Is this a good buy in Newport?

Wow Sarah 13k for the Buyers Agent’s fee that is ridiculous .

We charge less than half of that but would never put a client i to a deal like that.

The yield post reno isn’t that good so personally i would run a mile.

It all depends on what you are trying to achieve. I would be looking at what sort of portfolio your Buyers Agent has built up first .

Cheers

Yours in Finance

Hi Milliet

$13k is a ludicrous amount of money to be charged for the sourcing of what is essentially just a normal property.  If it were a fee for sourcing a development site that was expected to spill out a huge profit, perhaps it might be a different story.

If you are talking about Newport VIC, it is within a shortish distance of Melbourne CBD (and in train zone 1) and as such will always attract buyers and tenants.

That said, the property that you are proposing to buy will be negatively geared even after you renovate.  This is not awesome at all.  It is a million percent incorrect that this is the closest you will get to being neutrally geared.  A million percent incorrect.  I find properties every day of the week that are neutrally geared, and which you don't have to bother renovating (and in areas with strong growth and tenant demand).  Someone's taking you for a ride there.

Negative gearing means you make a loss.  Even after you do your tax return, you don't get a refund on the entire loss.  So it's still a loss. 

$400 per quarter seems a staggering amount for body corporate fees – even considering that it covers the building insurance.  Let's assume that the building insurance component is $800 (which is a lot for a unit), there's still $800 that you are paying the body corporate for "managing".  Is there communal lighting that is being paid for?  A gardener?  Or is the entire fee going to the Body Corporate to put in the big effort of renewing the building insurance every year?

You have to be careful of body corporates.  The BA should be watching out for problems on your behalf.  I saw a property the other day which the body corporate had underinsured by a disturbing amount.  This is a huge risk exposure for everyone involved.  Particularly when the remainder of the complex is owned by one person so you'd be just one owner with one vote towards body corporate decisions.  You'd have zero power towards getting the place suitably insured, or deciding who is the Body Corporate Manager.  Fees can escalate wildly out of control and there is virtually nothing you can do about it.  Needless to say I walked away from that property.  Shame, it was quite nice.

Negatively geared properties can hinder your property investing goals, making it much harder to demonstrate to a lender that you can support a mortgage on the next investment property.  Tread carefully, don't just blindly do what someone else tells you to do simply because you are paying them a fee.