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I am surprised to hear about this, since the conveyancer will usually confirm loan approval and ask for it in writing, before making the contact unconditional.
You are not worried about being cash flow negative?
I think outer east is still great value, for that money you can get a fantastic house and land.
Most investors buy unit/apart’s.
Most owner occupiers buy houses (70%).
Most people still prefer to rent houses, units are slow to rent were my properties are.
Infrastructure is also very good here.
I really like Croydon, also look at Ringwood for that price range.Thank you for all the responses, yes I agree Yarra, the perception is of something cosy and romantic. Also, city dwellers sometimes want to get away from it all and have some green around them.
Having a rental manager, even at that rate, sounds very much worthwhile, certainly worth the money.
I can’t see myself cleaning toilets and changing linen.
Steve, I often see hotel/motel units for sale,and it would be a great low cost housing option, although I believe there are some criteria that need to be satisfied, for permanent accomodation.
It would be similar to waht you did in the Latrobe Valley.Michael and Kaye you are fantastic and I agree with you.
Just imagine Margaret Lomas’ property was in a trust, which has no other income.
You could not use the depreciation and would be making a loss.
My properties are mostly neg geared at present, but I am out for cap gains in 6 to 12 months by subdividing the backyard.
Otherwise, I see absolutely no sense in Margaret Lomas’ approach.
Unfortunately the vast majority of properties in major cities are heavily reliant on depreciation/ neg. cash flow, and that’s what most of the so called property “investment”free seminars are flogging.
Cash flow positive property is flavour of the month and a new catch cry, so it’s now being flogged as cash flow +ve, if only due to the favourable depreciation schedule and heavy reliance on tax deductions.
Otherwise, a lot of so called fin advisors etc would be out of business, the whole invest. property scene has been buit up on this basis.Fantastic responses everyone, its so good to get a different perspective from your own, especially if you are in the first flush of enthusiasm on seing a potential investment property.
You don’t necessarily consider it in a particularly rational way.
I think the benefits to everyone of this sort of collective experience and appraisal are more than any r/e agent, fin advisor or book can give you.This could be an opportunity to strata title and do wraps if possible.
If I can afford to pay 700 p.w rent! why would I bother with this sort of deal, I’d be out there and buying myself.
It makes absolutely no sense.
It might make sense with the low priced units, where tenants can’t get standard bank loans.Hi Steve, aren’t you supposed to be on holidays?
Anyway I am the same, holidays or not, I still always look and browse, we can’t seem to get it oout of our system.
I believe Townsville/Mackay/Cairns are good growth areas.
Hope you’re enjoying the sun!
10degrees in Melbourne.Yes, funny you should mention the name.
I came across him at an Ed burton Seminar and I think he is a finance broker.
He asked a few questions and spoke up a couple of times at the seminar and appears reasonably intelligent.
I was going to try and apply for a loan from his company and see what gives.
Pleas let us know how it goes.Work friend of mine is now selling her ST Kilda Flatr, 4 weeks vacant so far, one other person I have heard has a flat in Elwood, no tenants for last 3 months.
Check rental vacancy factor, which is steadily rising.
Not much joy when you have to pay the mortgage.
It would probably be quite cash flow negative.Every time I read the financial review, red warning lights everywhere on property boom and bust oversupply and rising rental vacancies, especially city apartments and even serviced apartments.
There are a huge number of hotel beds in melb,, be especially careful of rental guarantees.
There is also warning of this spreading to suburbs around Melbourne.
I’ve heard of I flat being vacant 3 months in Elwood, and 4 weeks so far in St Kilda (friend at work).
What happens in other countries may not be mirrored here. In Spain, I believe apartment living is much more prevalent and the population larger.
So research it carefully.How do you know, that current cap gains will continue, since that is what you are relying on to make your pprofit.
I have done this before and came out even or minimal profit(it was not deliberate, it was meant to be our new home, but changed oour minds).
Do your sums, add stamp duty, r/e agent fees and guess waht the cap gain might be.
The biggest unknown is, if the present property boom will continueI was in Tassie only recently, lovely place but not much changed since my last visit about 15 years ago, growth? I don’t know.
Tasm. doesn’t have a lot of industry and seems to survive on tourism.
Also, when i saw some stats. on growth rate, it is very low, as opposed to say QLD.
So after consideration of all of the above, I decided to stay clear.
Its also really, really cold, I had to buy a coat!She is not cash flow +ve to my way, she only becomes cash flow +ve by the depreciation of fixtures/fittings/building.
To me cash flow +ve means cash above and beyond all expenses, not including depreciation, very hard to achieve in reality.
Clearly everyone is now jumping on the cash flow positive bandwagon.
how is she able to get finance on such a small unit?
Resale of anything of this sort is very difficult, as its pitched at the investors market.Great work!
first property is always exiting.
8% rental management does seem a lot!
Anyway, I don’t feel that exited about property buying any more, since I have now brought a few, I
Look at it from a business point of view and thats it.
By the way, all ypu need is landlords insurance, it pretty well covers everything to do with tenants but the building.
It costs me $220 p.a. per property, the rental manager can organise and deduct from rental.Hi, I’ll have to say I would be very hesistant to buy sight unseen, similarly buying interstate.
I just don’t know rental demand and markets.
Alot of little things can go wrong, at least we are local and have a measure of control over our properties.
we can do our own repairs and keep an eye on our assetts.
maybe its different with wraps.
Maybe I am old fashioned.
By the way, rental market very soft in the outer east! My manager has just told me, not many calls despite advertising etc.
I have one properety vacant at present.
I have had more calls by agents selling potential dual occ’s, but I think I will pause for the next little while and concentrate on my current properties and developement etc.Rental managers, I use for all properties are very good at chasing up late rents, since their commission is involved.
I had two tenants always late, one eventually did a runner, the other one we finally evicted (gambling problem).
He was sent an unpaid gas bill of over $1000.
The bank never waits for its mortgage!
Don’t give them too long!
You have abusiness to run and persistent late payment are a bad sign that the tenant is financially in trouble and or not reliable.Difficiult to finance, very difficult to sell.
Make sure you are not liable for replac. of furniture/fittings.You could also pretend you are looking for a 3 bedr. house in the area and what is available at what rental.
in my invest. area, Melb. outer east, my rental managers tell me that 2 bedr.units don’t rent easily, there is rather a large supply available.I strongly recommend every one reads the weekend FIN.
A fascinating article about how much investment property dollars are misplaced into 600,000 square boxes at the top end of the market, eg docklands and other high rises, asking for 600 rent per week.
Guess which market will be the first to drop?
The bottom end of the market has a huge demand.
There is a very large part of our population that will never be able to afford to buy, its a real social dilema and it is that end of the market we should be focusing on as well.
In other words, low cost, comfortable, affordable and to us cashflow positive housing.
