First timer needs advice

Viewing 4 posts - 1 through 4 (of 4 total)

Maxisteam
Member
@maxisteam
Join Date: 2003
Post Count: 2
August 31, 2003 - 2:20 pm
Hi there
I’ve just found a one bedroom unit in a small town in NSW for $69,000 with rent at $100 per week.
This would more than cover loan repayments. It comes fully furnished which the agent says mainlt attracts short termers (six months approx) It is close to main shopping center. The town has a large factory but unfortunately has no rail link and only has a bus out of town three times a week.
I don’t think it will have high capital gains, but as I can borrow the full amount, I should be able to get the property for nothing.
My philosophy is if I get a bad to mediocre property for nothing is better than no property at all.
What do you think
Thanks
John
calron
Participant
@calron
Join Date: 2003
Post Count: 78
August 31, 2003 - 2:55 pm
Hi.
So are you saying that the place is leased at the moment??
If so, How long is the lease for? how long have the tennants been there for? What do the tennants do for a living?
How much are the rates and body corporate?
these are a few questions that I would be asking the Agent…
Could you renovate it to attract more long termers?
What else would you like to know?
Cheers
Calron the Alcamist
Turning things into gold is fun.
[email protected][]
Maxisteam
Member
@maxisteam
Join Date: 2003
Post Count: 2
August 31, 2003 - 3:32 pm
Thanks Calron
The unit is currently rented but don’t know the lease period. The total expenses are $703 per annum including rates so total income based on 50 weeks is $4,297 not including agent management fees. The common areas have just been painted and there is a $27 p/q sinking fund to resurface the carpark.
peterp
Member
@peterp
Join Date: 2003
Post Count: 307
August 31, 2003 - 11:01 pm
‘as I can borrow the full amount, I should be able to get the property for nothing.’
Yes, it might be ‘nothing down’, but it’s not nothing. Consider the opportunity cost of the finance going towards something better before proceeding.
‘My philosophy is if I get a bad to mediocre property for nothing is better than no property at all.’
Yes, but only if you have good tenants. If it’s the sort of property that would attract poor tenants, you might be better off not to expose yourself to those hassles. Will people choose to live in the place, or would it be considered to be a ‘house of last resort by the desperate’ as there’s nothing cheaper in the area?
‘What do you think’
Well it could still be a good deal, but I’d personally go for either a higher return in this town or a similar return in a bigger centre.
Peter