
ReplyDeleteShocking result considering its a great house in a great suburb near a great school and transport/shops in a booming city. Another clear sign Perth is MASSIVELY overpriced still.
Not shocking.....reality. People convince themselves that prices always go up. Going to be hard for many of these people to clear what will be large debts.
ReplyDeleteIt costs a lot of money but it's worth buying.The designs are unique.
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