Hi Everyone
I am keen to start investing in property but I have a few questions.
I have noticed a couple of cheap properties in outback Queensland (I live near the city) which are going for around $45,000 with weekly rental of $86. I worked out that a loan weekly repayment would be approx $65 per week giving me a $11 cashflow (not including expenses). Does this seem like a good idea, and do any of you actually invest in far out areas? The area has a twice weekly train, hospital, shops and 1500 population.
Also, I have noticed the odd newspaper article on super cheap (around $10,000+) for properties on rural towns that are looking to increase their population. Would these be viable options for rentals?
When looking for investments what websites do you use, and what categories do you look for?
How can profits be made on standard suburbian houses that go for as much as $180,000. In Brisbane these usually get $170/week rent. By using the 11 second method, the above rent would only provide positive cashflow if the house cost $85,000. In these cases, should I be looking for properties that don’t have tenants and raise the rent accordingly. Where can the average suburb rent values be found.
I have seen a commercial building that is going for $395,000, returning 9.8%. Are my figures accurate in saying that the weekly rent is $744? Does this sound like a good deal?
Thanks in advance for your replies, and sorry about the length of the post.
Jason
45k paying $86 works. Would you rather pay 27k and get 120? – This is one of our deals.
I think it really comes down to your searching.
The returns you mention are uninspiring.
Asking price does not mean sale price.
I have offered people a lifeline of half of their asking price and they have accepted it.
More and more I agree with the mantra that positive cashflow deals are not bought, they are made.
We find property on normal websites, and through realtionships with agents. Also spending some time in a small town can lead to word of mouth deals – these have been some of our best.jenwren,
your numbers so8und inspiring. oz or internatrional? either way, what was your research or personal background to confirm or be confident about these deals?
It is only your thoughts that create your future – Be careful what you think!
Nathan210,
It is in our local (oz) area (of nine months), we know the market, we know the demand.
Lots of people want to live here because it makes access to centerlink benefits very easy. Since these people also get a subsidy, our returns are pumped up.
Here are the three secnario’s in our town:
1. Cost 18,000 retun $80/wk
2, Cost 42,000 return $130wk
3, Cost 27,000 return $120wkAs you can see from these figures, we are happy with these purchases.
We have looked for similar scenario’s in other states with success.If I had more equity or cash (I am maxed out) I would buy a dozen more with similar figures. And yes I do know where they are.
Roy
I dont see what is hard about finding these deals.Jen,
The reason you are having trouble buying more is because of the ‘QUALITY’ of the security in my opinion. If your returns were so good, each purchase would mean your serviceability would improve. I would love to know what ‘TYPE’ of properties these are. Sounds like caravan parks by all the subsidies etc your tenants are getting which I HAVE TO PAY!
Robert Bou-Hamdan
Mortgage Adviser
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And yes – in the banks eyes they are ‘country B’ wich i believe is the worst rating an area can have.
RE: The centrelink benefits, it has created a demand that is often not met by the supply – hence the good return.
I am sleeping well at night, I have specialised in a particular market area I have no moral or ethical qualms about providing housing for these people.
The issue is not one of cashflow, the bank knows what these properties return, I have tried to use OPM to finance all of our purchases, including closing costs. This is why we have have no more security, and need to either reduce our debt, or save some cash before the bank will let us go again.
Happy to hear any suggestions.Magnatolia,
Could there perhaps be a condition that the property become the buyers PPOR for those $10,000 properties.
Having people snap up a bunch of cheap properties just to rent them out doesn’t seem to do anything for boosting the population. Unless of course the houses were abandoned, so they have to give them to someone to rent out?
Though, you also have to consider that with housing at such an insane affordability level, that little to no one would rent – buying is cheaper!
On the up side, for those few who couldn’t get finance[possible for such a small amount?] that they would be ideal candidates for a wrap.
Take what I say with a grain of salt, I am new here and inexeperienced. Just my 2 cents.
im unannounced
HMMM i wonder what type of tennant would be attracted at such cheep rent. And i would also think to myself why are they not buying at the cheep prices? could it be they are a credit risk for the banks?
Or are they casual or seasonal workers who will follow work around the state or country? I would speak to the real estate agents and look at the rentals via the websites to do some research. I would ask what the tennant make up was in the area where the majourity work and earnings etc. They may not tell you the info but it is worht asking.[drummer].
The properties are located in regional NSW in a small country town located 45mins from a major town centre that has boomed considerably over the last year.
With the town in question, we actually purchased 2 of the properties just before the increase in prices started (about 1 month actually) – the average price for a house in the town now is $65K-$75K. For ones which require a little bit of work you can get around $50K.
With renos completed (basicaly cosmetic) on one of the residentials for a couple of $K, it has now been brought up to the $65K-$75K range, thus the reason it is now returning a rental of $130p/w with long-terms tenants.
Need to also consider that for country people it is not necessary considered cheap rent. The average wage in a country town is a lot lower than those of the corporate world and work is not always in abundance, therefore they are not all in a position to be able to buy.
We originally came from Sydney, so a house for say $50K is a bargain to us but for some country people the dream of owning your own home (even for $50K) is still unattainable.
For locals, rentals are considered on the high side – but for people coming from the major town centre (which is who we are basically targeting), it is considered a better prospective than paying $200+p/w. Due to the boom in the major town centre, people are looking further out to find affordable rentals. As our town has few rentals availabe and is only located 45mins from the major town centre, agents are having no trouble finding prospective tenants – demand is high.
The other one for $27K – yes was a great deal as it was very cheap. We actually offered almost 1/2 of the asking price due to some work needing to be done. We didn’t actually expect him to accept but as he was keen to sell he did. With renos completed it’s valued at $65K-$75K range and a rental of $120p/w.
These deals didn’t just fall into our lap – they came from research, building good relationships with the locals and agents, and hard work. We didn’t just buy properties that automatically gave us this rental return – we made them happen with a bit of sacrifice and hard work. At this stage, this is our formula for achieving our dream of having a passive income.
JennyJenny,
You can still get the odd bargain in Dubbo itself too. This little gem crossed my path today…
Its a real cheapie, but with a lick of paint you could probably get the rent well up from $80 a week. Asking price of $25K is a great buy, but she’s under contract.
They are out there still, you just need to keep your eyes open and be ready to act.
Cheers,
Michael.Hi Michael
Yeah we know, pretty good isn’t it! We actually went to some auctions prior to xmas in the hope to get a couple but as usually happens (much to the real estate agents hopes) everyone gets caught up in the auction and it goes over the price we set for ourselves.
I commend my partner though, as he goes there with a figure in mind and sticks to it. If it goes over, he forgets about it as it’s no longer a +CF deal.
But we just closed a couple of deals so now we need to save some cash for the next opportunity. But it won’t stop us from looking!
Jenny
Michael,
We are aware of the property you are talking about. It is in Gulargambone. This is the second time it has gone to contract, first time it fell through.
The property is rough, and needs a little more than paint.
Gulargambone is not an area we woud buy in as it does not have the qualities we are looking for in a town. I wont deny however that you can buy +CF properties there.
As a fixer upper, it is too far for our weekend DIY jobs. But you are right – cheap house!The auctions Jenny mentions are for ex Dept Housing places in Dubbo VERY GOOD +CF and GREAT CG.
Roy
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