Recently whilst speaking to a country seller he informed me how easy they are manipulating prices to you city folk.
Simple when its time to sell they put there friends into the property on a lease paying way over the going rate on a 12/24 month lease.The seller refunds his friends monthly and to you the buyer it looks fantastic and positive positive ,they usually make it a 10/12% return be wary when many in the same town do it you may thinks the figures are correct but in reality your a woodduck be carefull !!!We’re not slow in the country – that’s just what can happen in guaranteed rent offers.
As always you need to check whether the rent paid reflects the rental market in the area
crj, I don’t think lynchy was implying that country folk are slow – more to the point they are manipulating rental yields in an effort to sell their property to an out-of-town investor who thinks they are getting a cashflow +ive deal, when in fact the rent that specific property is getting is way over what it is really worth.
Age doesn’t negate effort – you can never be too young or too old.
I remember pre boom Tasmania had houses perpetually for sale from the last boom! (some 10 years!)……………Then along came the investor………..
You can see why remote some vendors resort to dirty tricks to move ‘em because out of a boom he might be holding it for a mighty long time.
Yeah I know I’m a sucker….
Summary:
Total annual rent = $14700
Total annual mortgage = $3720
Total annual costs = $1450
Total annual cashflow = $9530
Total funded costs = $6125.00
Annual Cash On Cash Return = 155 Percent
Cashflow Positive Weekly = $180Sucker for a damn good deal…
Of course the guy who sold it to me made $30K (and god did he let everyone know), but I still don’t mind investments that net me 155%.
Rgds.
Lucifer_auonly unseeded investers would take the deal based on the income generated without doing due diligence on comparable rental returns and then asking the questions of justificatoin to weed out the sour part of the transaction….. a bit like some of there ebayers…. do not check the prices and than go stir crazy once they start bidding and over pay on the item. – Due Care and Due Dilligence Always…. unless you like throwing hard earnt cash away? :o)
due diligence is key, current rental is one factor only you must get a market value for a comparable rental and not from the agent who is marketing the property. the retnal yield is just the start of your due diligence process, look at all factors that will enablke you to make a good return from the property.
I have been thinking of looking at getting steves buyer beware template any one have feedback on them, i currently use my own templates on spreadsheet for purchasing +ve CF props but am always keen to learn and adapt to the everchanging market
when the going gets weird the weird turn pro
Good scam!
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Seen a lot of this type of thing in Northern Tassie properties advertised with 6 mth leases. Easiest way to check is do a rental search on something like realestate.com.au
If the rental is way above the market then avoid, or go and make an offer(probably way below asking price) based on market rent making it a positive cash flow property.
How about requesting 18 months rental history?
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter: See – http://www.mortgagepackaging.com.au/index_files/newsletter.htm
Comments made are of a general nature and should not be construed as individual advice.
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Hi all,
I have found that people who live in country areas are genarally friendly and willing to share their knowedge about their town. My advice is if you don’t already know a local or two then get to know them. If you are not familiar with the area then stay there for a while – the staff at the motel or caravan park will be a good place to start asking questions. As long as you come across as being genuine and reasonable then I’m sure you will enjoy your stay and find out lots of “local” info.
I live in a country town and although I don’t agree with the practice, there are some who have no remorse about taking advantage of investors from major cities who don’t have any knowledge of (or interest in) the town and it’s people. It is just another example of “buyer beware” or do your due diligence (BTW this applies not only to RE or country folk).
Regards
Sonja
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