Hi everyone wont bore you with all the details looking at 6 x 1brm units in north vic all on 1 block they are let out at $90 p/w they are asking $280k plus what is your opinion on it.How much would one pay for it i have done my maths and have come up with a figure just want to see if im in the ballpark only new to this game..
Hi gooch1
You would nead a commercial loan because there are 6 units therefore my need 66%finance ?
assuming that you pay 280K you nead 96k cash in the deal.
Loan 184K @ 6.6% = 233.5 pw Interest
Rates/water could be high
because 6 units say 3000 pa = 60pw
Insurance 400pa (guess) =8pw
agent @7% assuming all let
at 90pw =40pw
Total expenses =340 pw
Total rent 90*6 =540pw
balance =200pw
this must cover vacancy/ repairs etc
Best senario 200pw = 10000pa
Return on Cash 10.4% (not high enough for me)
Risks
1 bedrooms usually have the highest vacancy and turnover of tenants, especially during quiet times. If two units were vacant you will make nothing on you sizable investment of 100k. The property would have to be in an area of stong growth. i know i’m a lot tighter with the figures than most people but i wouldn’t be in this deal, i like to return 20% on my cash into a deal. Gooch1 if you could get an 80% loan the profit is $7500 pa and %13.39% still not good enough given the risks of vacancy (sorry mate).
Interested to here what others think of the deal. I’m in at $180K
regars westanJust an idea – are they near a hospital or major industrial area with limited hotels etc around? I think Westan is right and normal tenant turnover would be a problem, so why not consider banking on that, furnishing the rooms and erecting a sign out the front saying “short-term leases available for $130 per week, minumum stay 6 weeks” or something to that effect. Your occupancy would have to be less than about 70% to be worse off. It’s not serviced and the lender doesn’t have to know you intend to do anything but the standard rent deal, but I’d definitely see a broker about how to structure it.
Cheers,
MelJust a couple of comments:
NAB will do up to 6 units on a residential mortgage (but this is on a case by case basis).
If you can’t get a lender to do it on a residential basis then a commercial loan is probably going to cost you around 7.5% p.a.
Cheers
Stu
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