hi all, my wife and i are thinking of buying 2 ip of the plan in northcote and essendon both are 2bed 1bath 1carpark located on or near main roads with all amenities close by both are priced at 330k and have a rent guarantees at $375pw and $352pw for 52weeks and body corp fees first year paid by developer an accountancy firm is organizing all matters on our behalf eg finance,buyers advocate,solicitors costs,depreciation schedule and financial planning for a fee of 1.5% of purchase price both properties will be negatively geared as we both have huge tax bills.
a wealth creation strategy has also been created for us with our next ip to be a cash flow positive property and subsequent ip,s purchased to expand our portfolio the properties will be managed by a real estate agencey charging 7.7% pa.
this will suit us as we have demanding careers and very little time as is .ps an independant valuation has been done by a reputable firm .valuations aprox 1% above purchase price would appreciate any advice positive or negative thankyou all have agreat day[biggrin]Hi renand and welcome to the forum…hope you have a good time.
You haven’t asked a specific question so if you’ll indulge me, a couple of comments / queries if you will ;
1. How much extra on top of the normal purchase price did you pay for the rental guarantee ??
2. How much did you learn through the process of purchasing ?? With everything being organised for you, are you positive you got the best deal, and what lessons will you be able to glean for next time.
3. The people you’ve used to handle all of your transacting, including wealth creation plans, are they all completely independent from the developer who sold you the units ??
4. These demanding careers of yours, how much after tax wealth do they create compared with your expected increase in equity, with these two and perhaps subsequent purchases. Based on the answer to that, do you believe you are spending your most valuable resource – time – focusing on the most productive activity.
5. Looks like you’ve chosen to pay interest rather than tax – well done. Either way, if you are entrenched within the Australian taxation system and earning taxable income, you can’t keep the money, so you may as well get something for it – the promise of a capital gain…maybe.
Hope you had fun during the process – will you do it again ??
Whoops….just re-read your first line…I missed the “thinking of buying” bit…another question then…
1. What else have you looked at and how does it stack up compared with these units, before you dip your toe in ??
Sorry do i read that correctly you are paying nearly $10K for someone to organise for your your finance, conveyancing costs, depreciation schedules and a bit of financial planning.
This doesnt cover the stamp duty x 2 or search etc.
You have to having us on.
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
Hi Renand.
Make sure you check with other real estate agents in the area as to the REALISTIC rent that can be achieved with this type of property.
Good luck.Here’s some things to think about
1) First, you’ve chosen great areas in Melbourne
2) You are paying the rental guarantee, it is built into the purchase price.
3) You make it sound like being on a main road is a positive, it isn’t, it a negative.
4) Off the plan (OTP) has numerous problems, most importantly the problem of likely low land content and the likely large developer margin built into the price
5) 1.5% for those services is highway robbery.
– finance can be arranged for $0, and probably far more competantly by a broker from this forum. By them arranging it they are first charging you to take out finance and then pocketing a nice trail fee on the interest
– buyers advocate – what the?? They are the developer aren’t they, so this is completely bogus.
– solicitors fees are worth ~$900 per property
– depreciation schedule – normally provided for free by a developer of an OTP.
– financial planning – what the?? Horse has sort of bolted don’t you think. This must be a way for them to screw you in yet another way or to give you a nice warm feeling about linnig their pockets.OK, the 1.5% is ridiculous but in the big picture it is the least of your concerns. Your major risk/issue is buying OTP, with low land content, that shows every sign of having a nicely padded price.
IMHO you would do better by doing any of the following
1) turning up to an auction of a random established house in either of those suburbs and simply pinning your ears back and buying it. Yes I’m not kidding, that would be better than the deal you’ve outlined.
2) Pay a real buyers advocate (eg Wakelin) to buy an established property in that area
3) Look at 10 to 20 houses in that suburb and buy one you like and that is within 10% of the median priceThis comes across as harsh, but really with very minimal effort you could get yourself a great investment rather than a dud.
Good luck.
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