Hi everyone
I have just been offered a property in a regional area for $65,000 and it will rent at $160 – 180. Great returns! BUT it is getting old,(tho in good condition at present) there will be a minimal capital growth but I would expect a little over time but it’s propbably not that important. I have 3 others which are going well so this could be a nice addition. I just can’t decide on this onetho my gut feeling is go for it……thoughts appreciated,Cheryl F[confused2]If I were you, I would get a thorough building inspection done, and if it turns out to be structually sound, and the wiring and everything is ok, I’d go for it. I suppose it depends on what your strategy is though … are you in it for the +CF or CG? Trust your gut instinct (after doing proper due diligence, of course).
p.s … total newbie here, so I’m throwing in a grain of salt with this post
Kez
Hi Cheryl
I too am very new at all this. I have also been looking at +ve cashflow properties on the net and have come to varying conclusions. When I find one that tells you how much it’s tenanted for I always look at it in greater detail. How long have the current tenants been there for, what is their current contract, are they happy there, and if they vacate what would you get the same rent?
I have no idea whether this is the right strategy, but I understand that sometimes tenants are put into a property so it looks good for the potential buyer. I have also started to look in the API (Australian Property Investment)magazine what the average rental is.
Don’t know if this will help, but really with investment properties if the maths are right then probably the property is right.
Good luckSimon
thanks Kez, Simon,
it looks all OK, wiring plumbing etc is good. The IP is not tenanted but rang a local agent (not the selling agent) and there are few “good” places available and they are looking for them. I have no IP’s near me so am used to not seeing properties so don’t really know why I am just a bit hesitant with this one.
Maybe it’s because it’s a while since I bought and I just can’t “get in the groove” after the break!
As you see I am a newbie to these boards but have been following them – and Steve – for quite a while now.
Cheryl – sorry about the last sign off – not sure how it got so big!Cafank,
NEVER buy property on “gut instinct” alone (if at all).
How about giving us some more information before you expect people (aside from perhaps a few inexperienced “newbies”) to be able to give any credible/logical reasoning that could help you in your decision making???
Firstly, let me ask:
1. WHO offered it to you, and WHY??
2. The gross rental yield is between 12.8% – 14.4% which in today’s market is almost (note: I said almost) impossible to come by in residential properties.
3. How do you know CG will be minimal??
4. All properties age, so what if it is not going to stay “new” forever, neither are you!!!
Just because a property gets “older” doesn’t mean it loses value!!! Or it is that you invest based on tax deductions/depreciation hence “new” means higher claims???5. How much information do you have on the area?? That is, what infrastructure is in place, what is the population size/trends (ie. growth or decline, past and present)??
6. What is the rental yield of similar properties in the area, and market value for properties being sold???
Personally, based on the “little” valuable information you have conveyed, my “gut feeling” is WALK AWAY!!!
Good luck,
Jo
I would focus on the rental returns in the area as Jo has outlined and, more specifically, vacancy rates. As far as I am concerned, this property is not returning anything as it is not rented.
How long has it been vacant?
Why is it vacant?
How long will it be vacant?
These are the most important questions to me.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdHi Jo, here are the answers
1. property was sent to me by an agaent I have dealt with in the past and knows what I generally look at.
2. This is a rural/remote town with limited rentals and high need, I know the place and have checked out with other agent and one friend who lives nearby.
3.4. CG will be minimal?? – just my gut in the area – there hasn’t been much CG in the last few years but there hasn’t been much growth either. And by older the place is only 20 years old so not too bad…5. It is a stable area with slow growth – including few new homes – I’ve known the area for about 20 years and there has been steady growth – stable schools, hospital, business and increasing tourism. The population is only small – about 4,500 but as the place is so stable I don’t see this as a -ve at present.
6. There are no other homes on market at present but this compares favourably to the most recent that I have been able to find.
Robert – owners have moved out of this one just recently and wanted to sell with no tenant.
Thanks for your adviceCheryl
D’oh! Silly me! *slapping my wrist*
Fancy thinking that and inexperienced “newbie” would have anything credible or logical to say.
My, I have so much to learn.[blink]Kez
Kez,
I’m still a newbie – I’ve lost a bit of money overtime – but second time around I’ve learned to do some research. Steve’s books helped a lot there
Cheryl[blush2]you lost some money in the past? may i ask what u did wrong or what u know could have prevented this?
thanks
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