contract will be signed tomorrow!! im so excited as this is only our 2nd IP … our first intentional IP!! our other place used to be our PPOR. i thought i would share this with you peeps cos ive learnt SO much here and u helped me make an informed decision. this is only our second IP – our first one is a 2 bed unit we owe $85k on, that is worth $280-ish. so we are redrawing the deposit to purchase this new IP.
so here is the new one. it is on a big 850m2 block of land only 3 blocks to mackay CBD. its a corner block that is fully fenced (although we will be replacing the fence for a higher one to give more privacy). two year old kitchen, bathroom and toilet. tongue in groove walls. 3 large airconed bedrooms, plus a study. two sunrooms – one at the front and one at the back.
the listed price was $330k, but we scooped it up at $260k. they musta been desperate to sell
it was rented for $300 a week but the owners didnt renew the lease cos they were going to sell and wanted to have it vacant for the sale. so its got positive cashflow even without renos. im glad its vacant though because we can fix the fence and freshen it up with a repaint and rent it out at above $300 a week once we are done.here are the only pics i have off the net.
Im excited to find out what the valuation is once I get that organised for later this week. Im confidant itll come out higher than the price paid, but u never know!
anyways, just thought i would share
Hi Karen, good for you! Looks like a great buy and the numbers are pleasant. What sort of fence are you thinking about? Does it need one. Do the prospective tenants need the privacy? Just few thoughts. Well done…..
sorry i shoulda specified this before. im wanting a 6 foot wooden picket fence, or something that provides the same blockage. its just that the 'backyard' is more beside the house than behind. and my target market is families. i wouldnt want my kids playing beside the house in plain site of the passers by … and i expect other families are the same. its very close to town and is joined onto a busy street. a higher fence is more protection for the children when the play. hide them from people who dont have the best intentions.
Hi Karen
Yep sounds like a good buy.
Just dont be too disappointed if your financiers valuer doesnt put more than the purchase price on the property as this is rare even with a good buy.
Also just for reference make sure the loans arent cross collateralised another pet hate of mine.
Richard Taylor | Australia's leading private lender
yeah richard i remember that about CC loans
I remember your comments when I discussed it lasttime and cos of ur advice plus also independant research i have stipulated not to CC my loans. spoke to the lady from CUA today and asked her specifically that if i withdraw $60k the money from the equity in my other IP, and then use that money to fund my 20% deposit (yay no LMI) and fees for the new IP, would they be CC? and she said no. and even after ive have withdrawn that money, i still have another $40k im allowed to withdraw that i havent touched yet. I plan on using that money plus some savings to purchase another IP in 2010 when some of the first home buyers who are now unemployed and cant afford higher interest rates sell up.
i love that i am able to purchase this current one without forking out any of my cash reserves. I was silly enough to be paying off the principle of the unit … but i guess now its paying off seeing as i can redraw it.
Well done Karen! Thanks for sharing your success and the pics with us. I hope all your plans go well.
Carlin
G,Day Karen
Glad your excited – you should be too I have actually been for an inspection through this house and for $260000 you got it for a steal. Median rent for the march Quarter ( http://www.rta.qld.gov.au) for a three bedroom home in Mackay is $380 a week, I rent out a two bedroom house in Bucasia for $300 a week ( not a new place either) – I't would be safe to say that you could rent this place for at least $350 a week.
Well Done
want to know the even better news??
i had to drive 2 hours yesterday to see the house because i made an offer without seeing it – planning on seeing it if they wanted to go that low. anyways, when i went there the bathroom is definitely not "renovated in the last few years" as the description said. i would estimate it was at least 10 years old – but was still in good condition. it doesnt need replacing. but it definitely looks older.
so cos it wasnt what i expect i said that i wanted to change my offer – seeing it wasnt what was described in the real estate ad. and they accepted!! i knocked them down ANOTHER 10 thousand dollars
im now paying $250k for a 3 bedroom, 2 sunroom and 1 office house. so its all done now. contract is through. so just gotta wait for building and pest reports.
now that ive seen it i know that the only renovations im going to do are:
- new lino in the front sunroom needs to be replaced
- the glass side of the shower screen needs to be replaced cos its got a crack
- new paint through the house – the current colour is aqua blue – gross
- the grass is hip height so i need a prof mower to come through with something more powerful than my mower – inexpensive
- the house needs a HEAP of elbow grease cos they didnt clean at all. even mould on every ceiling
- maybe new front door, but i may get away with just a repaint
- a few missing panels on the front fence (i discovered it already has a 6 foot high fence along the side where the yard is … its only short in front of the house – yay!)
- a few new light fittings and 1 new fan
but that is it. so shouldnt set me back too much. the things i was pleasantly surprised about:
- floorboards are perfect, no need to repolish
- windows are all good, not the original ones
- split systems in all 3 bedrooms, plus 1 box aircon in the back sunroom
- the office is surprisingly adequate – i thought itd be the size of a cupboard
- the roof looks perfect
- the guttering only has 1 small section that needs to be replaced. its about 50cms long.
- one of my mother's close friends lives across the road so she can keep and eye on the house for me while tenanted
I cant wait to get the inspections back. i went and saw my financial planner yesterday for a meeting and his jaw dropped when we were talking about the house. he was impressed
here are a couple more pics. would u keep these french doors? obviously they will be repainted when the other stuff gets repainted. and i would put on new knobs.
Thats great news Karen.
I just picked up a house today for $85K through a very good agent friend of mine in mid Qld which was originally on the market for $155K and is rented at $215 / week. Contracts all accepted with 90 day settlement so bringing it into next Tax year.
Not bad cash acqusition for the SMSF.
The bargains are starting to come back if you dig deep enough.
Richard Taylor | Australia's leading private lender
wow richard – nice buy! is there a reason why u are not setting till the next financial year? is there some kind of tax benefit? i ask because our settlement is on May 28th … so is significantly shorter than yours. am curious.
ive got itchy feet now! i cant wait to get my feet dirty with this small reno.
Yes it is a Call Option contract with the execution date being 1st July 2009.
Settlement can be 30 days later.
Capital Gains Tax is based on the Contract date not settlement date and I dont want it assessed in this financial year.
Richard Taylor | Australia's leading private lender
Hey Karen,
Have to admit hearing your story has inspired me to look at my finances now and see if I am in a position to purchase my 2nd IP. I was initially going to wait till the end of the year but stories like this help to motivate me and push me that little bit further.
Rudra
i have to admit richard – i had to google what a "call option contract" was … i seem to learn something new every day when it comes to purchasing
rudra – we've been making tonnes of offers on heaps of properties we saw potential in. but if they didnt come down to the price we were asking we just kept walking away. so it took alot of offers to find the kind of vendor we were looking for … a desperate one! so it was a fair bit of work but it was worth it.
we are hoping to have made enough savings through cashflow and enough equity through renos (with both our props) to maybe purchase again at the end of the year. along with u, i also think that would be a good time to buy.
but ive seen heaps of people say u can buy now, but u just gotta work harder and fiercer.
Richard, what interest rate did you or will you lock this property in at.
Hey Karen,
Thanks to your story, it got me into gear and really hunting around for properties in my area. I've scoured lots of pages on realestate.com.au as well as going down to real estate agents. I've narrowed it down to about 15 properties and tomorrow I'm calling all the agents to ask to view the property and put a bid in if necessary. I've prepared myself for sellers to turn our offers down but will happily walk away and find something else till someone accepts. It's great hearing stories like yours and hopefully I'll be posting soon about a newly purchased investment property that I've purchased.
Rudra
good luck rudra. sometimes its hard to walk away when they want to negotiate above your comfort level, but keep emotions out of it and think with a level mind. that was one of the best bits of advice ive been given over the last couple of months.
we only wanted to buy now if we got a ridiculous bargain from a vendor who was willing to sell way below market value. so we kept making ridiculous offers until we found a vendor in a position that was favourable to us. we put forward ALOT of offers – i cant remember how many. we were thinking that it may take us till the end of the year to get the kind of deal that we wanted.
nearly every house we looked at was $330k-ish … because that is the price of the 3 bedder older houses here at the moment. and for each of them (depending on what needed to be done) we offered around $250k-ish and didnt negotiate. u can see why we got alot of knockbacks.at least this way we can look at getting another one in 6 months hopefully. refinance this loan and see if we can scrape together enough for another 20% deposit on another deal.
let us know how u go with your offers this week.
keiko
I paid cash for it in my SMSF as the loan amount is too small to make it viable to borrow in Superanuation.
Richard Taylor | Australia's leading private lender
What a rollercoaster!!! Our contract finally went unconditional today
we've been told that in the condition it is in currently itll rent for $330 a week. They said after our renovations get completed itll rent for around $350 a week. yay! Our reno budget is small ($10k) as we are leaving the $11k restump for next year when its tax deductable. The renos will take approx a week so we have requested early access before settlement. The rental market here is pretty tight so im REALLY hoping I am able to get a tenant in within a week after settlement (as long as we get the early access).
something is finally happening!! yay! now to await the responce to the request for early access …..
Hi, Karen
Congratulation. A true morale booster for many aspirational investors like myself. A truly amazing purchase.
Regards
Daniel Lee
it was rented for $300 a week but the owners didnt renew the lease cos they were going to sell and wanted to have it vacant for the sale. so its got positive cashflow even without renos. im glad its vacant though because we can fix the fence and freshen it up with a repaint and rent it out at above $300 a week once we are done.
and cos of ur advice plus also independant research i have stipulated not to CC my loans. spoke to the lady from CUA today and asked her specifically that if i withdraw $60k the money from the equity in my other IP, and then use that money to fund my 20% deposit (yay no LMI) and fees for the new IP, would they be CC? and she said no. 
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