This correction will get rid of some of the reef fish and shake out the weak holders. I see it as a healthy thing.
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This correction will get rid of some of the reef fish and shake out the weak holders. I see it as a healthy thing.
You may get more chances down here as it dumps up and down based on the wild fires around the globe... only just started burning..They havnt replaced security at hotels with the Army but may just be a matter of time. Army deployed in Victoria just announced.
Just sitting on the fence at the moment, waiting for 85, before I accumulate any more.
yes waiting ... for some more ...
They are not falling for it buyers increasing as usual...no we dont have enough but as stated its a battle between the few sellers and the public who understand the value of a roof over peoples head... was there ever a doubt...
OK the 30% retention, is 30% of the original purchase price. That seems to be standard for 'right to occupy' properties.
That $130 isn't profit though. That is money spent around the village and also the resident's share of council rates.Quote:
Then add a weekly villa fee ,say, $130
Already your unabused RV villa is looking significantly better.
A couple of points here. The 30% retention fee isn't a given. Sure OCA is a business and they can set this figure at 30%. But what if there are other retirement villages with lesser retentions that are therefore more attractive? OCA may end up having to discount this fee at some point in the future.Quote:
Now this is the point I don't quite think you are getting Snoopy…..
Your house is , at best, returning 2 -4% on “your” capital whereas the Villa is paid up front, in full by the client, so you are making 4% on “their” money. You have now been fully reimbursed for your villa and can perpetuate the process limited only by time to build another one and demand . You are now making 4% on someone else's money.
Next point. The refurbishment of the occupational rights villa must be paid for out of this 4% pa return.
Earning 4% on someone else's money is attractive. Effectively this is a leveraged property investment with no money put down by Oceania. But leverage backfires in a real downturn. If property values fall then Oceania must swallow the equity loss on all the capital it does not own) (the resident's capital). This 'borrowed capital from residents' no doubt dwarf's Oceania's own capital by a country mile. I guess this is why retirement villages revalue their assets each year (to act as a canary for such a disaster). In fairness this would only become a solvency issue if the property in the village went down in value by 30% and held there over a seven year period (the average occupation time). In that situation, seven years of profits could be wiped out. But even a fall in property values of say 15% would cause a fall in underlying customer equity value of 20% or more (because we have to add on the running costs that could no longer be taken out of property profits). And such a fall could absolutely decimate Oceania's own equity. Don't think a property downturn could last for seven years? With property prices at all time highs and Auckland being the ninth least affordable city in the world in which to live (median house price/median household income = 8.6), think again.
Reference https://www.nzherald.co.nz/nz/news/a...ectid=12193684
Getting a 30% retention after three years is 10% per year I get that. But a care suite will generally be worth substantially less than a villa. You will find that 10% of $250,000 ($25,000) is less than 4% of $680,000 ($27,200). So the annual return per resident looks to be less in dollar terms, plus you have to add on the extra care costs incurred by Oceania that are not covered by the government. Put this way, the myth of a 'highly profitable care model' disappears.Quote:
OCAs real point of difference from its peers, is that it can churn a care suit over every 3 yrs rather than the standard 7 for a villa . So that's effectively a 10% return p/a, again entirely on some else's money.
Care for vulnerable elderly is the core service. If your core service is a 'loss leader', then IMO you don't have a business model.Quote:
OCA have deliberately targeted care suits as the coming excessive demand will not be met by other competitors...perhaps an opposing example is SUM who have targeted villas until now and now having to curb their build rates.
I especially like the term recently coined by BaaBaa for the care side of the business as a “loss leader” and especially “COGS”...that's just brilliant!
……..got to get those customers coming into the store somehow.
SNOOPY
Snoopy,
Do not forget with your rental property to only budget for about 45 weeks average annual income if you are lucky, to allow for about 3 hours of your time on average each week per property to manage it, (I did not pull this figure out of thin air, highly experienced rental property owners with multiple units tell me there's about 150 hours of their time per unit end to end each year in the whole process), to allow for rates, repairs and maintenance, body corp fees for apartments and ever increasing insurance premiums and last but certainly not least and something almost no rental property investor I have ever acted for or met actually does budget for, a complete repaint and redecoration outside and inside every 7-8 years. When you actually allow for the deep cycle refurbishment costs which typically run to somewhere in the order of $20,000 - $25,000 for a typical 3 bedroom rental property you will find the average net return after all costs is somewhere around 2% per annum.
This paltry return is only if everything works out okay and you don't get done in by malicious damage costing tens of thousands of dollars extra or methamphetamine contamination costing even more like several of my clients have and all that assumes you don't get lumbered with an even bigger massive leaky building repair for your apartment complex like most of the apartment owners I know have.
I could write pages on the drama's Mrs B and I had to endure with our 2 rental properties and a whole book on the drama's I have seen clients endure. Fortunately we sold our 2 apartments before the next owner got caught with a massive leaky building repair. Now days we have the Government chiming in and making is less attractive with no depreciation on houses, (even though I can assure you they do wear out), no loss offsets to other income and tenancy laws increasingly heavily stacked in the tenants favour to such an extent you'd be forgiven for now wondering who actually has ownership rights of the property !
Its a mugs game that involves substantial amounts of your time, effort, heaps of stress and drama and at the end of it all unless you get substantial capital gain, you're on a hiding to nothing. NEVER AGAIN as far as I am concerned. Don't believe me ? Fill ya boots my friend and buy a couple of rental properties and see how you go and come back and tell me all about it a decade from now. You will say, Beagle, you were spot on, I wish I has listened to you.
Not sure why I bothered with this because I know there is nothing I can say that will change your mind...maybe someone else will get some value out of this post or maybe its just good therapy for me to vent one more time about the drama's I had with rental's.
OCA churn is going to be a lot more than the other retirement companies...think of them clipping the ticket with 30% every 3 years instead of every 9-10 years. If you can't understand that...