Wednesday, March 06, 2013

Land in Western Australia / the Outback

Australia is one of those countries I don't really long to see.

Asia, love it there and have already been there twice. South America - I can't wait to visit Bolivia and Brazil. Africa... Egypt, Morocco, Tunisia, Zimbabwe... all fascinating places. And Europe of course, lots of things to do there.

But Australia?

I guess I am just not a fan of kangaroos, crocodiles, and Australia's landscape.

However I do like a bargain when it comes to real estate - and Australia has a lot of bargains when compared to the real estate prices in Canada.

And I also enjoy looking at the real estate prices of obscure parts of the world... eg. You can get a plot of land on the side of volcano in Hawaii for $5,000 USD. True, its on the side of an inactive volcano... which means no local water... but it is in Hawaii!

Western Australia (WA) on the other hand has vasts regions of desert and scrub brush for sale. Some of it is former farmland that has gone belly up due to extreme droughts.

Its the kind of place where you can buy 680 square miles of land for $360,000 Australian dollars, according to the website provide land for sale in WA.

There are homes in more habitable regions too, like in Perth, Beaumaris Beach, Brighton, Catalina, Eglinton, Erindale Grove, Jindalee Beachside and Princeton... but I really need to post a map of Western Australia so you know where these places are.

I went browsing on various Australian real estate websites and found some interesting deals.

#1. A plot of residential land in Perth for $8,500. Nothing built on it yet, waiting for a developer.

#2. 2032 square meters of land in Doodlakine for only $19,500. (Australian towns have such funny names.)

#3. $114,000 for abandoned farmland near Perth. 206 acres worth. See photo below.

I think my point here is that if the prices are low enough there is a certain romanticism to the idea of suddenly picking up and moving to a different country and trying something new.

Even more so if you're already independently wealthy - or have enough that you don't really worry about food any more.

However I must admit Hawaii is more enticing than Australia. I am sorry to the good people of Australia for saying this... but its freaking HAWAII! Its one of the most desirable places to live in the world.

And if you love sailing you could always just buy a ship and then sail from place to place... something I have frequently dreamed of doing, if I could find a way of doing it financially.

OFF TOPIC - Where does one look for used ships online? I tried Googling it and found on Kijiji an used 29 foot Westerly sailboat in Nova Scotia for $20,000.

So I guess my point here is that depending on what your real estate / career / travel aspirations are you can find cheap land in many strange parts of the world - and failing that, buy an used sailboat and then just sail to many strange parts of the world. Assuming of course that you have the financial means to get food and other things you might need along the way.

So if you're living in Toronto - or Perth - or wherever you happen to live, and have saved up a tidy nest egg... absolutely, why not follow your dreams and move somewhere interesting (or sail there)?

You only live once.

Friday, March 01, 2013

What Will Home Refinancing do to Your Net Worth?

When mortgage interest rates fall to historic lows as they have done in the past couple of years, it’s very tempting for homeowners to want to refinance their mortgage and get a better deal on it. This can make a lot of sense, as getting a lower interest rate can save you thousands. But before you start barraging your banker or broker for a better deal, first stop and figure out what refinancing will do to your overall net worth.

Refinancing your mortgage may lower your costs in the short-term, and that can tip the money scales in your favor. With refinancing you can stretch out your amortization period and arrange for a lower monthly payment. This frees up extra cash, and is one of the reasons so many homeowners opt to refinance when rates are low – it’s like they’re getting two savings at once! But, short term benefits also often have long-term consequences and in the case of refinancing, those consequences will affect your net worth.

This is because your home is a liability on your household’s balance sheet. And even though in the case of debt, a home is always considered to be “good debt,” the balance sheet does not discern between good and bad. It’s a liability, which means it’s not good. And when you refinance so that you can make lower monthly payments, it will take you longer to pay it off and you could potentially add thousands of dollars in interest onto your total mortgage amount. That in turn, will subtract thousands of dollars from your net worth, decreasing it by as much as those interest costs.

But will refinancing always lower your net worth?

Not necessarily. You can still refinance to take advantage of those low interest costs; just ensure that you keep your amortization the same and that you continue to make the same monthly payments (or even more!) as you did before. That is only the true way to refinance without decreasing your total net worth. And even when using this option, you still need to be very careful.

Home refinancing usually comes with many different costs including closing costs and legal fees, to name just a couple. Be sure to fully review what it will cost you to refinance your home loan, and compare that against the savings. Do you have a positive or a negative after your calculation? This is the only way to know whether or not you’ll be increasing or decreasing your net worth through a refinance; and whether or not you should do it!

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