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20 sqm is possible… my first place is 30m². Studio apartment, $165k, currently renting at $185 pw, furnished. There is another studio in the same building currently up for rent, asking $240pw (although it’s probably renovated, and has a car space). This is in Artarmon, (lower north shore, NSW).
Purchase price sounds about right, rental sounds a bit high – have you done a domain.com.au search or something to get some comparison rental prices?
It is hard to get finance for such a small place (as people have said, below the magic 50m²), you’ll need the full 20% deposit for starters, since no lender’s mortgage insurer will touch it.
Originally posted by eezy:Hi Bizibee,
Yes you are correct, my IP, with the figures i gave isn’t quite cf+, but because it is my first IP i had to have a 20% deposit. So with the small rejuv i will give it the figures will be loan of 104K receiving $250 per week rent. It works out (minus costs) to be cf+ by a small $10 a week, not much but i have to start somewhere. I guess i case could be made that to factor in the 26K deposit over the course of the loan it would be negatively geared ($15 a week or so) but i am hoping the capital growth and rent rises will negate that cost over 10 years. I hope to not have to fork out that sort of money for each deposit, and will be implementing the “leap frogging” strategy from now on.. I, like you, am finding it hard to find “true” cash flow properties in good growth areas, negative geared (by around 30 a week) unrenovated properties with potential to add value to increase rent seem to be my best option at the moment.
Sounds like Peter Spann’s technique – that’s the one I hope to use.
Bought my first property, settlement is next week. Artarmon (Lower North Shore, NSW), studio apartment, pool, gym, sauna, tennis court, spa. Cost 165k. Currently tenanted at 185/week. Will move in in a little under a year. Plan then would be to rejuvenate a bit cosmetically, then rent it out – should go for about 200 a week or maybe slightly more by then.
BTW, I’m 25, so starting a bit late, but have to start somewhere/sometime.
Cheers all!
EDIT: Another studio apartment in the same lot currently on the rental market for $215/week.
Originally posted by aumeow:can anyone show me something nice around sydney…. within 3 hours from sydney coz i really want to get motivated…(well at least know that it is possible to find a deal)
andy you said you find one in auburn for 90K??
thats CHEAP !!!
-aumeow
Yeah, you just need to do your homework! Like I said, I haven’t seen the place so it could be a complete hole, but I just did a search on Domain (www.domain.com.au) for places in Sydney under 150k (I think that’s what I did). Anyway, the list price has gone down to 85k now…
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2004625431
Web searching is probably a good place to start because it’s very time efficient, but I expect that there are more avenues that will get better deals that don’t make it to the web sites. I don’t know what these are though…
Good luck, it’s all about research!
Hi aumeow,
I’m just starting in Sydney.
Very difficult to find cashflow positive in Sydney. My current place was 165k (studio apartment) and currently renting for 185/week. This is good for Sydney market, although obviously it’s quite cash negative.
I did some digging and discovered a studio apartment for 90k in Auburn, similar units rent for 130 per week. Still short of the 11 second rule but may end up OK. I didn’t visit it or anything.
If you were pumped after reading Steve’s book, might I also suggest Wealth Magic by Peter Spann. His techniques are largely different, and his book covers more general aspects of wealth whereas Steve’s book is very specific. If only because it’s always good to hear a wide range of opinions.
I wouldn’t invest with others; firstly because I don’t want to be responsible to the others in the group, I don’t want to be confined by their risk adverseness or their foolhardiness. Furthermore I don’t want to sign over my investment to others, especially not professionals. People are really good at spending other people’s money!
I’d definitely encourage “networking” with other people interested in invesetment and stuff to hear different ideas and gain encouragement, however.
Good luck!
Originally posted by darls_666:Sorry another topic from me…
I am just trying to see if I am on right track with potential IPs in WA… No plans to buy at this stage – still doing research (heck I only started last nite!).
IP #1. – Wembley – One bedroom Unit “Investors bargain, etc” – Asking price – $115,000. Currently rented out at $110 pwk.
* From my own calculations – it is a negative cashflow property:
($115,000 divided by 1000) x 2.5 = $287.5 pwk therefore a loss of $117.5 pwk
Is this right??
So if using the 11 Sec Sol., it will calculate as a bad buy: the loss of $54, 885…
Right?
Now next one:
IP #2. – Norseman – 3 bedrooms fibro house – asking price – $45,000. Currently rented at $95pwk.
* From my own calculations it is a postive cashflow property:
($45,000 / 1000) x 2.5 = $112.5pwk
therefore a postive gain of $17.5 pwk…Is this correct?
If using 11 Sec Sol., it would come to the saving of $2, 500. ??
It is just an exercise for me to see if I can work it out ‘correctly’…
Cheers with thanks, darls
Hey Darls,
Remember that real estate agents are trying to sell the property. If they call it an “investor’s bargain” or a “great investment”, all it means is “we want to sell it” – ie, it doesn’t contain any information at all.
On the face of it the 2nd place seems like a damn good deal, especially in today’s market.
The 11s solution is only meant to be a very quick discriminator. It comes out at 10.4% if the weekly rental is double the price divided by 1000 because 10.4% = 2 * 52 / 1000. Hence the 10.4% – the 7% or whatever your interest rate is leaves you with a 3.4% difference to pay for insurance, council rates, property management fees etc.
To work out the cashflow properly, you’ll need to calculate the interest on the loan, plus all the outgoings like insurance, council rates etc.
Mr Allistair Graheme,
There are two kinds of doomsayers; rational ones who want the best for you and don’t want to see you get burnt (and will say things like “is it a good price”, “do you really think it’s a good buy” etc, and will eventually come up with “as long as you’ve done your research…) and ones who either don’t want you to succeed, most often because they don’t want to feel left out themselves, or for some irrational hatred of rich people.
I don’t bring up the topic with people generally, because:
1. I don’t want to get a negative reaction
2. I don’t want to be seen to be showing off, or trying to make myself feel superior to othersWhile few of my friends are seriously into investing (be it real estate, business or whatever), some have been really supportive with my first purchase (settlement in a few weeks, yay!) and my business. I guess I’m selective with whom I open up to, depending on whether I think they’ll be encouraging (and encouraged/inspired themselves) or not. I think that’s the key.
Remember that whether you like it or not, people’s attitudes and behaviours will rub off on you, no man is an island and all those other cliches. So make sure you restrict interactions with people so that they’ll be positive experiences. I’m not suggesting abandoning people who aren’t going to encourage you, just saying that you should steer clear of topics where you would feel let down by a lack of encouragement with those people.
Kind of long-winded, but I think you get the idea.
Originally posted by Pelicaninvestments:This is more an issue of ethics/morals….
If you don’t tell they won’t know……
BUT – Will that sit OK with you ???
To be frank it sounds like you don’t really need it, if you can afford to buy an IP in NZ….. but…. it’s your call…..
Cheers
You may know the cost of everything…. but what about the value ????
Fair point, you’re quesioning the adherence to the intent of the law, right? The conditions are quite specific about having owned residential property in Australia; not commercial property, and not properties outside Australia. Had they intended to, I’m sure they could have specified that applicants must not have owned any property anywhere.
Furthermore, in reference to “you don’t need it”, the grant is not means tested, so I don’t think that this comment is faithful to the spirit of the law. Again, OSR could have made it means tested if they wanted to.
Cheers
G’day.
Sorry, I’m new here, if I’m breaching any protocols please slap me on the wrists.
http://www.osr.nsw.gov.au/portal/page?_pageid=33,63391&_dad=portal&_schema=OSRPTLT
That’s a link to the OSR website. It only mentions properties bought in Australia, so you should be OK, I would have thought.
Cheers
