Hey guys,
Can you all give me your thoughs on this deal.
1 bedroom unit (one of 2) for $65,000 in a major regional area. Rent is currently $160pw with a long term tennant. Floor space 193m2, no huge repairs needed on the property, tiled throughout.
I have suspicions that the vendor has artificially inflated the rental return to appear more attractive to prospective buyers…
Floor space looks wrong for a unit, unless your unit is about 20 squares in size. For each 10 square meters, that equates to about 1 square in property size.
No huge repairs, make sure of it, know what needs doing and what’s OK. Do NOT get burnt.
Long term tennant? Make sure that they are and check the lease thoroughly. You’ll soon know if you’re getting done. Check comparative rents, get a rental appraisal- not from the agent you’re buying from and do your due dilligence.
Sounds like a very, very good deal, however be prepared to walk away if need be!
Hope this helps…G7
I will be getting a pest inspection and building inspection done definately. There are some minor repairs needed, but I can pretty much do them myself next time Im down in the area. I’m trying to negotiate for early access to the 2 properties so I can make the repairs/value add before the titles pass hands and I can get a tennant in the second $65k unit.
Hi Borginvestor
In my experience it is almost impossible to get an unbiased rent appraisal- even if it is in writing from another agent. I think the best insight you can get is to put yourself in the shoes of a tennant and see how much you would have to pay to rent a similar unit in the area.
Without knowing the area but as a general comment for units-if there is a body corporate be sure to peruse their records as well- the unit itself may not need repair but you may be up for maintenance on the block.
On the face of it though it looks like a great deal.
Sounds to good to be true. Why not offer the tenant $50.00 to show you his recent rental receipts to confirm the rent. You could also ask them if they are happy to stay and how long they have been renting the property. If the figures are correct buy both.
Happy investing regards BofclarkI’m with Bofclark on this one. Don’t simply take the easy way out by taking the vendor’s word for it. Your effort will be worth it either way if you do so.
Challenge him to prove his rental claims. Best of luck!
Looking for another income source? – Email me.
A simple solution to the rental question is to ask for 12 months rental statements. If he screams and shouts or says he doesn’t have any because it was self-managed, ask for bank account statements showing the rent going in. If he does not present these, I would walk away.
Regarding the floor size, for a 1 bedroom unit to be that big, it would mean that the internal floor space is as big as a house.
Robert Bou-Hamdan
Mortgage Adviser
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