Hi everyone
I posted to this forum for the first time last week, and now there is no stopping me
OK, my bank has given me the go ahead to buy another IP. I can spend up to $270,000.
I have found a property in an area that i feel is about to increase significantly in capital Growth. The property is a brick and tile 3 bedroom home in great condition on a 780sq block of land within a 10minute walk to the CBD and train station.
But, the alarm bells are ringing because it backs onto a major road. Apparently there is a sound barrier – but do these really block out the traffic noise ??
To rent this property I could expect to achieve around a 5% return and the vendor is happy to take a 12 month settlement period.
I could buy 2 2 bedrom units in a similar location (but not as close to the main road) for the same price as the house with a higher yield potential but not the 12 month settlement period.
What would you experts consider to be the better option ???? would any of you purchase a house backing onto a major road ???
Thanx heaps for your input
Debbie
If alarm bells are ringing then walk away. You need to be comfortable and sure.
You said ‘apparently’ there is a sound barrier, and ‘I could expect to achieve a 5% return’.
Is this property in an area where you can’t inspect it?
These statements are vague; you need to find out definitely that you can achieve the rent you expect and if there is a sound wall. Don’t go by the agent’s guess. Check out the actual rent returns for your type of property in the area by asking other agents and the rentals on r/e.com.au etc.
Can the block be sub-divided at that size?
Why is the settlement period so long? By not settling now you are missing out on the rent and the tax deductions that go with the property. It will probably be neg geared, so you would save on the loss but still get the cap growth of 1 year I suppose.
2 units with a better yield may still achieve good cap growth, and the risk of vacancy is spread – less likely to have both vacant at the same time.
There is still more research to be done for the area I think.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
sorry Mark
I was a little vauge.
There “is” a sound barrier at the back of the property.
The yield of 5% is the going rate, according to real estate.com.au and other agents that i have spoken to, for the area and the quailty and location of the house.
The block can be sub divided.
The vendor was happy to lease back for 12 months at a 5% yield – but i requested a 12 month settlement becasue this enables me to buy more property with the money that i have left after paying the 10% deposit.
It would have been negative geared at a loss to us. With the 12 month settlement I should get some capital growth and maybe a rent rise between now and then.
The properties in this area sell very quickly due to the location and land size. This has been confirmed by several agents i have spoken to.
This particular property has not hit the open market as yet.
Am I on the right track or should i be looking at the units do you think ??
I am still new to this game !!
your input is much appreciated
debbie
From my experience I have found some people don’t mind main roads and noise. Many times I’ve thought “what a bad place to build, so close to freeway or airport”. Then I’ve seen properties developed and sold for premium price. I saw this happen in Brisbane in Greenslopes 8 years ago with properties built right on the barrier. If in popular location I’d consider the house with sub-dividable land. I have a friend that lives in Perth in Guildford and every 20mins you hear a train or plain and she loves all the noise, feels like she’s part of the action. Plus the conveinience. Regards Linda
sorry again Marc
I have a brother named Mark with a k. Just habit I guess.
Thanks for your reply Linda.
I guess that after awhile you just wouldn’t hear it anymore – just get so used to it.
cheers
debbie
Hi, I’m living in a property exactly as described. The reasons I bought are:
1) It’s a wonderful suburb to live in
2) Properties take only 3 weeks to sell
3) My house cost half the price of those further up the hill, away from the railway track
4) My block is 1300m2 & sub-dividableI ‘m extremely ‘lucky’ to be correct in buying into a rising market. BTW, everyone said at the time (12 months ago) that house price could not go up anymore. If I sell now, I make up to $50000 after tax.
Be wary of the capital gain expectations though. My advice is to buy on CURRENT figures.
Good luck,
Kum YinOriginally posted by fingerscrossed:sorry Mark
I was a little vauge.
There “is” a sound barrier at the back of the property.
The yield of 5% is the going rate, according to real estate.com.au and other agents that i have spoken to, for the area and the quailty and location of the house.
The block can be sub divided.
The vendor was happy to lease back for 12 months at a 5% yield – but i requested a 12 month settlement becasue this enables me to buy more property with the money that i have left after paying the 10% deposit.
It would have been negative geared at a loss to us. With the 12 month settlement I should get some capital growth and maybe a rent rise between now and then.
The properties in this area sell very quickly due to the location and land size. This has been confirmed by several agents i have spoken to.
This particular property has not hit the open market as yet.
Am I on the right track or should i be looking at the units do you think ??
I am still new to this game !!
your input is much appreciated
debbie
It all sounds good; the fact that the block is sub-dividable, and you have 12 months settlement time to get some cap growth is the winner there.
I think those factors are more compelling than the units.
As you get more experience and confidence you won’t second guess yourself. One of the biggest barriers for people to overcome when beginning to invest is to have the courage of their convictions and pull the trigger. Go for it!
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
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