My wife & I have recently been away on holidays in W.A.
We found 3 properties we think are possibly a good investment & would like a 2nd opinion.
1/ 3×1 unit in block of 6 holiday villas 12 years old attracting $90/night or $660/week on short term holiday rental with approx 30-40% occupancy rate. Cost $95,000 fully furnished.
2/ 3×1 with granny flat unsure of age but a lot older although parts have been renovated $195,000 attracting between $300 – $350 / week full time lease. Although currently owned & not leased
3/ 4×2 brand new. We have to build what prospective tenant wants as they are a large company wanting a 10yr lease @ $550 / week for first 5 yrs & 10% increase to $605 for following 5 yrs. Cost to build property is $360,000
We think option 3 is the best but are unsure about borrowing such a large amount of money as we already have a 100% financed i.o property & are building a new home which will have a $200,000 mortgage.
Thanks
Boardy
p.s unsure & dont want to get in 2 deep. Should we be hesitant or not advice appreciated
Hi Boardy,
And how long is a piece of string. One man’s nightmare may be another man’s dream.
I can only give comment on the rudimentary information provided and as such it all needs to be taken with a grain of salt.
At the moment you haven’t provided much in the way of supporting detail such as other outgoings for each of the properties, where they are and even your basic investment philosophy. The supporting details are just as important as the numbers provided.
The key issue for me lies in your last line about taking on such a large debt.
How are you going to feel when you open up your bank statements each month and see you own them $360K – even though it may be a ‘good investment’ there is the mental side of things to consider too. Are you leaning towards this property because you want to or because the ‘salesman’ did a better job with you.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi,
These properties by themselves are neither good or bad.
The question to ask is “how will these properties deliver on my investing goals?”
Some things to look out for:
Property One: Watch out for the vacancy rate, management costs and body corp fees as they can really sink your cashflow.
Property Two: Is there market demand for a property such as this? What is the market rent? On a 80% lend it would be cashflow neutral at best, in which case your relying on cap. growth… how likely is this?
Property Three: Negative cashflow with depreciation benefits… hmmm, another capital growth property. Sure, you get a long term lease, but you are also locking yourself into a fixed rent for 5 years.
I make these observations to stress that the cash/profit outcome from investing in property must be related back to your underlying financial plan.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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