How can I buy these 12% return $400k+ equity

Here are my thoughts:

If I found a deal I thought was unmissable, I don't think I would post the link on open forum in case anyone pinched it (wink).

Firstly, I would double check with the agent that is currently managing the leases what the actual rental returns are (and would request to see this in writing through my solicitor), and also compare it to the asking price of rents on similar properties in the area.

I would also speak to Moree council about whether in fact this site can be strata titled, and if so, whether there is anything obvious they see that you would have to do.  Some examples might be "we would demand you create a large concreted area for visitor parking" or "we would demand you upgrade the sewer pipe both on the property and on the crown land in front of the property"…… etc.  I would also speak to a Surveyor that works the Moree area to understand the likely costs of the strata titling. 

I would then look at the historical figures of how long properties take to sell in Moree.  Such figures are in the rear pages of the Australian Property Investor Magazine.  If your strategy is subdivide and offload, you need to have a solid understanding of how long the strata titling will take, how long each unit will take to sell, how much these processes cost, how much the holding costs (eg bank interest, insurance) will be while you wait for all this to happen, and the relevant capital gains taxes (it would probably be unwise to sell all of them in the one financial year).

An agent will of course tell you this is an amazing deal and you can make $x.  But assume he is telling you nonsense and check these figures yourself.

Anyway.  It does beg the question; if there is such a large amount of cash up for grabs, why is the current owner not doing it him/herself?  Or indeed, why hasn't the agent snaffled the deal for himself?

As for who would finance it, don't know.  But 12 units on one title will be considered commercial finance.

You arent the first person to stumble across these delightful Moree properties. I was aware of them when they first tumbled onto the market several months ago.

Do your homework on them. And then you'll realise that the risks vs returns scenario is a lot more risks than returns.

The excuse used by the landlord is he evacuated the property for serious upgrading. Now as a landlord the only time I would be doing that is for a total renewal. Otherwise its to be done gradually because you remain reliant on the income.

The property may be a gem. But from having contacted the agent on them .. be wary. All is not as it seems.

If you get your numbers wrong on a property that you've forked out a million bucks for in a regional area, it has the potential to bite you on the backside big time.  Sounds like it's been on the market a while… there is probably a reason.  Do your homework and be super sure of everything, and be super sure of the impact to you if a couple of tenants suddenly stopped paying rent, or vacated and you couldn't re-tenant it straight away, or if interest rates went up a bit, or if the water company hiked the rates up… etc etc

Location and security type alone will push this loan type into the Commercial side of things.

The rate for commercial will range from 7.8%- 10.5% +
SO your NET return is much much lower because of this Commercial rate…

Also the LVR would be def under 65%…more like 50% i would say for a 18×2 in Moore.

Hence why it’s still on the market

If you have the deposit may be worth looking into.

Regards
Michael