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Hey guys and gals,
I thought i’d post a quick update on the decision my wife and I ended up making and the subsequent results.
Basically we decided to go down the corporate letting pathway which required for us to have our apartment fully furnished. We just got off the phone with the property manager and she has lined up a tenant who wants a 6 month lease with the option of a further 12 months after that and is willing to pay $500 per week for the privledge.
This also includes a weekly clean by a cleaning subcontractor to ensure the place remains in good condition. My wife and I are extremely happy with the result as it makes the apartment almost neutral (slight +ve but only just once all the costs are truely added not to mention the outlay for the furniture). But it’s a decent start and a hell of lot better than if we were doing a normal rental (ie $320 per week).
Thanks for the advice.[cap]
Originally posted by Dazzling:Have a crack at it.
Hi Dazzling,
Thankyou for your great reply and the time it took to type it.
I’m definetly leaning towards the way you did things as opposed to the “bunny hop” approach. I can see the upside to both methods it’s just that i think the properties we have purchased (the unit with water views and right in the CBD and the house 5 mins from the University and only 2 years old) will provide decent capital gains in the future that are too good to pass up. The last thing i want to do is look back and see my unit selling for 700k and kicking myself for selling it.
The high risk/reward vs perceived lower risk/reward is the exact discussion i have been having with my beautiful wife. She is more conservative and wants to go the standard tenant route where as i’m leaning towards the corporate letting option. Adding 7k to the loan amount will mean diddly swat if we can get an extra 150 per week rent. The corporate rate does also cost an extra $30 per week to have the whole thing (linen included) cleaned professionally so that will also have to be taken into consideration.
I say we are young enough and don’t have any children to take a few risks now, it could pay off big time in the future. Try telling her that! [biggrin]
Shake: yeah thanks for that, there is definetly more information to consider. I too am curious how the standard (in QLD) real estate agency gets the first weeks rent rule applys with this type of property. If the property is being leased by a new tenant every 2-3 months then that would seriously eat into the returns. I’m meeting with the head of their corporate letting department at the unit on thursday so that’s one of the (many) questions i’ll be putting to her.
Hi Rhys,
Thanks for the input. I guess the main reason why we didn’t want to sell the apartment is that we will probably have to move to Cairns in 2 years time so the PPoR we are purchasing will only be so for a short period of time. Our plan was to rent the house out then buy another house in Cairns when we move there Therefore owning two IP’s before we are 30).
I guess another options is to sell the apartment (sans CCG), move into the house for 2 years then sell that (once again with no CGT) then use those (hopefully decent) capital gains to buy a nice house in Cairns.
So many options.
Jonesy
Kim and Megan
Thanks for the prompt (and great advice) as you both make very good points.
Kim: Finding out how risky option two is kind of hard to do. Apparently occupancy rates for rental property in Townsville are very high at the moment (i have been told 95% by two different PM’s but take that with a grain of salt). I guess in the back of mind is that if i can get 450 per week and only rent it for 40 weeks of the year (18000) i’m still better off than if i rent it for a full 12 months at $320 (16640). The property management fees are the same for either option and there is more depreciation to be claimed on the 450 option. There is more risk however because it could sit vacant in which case we may have spent more money for less return.
The other option you mentioned is tempting but the real estate agents have told us that things are slowing down a bit at the moment and we’d be more likely to get 275-280K for the apartment valued at 300K. I guess we’d prefer to hang onto it for the time being.
Megan: The type of rental i was talking about is corporate letting. From what i’m told basically large companies (such as the mines or accountancy firms) offer them as part of a package to attract people to join/stay with their organisation. There was a unit in our building (3bed,2bth) that was recently signed up for 12 months at $500 per week.Ours is 2bed,2bth so we may get a little less but the returns are their if it’s leased.
decisions, decisions. [blink]
