Hey guys been looking at getting into the property market (first home buyer) what do you think of this as a first investment property?
Hi Alchemisst, I checked out your link,
I would say a no way, I think you will have major problems financing a hotel room
the future growth will be limited if at all..
Im skeptical of any rental guarantee what if the management company goes bust ? wheres your guarantee then ?
is this hotel room freehold/strata titled ??? i get the feeling its just lease hold
I think most of the people on this forum will agree
I hope I didnt rain on your parade
Thanks for the reply. Its leasehold, this is what the agent sent me:
Hi Alex,
Thank you for your inquiry on my property in the Tower Mill building at 239 Wickham Tce.
I currently have two apartments for sale in the building.
Apartment 208/239 Wickham Tce
· Returning $5344.00p/a paid quarterly
· Body Corporate $1234.16p/a
· Rates Paid by the Hotel
Apartment 604/239 Wickham Tce
· Returning $5872p/a paid quarterly
· Body Corporate $1234.16p/a
· Rates paid by the Hotel
The apartments are sold with a registered lease (on title) through Metro Hotel Group, this is a 5 year reoccurring lease. The return is reassessed on the last 4 years of each lease period.
As long as the hotel occupies the Tower Mill the property must remain under their management.
The lease in place stipulates that the Hotel must insure the property, and also expend to maintain the property.
Both apartments come fully furnished and are approx 20m2 in size.
Both vendors are very keen to sell and I have been instructed to present all offers to them.
I have attached a copy of lease agreement terms for your perusal, please let me know if you would like to arrange a time to inspect.
You have a couple of good points, maybe that's why they're so cheap. its hard to find anything at all around the 100k mark though, what do you mean there would be major problems financing?
Regards,
Alex.
Major meaning it cant be financed using the property as security.
Sure if you owned a property and have a $100K line of credit and wanted to throw your money away then go for your life but you wont find any traditional lender finance such a security in the current climate.
As tenburner mentioned run for the hills.
Richard Taylor | Australia's leading private lender
Thanks for the heads up guys. What should I be looking for? I can't find anything where the rent would cover the repayments..
Regards,
Alex.
Hi Alchemisst,
the best cashflow idea I have come across lately is to buy a house with a self contained grannyflat fence it off from the house and rent the house and grannyflat out seperately…
A mate of mine is doing it its his niche, he buys places in west sydney, house with grannyflat for $300-330k does a quick
$15-20k reno if needed, rents the house for $300p/w then rents the grannyflat for $170p/w its cash pos from the get go
he has done 4 of these in the last yr..all the best
Cheers, sounds like a good idea, would be out of my price range though. I'd like to get a unit to rent out, one that I'd be able to live in later on possibly.
Regards,
Alex.
Alex, those returns are also woeful for an outlay of $100k. I bought a house in a good size regional town for $80K and rent it for $145/ week. Another property in a larger rural town bought for $120k rents for $175 per week. Perhaps you need to decide what your aim is, are you wanting an IP or something that may become your own PPOR, the criteria for each is usually quite different. Also are you sure of your budget. Remember to factor in what you would reasonably expect to recieve in rent when working out repayments as well structurign the loan properly, ie interest only.
cheers
Sonya
Thanks for the advice, where about did you buy those properties and was it recent? Primarily I'm looking for an investment property I guess but it'd be a bonus if it was something that could become my PPOR later on. Interest only? Not sure about this I'd never get the place paid off that way?
Regards,
Alex.
Hey all,
I'm with running away with all of the others on this. I forund one in Wellington (near Orange miles from anything for uner 100k but the rent is $110 p week needs some work probably rent for more then. Hey Sonya had much luck in Vic? My one is ok but haven't found any since then. Where have you bought in NSW, Hunter Valley?
Good luck Alex maybe you can find someone who will go halves with you to top you up to 200k then maybe you will have a fighting chance. 20m2, So it is the size of a double bed that's it.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Mehello Alchemisst,
This type of property can be a GREAT investment should some of the questions asked (above) and by you prove positive/ in your favour.
You should treat this property as a commercial NOT residential. Hence its suitability should be weighed with such factors/criteria. Meaning you CAN NOT use residential capital performance figures to assess this investment.
Commercial properties have different performance measures different and lending criteria.
AA
i think I would be able to borrow around 250k, but the problem I have is most properties in this range the repayments greatly outweigh the rent received so I'd still be paying hefty repayments on the properties, and then there's the chance that they could go untenanted for a time, then I'd be really struggling especially if I wasn't working then I'd be totally screwed.. so I'm trying to stay within the under 150k range and hopefully something with relatively high tenancy and one where the rent would cover or just about cover the repayments. I'd also prefer a unit. Hard to find I know. Any tips??
Regards,
Alex.
Before ruling anything out / in sit down with someone who knows dollars. Have a look on this website to see someone in your area who you can sit down with for 2-3 hours. Make a well informed decision by getting some real education, I noticed several comments at the start of this blog started to direct you that way but the topic went in a different direction. When you are talking about paying your property off I am concerned? Always use I/O , take tax deductions, utilise depreciation and implement other little tricks, and you could be walking away with an investment property for the cost of a case / slab of beer. Not the imported stuff either.
Hi DWolfe, there are a couple of properties that I am looking at in Victoria. My best performing properties are in Gunnedah. My first was purchased two years ago and the most recent settled last month. Bought for $185K and rents for $230 per week.
Alchemist, have some look at posts by experienced investors such as Richard who is also a mortgage broker for the reasoning behind using interest only loans. It makes a lot of sense if you are buying investment properties.
cheers
Sonya
Alchemist,
Your circumstances will always be a little different to the the common response, so get personal advice so you do not cost yourself big $$$, I agree with Sonya. If you live in Qld organise a sitting with someone who has made $$$ such as Richard -They are more then willing to give their time otherwise they would not be writing all day and night on this website. Most guys / gals that write on this site are retired and will give you a formal meeting for (2-3hrs for nil cost) to discuss the pros and cons. Just ask them directly for help.G’Day All,
I am a newbie, I have just finished the book 0 – 130 properties. I just need to confirm my own thinking. I own a property in Townsville, bought in late 2003 and lived in as primary residence (defence family move every 2 yrs). Current conservative value of $350k I owe $120k, with gov paying $120 of the interest for me a month. The property is currently rented at $330 a week. My thoughts are before I embark on my real estate empire is to use equity to renovate (approx $30k) so I can increase rent and value of property and push me into +CF territory as at the moment as the property costs approx $5000 a year (maybe I have set aside to much for maint, managers and all other costs). I already have a guaranteed passive income of $55k (CPI indexed). I would like to increase this substantively so my wife can retire and we can maintain our same standard of living (medical issues life is short, need to enjoy life a lot more before I no longer can). As I already have this passive income this will be my full time job / hobby. I would just like opinions on wether to focus on this current property first whilst I learn the ins and outs of full time property investment and forming our own family property business.
THank you all forumites for your wisdom
GavrossNot sure about this interest only? You'd be stuck owing the same amount for ever?
yes, but if you have bought well the value of your property will increase and the rental income will also increase so in ten years time the loan amount becomes a much smaller percentage of the original purchase price. the equity allows you to buy another property or two. my strategy is to buy and hold, never sell, when I am happy with the number of properties that i have in my portfolio then I will begin to pay down the loans on my various properties using the increased rental payments. in the meantime the extra income that i receive from my properties go into the offset account that i have linked to the loan on my PPOR. reducing the interest payments significantly.
Alchemist,
Thats right, Look at the Asset value as opposed to the debt. ASSET INCREASES, DEBT REMAINS. (I/O will increase the available $$$ for the next property, AGAIN ASSET INCREASES ON THE SECOND PROPERTY ETC, Your wealth is correlated to the value of your ASSETS and your CASHFLOW. The tricks are around increasing your cashflow to service more debt, where the debt is the foundation to increasing the amount your assets.
Why pay down the debt when you can purchase further properties? Why would you indulge in the activities that make nil $$$ after you have started so well.
Starting to like this interest only idea, definitely opens my options up whereas I basically had none before lol.
What do you think of these ones?
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