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Saturday, 26 October 2013

Estimated cost for a second storey house extension

The consultant dropped by last night to have a look at our existing single-story, brick veneer home and discuss our ideas for adding a second floor on top. Our thoughts about adding a master bedroom with en suite bathroom, study, and WIR, plus a large lounge room and library appear 'do-able' at about the cost I had in mind - around $230,000 to $250,000. The price includes an interior staircase, bathroom fittings and so forth, and some minor changes to the downstairs, and a large tiled balcony along the front of the house. But it doesn't include floor coverings (we'd probably have hardwood flooring put down), so I'm sure the total cost would end up near $300,000. The extension would be done in single brick 'skin' and a timber frame, with the bricks chosen to match the old red bricks as closely as possible. A slight mismatch shouldn't matter, as the new balcony with separate the old and new brick sections visually. The alternate would have been to use rendered cement sheeting on the extension, and render the existing house - but doing that probably would have cost around $30,000.

We'll get a sketch plan of the concept in the mail, and think about it for the next year or so before making a decision. Meanwhile, I'll consider the alternative of spending the money on a block of land up at Port Stephens, and building a new 4-bedroom holiday/retirement home there. The cost would be about the same as adding an extension on top of our Sydney home. I can't afford to do both. And I'm not entirely sure if I'll decide to do either.

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Monday, 21 October 2013

Credit burns a hole in my pocket

Only a few months have passed since we finalised the sale of our Sydney investment property and we used the proceeds to pay off most of our home loan. Yet DW and I have each already 'invested' about $100,000 in the stock market using some of the 'portfolio loan' credit that became available once the investment property and home loan accounts had been paid out. And we are now talking about using some of the remaining credit to maybe add a second-storey extension on top of our existing 3-bedroom home. Seems that having hundreds of thousands of dollars available to borrow (at home loan interest rates) is too tempting to resist for long.

While our 40+ year old home isn't very large (3 small bedrooms and one bathroom), we don't really need the extra space - especially as DS1 might be moving out of home when he starts university about four years from now. The cost of adding a simple upstairs extension is also fairly expensive in Sydney - one master bedroom with en suite bathroom and a small study/office, a lounge room and a library room will cost somewhere in the vicinity of $200,000-$300,000 (I'll have a better idea once a 'consultant' from one building firm visits on Friday to give an 'obligation free' inspection and price guidance). And living in our house while construction work is going on above us also wouldn't be particularly pleasant.

As an alternative, I'm thinking about buying a vacant house block in a sea-side village in the Port Stephen's area (about two hours drive north of Sydney). A vacant block there costs around $100,000 and a quick internet search has turned up at least one project home company that will build a basic, single-storey four-bedroom/one bathroom house for around $160,000. So it should be possible to end up with a nice new holiday home on the central coast for under $300,000.  New four-bedroom houses in the area are selling for around $400,000 so it should be possible to get our money back if we decide to sell the finished house (provided the real estate market in general doesn't decline). And if we choose to rent it out, similar houses in the area rent for $300-$400+ per week, which we provide an ROI of between 5% and 8% (depending on the final cost of the finished house and land). If we like the area we might even move their when we retire (it's close enough to visit Sydney for a day trip), which would let us sell or rent out our Sydney home to help fund our retirement (if we needed the cash/cash flow). We may drive up there next weekend and check out the area and local facilities.

Then again, I may decide to do nothing, and just keep waiting for my parents to renovate the holiday house they have sitting on a lake-side 25-acre hobby farm (about three hours drive north of Sydney). However, that house is in unliveable condition at the moment, and my parent's have been 'planning' to renovate it for most of the last ten years since I last visited there (without making any noticeable progress). So I think both of our kids may have moved out of home before we can realistically expect to stay there on vacation!

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Sunday, 20 October 2013

Feeling like a Ph(rau)D

My first year as a part-time, post-grad 'research' student is drawing to a close, and I've just had my first 'Annual Progress Report' signed off by my research supervisor. He seemed quite happy with my progress and gave me a 'motivated and very capable' rating, which should go down well with the review committee (I will have a brief 'interview' session with them in early November to finalise the annual review). My supervisor also signed off that I had completed the 12-month's probation period, so I should have my candidature officially 'confirmed' once I get past the review committee interview. And after that is out of the way I'll start working on the application required to officially  'upgrade' my enrolment from the MSc(Research) degree to  PhD. Knowing that I'm working towards a PhD thesis due in 6-8 years time, rather than having a MSc thesis due 1-2 years from now, will make it easier to plan my literature and thesis writing schedule. Being a part-time research student is a s-l-o-w process ;)

Despite my supervisor saying that my research topics have turned out to be more difficult than he had anticipated, I still feel I haven't achieved very much this year (definitely not as much as I had intended). Although I've managed to learn how to 'drive' the Mt Wilson interferometry telescope array remotely from the lab at Sydney University, and have some tantalising preliminary results from my micro-quasar observations (which my supervisor says should be enough to publish a paper already), there is still a lot to learn about the nuances of optical stellar interferometry and the 'nuts and bolts' of the various data reduction and modelling software tools. I also feel that my maths and statistics (which were never my strongest subjects) are about 30 years out of date, and I haven't spent as much time 'brushing up' my calculus and basic physics knowledge this year as I had hoped. Oh well, I will have a couple of weeks over the Christmas/New Year period at home (while my office shuts down for the holidays), so I *might* be able to do some remedial background reading while lounging around the swimming pool. I also have to get my literature search more organised (so far I'm just browsing random papers that seem relevant), and allocate a fixed amount of time each week to read and critically summarise each paper, rather than just skimming through them and jotting down a few interesting factoids.

Next year I'll also have to enrol in one of the 'honours' level courses that have to be completed as part of a MSc/PhD at Sydney University. It's probably not a good idea to attempt my supervisor's Bayesian Statistics course until I've brushed up my maths and statistics a bit more ;) so I'm thinking of doing the History and Philosophy of Science honours course as my first elective. At least that was one of the subjects I got a high distinction for in my undergraduate degree thirty years ago, and although there is a lot of reading required, the assessment only involves four 1,500 word essays.

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Tuesday, 1 October 2013

Net Worth: September 2013

A good month for the stock market, despite a sudden drop on the last day due to the US budget imbroglio. There was a slight downward adjustment in my estimate of our home valuation due to the source of the monthly average sales data, but overall Sydney house prices seem to be starting another uptrend despite already being unaffordable for many young local families. The latest explanations include foreign (ie Chinese) investors, and self-managed super funds, driving up prices. But the old explanations of geographic restrictions on available house sites, high local building costs, council red-tape and zoning restrictions all help restrict supply, despite some people expecting a glut of properties as the 'baby boomer' generation starts to sell off the family home to downsize, move to aged care accommodation, or make escape to the country/seaside. I think it is the effect of home loan interest rates being around 5% that is the main driver, and the trigger for a drop of Sydney house prices (at least in real terms) will be when the RBA starts to raise interest rates again when the Australian economy recovers.

Assets$ Amount$ Diff% Diff
Stocks *$169,191$20,688n/a
Retirement$536,283$10,1001.92%
Properties$458,627-$12,478-2.65%
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,380$90.01%
Net Worth$1,061,721$18,3011.75%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans

Despite some trepidation at increasing my level of gearing to invest in the stock market, in the end I decided to borrow $96,000 of the $250,000 available from my portfolio loan account last month, and invested in a dozen Australian stocks selected from the ASX200. Only time will tell if this was bold move to invest close to the bottom of the market, or absolute folly at my stage of life given the volatility of the market so far this century, and the ongoing challenges faced by the developed economies.

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