Forum Replies Created
hi muppet,
the census figures I’ve seen show different numbers. The 2001 figures I saw for Kawerau had 19.3% unemployment!!
I hadn’t seen the figure for empty dwellings, but when I spoke to the local PM they had no empty houses on there books and only a few vacant units.
Rod.
Welcome to the forum Lucy.
You are quite correct, there are risks involved with the <$40K properties (and there is usually a reason why they are that cheap). However, there are risks with all properties, just because lower priced ones have a different risk profile than higher priced ones doesn’t necessarily mean they are riskier overall (if you know what I mean).
You just need to be aware of all the risks and allow for them as much as possible.Rod.
I might as well put my views in.
Mangakino, pretty much what others have said. Seems to be high crime and unemployment. Also a lot of leasehold land which changes the sums a bit. There would certainly be some opportunities there but probably at a higher risk.
Kawerau, As muppet said it’s a one industry town with quite high unemployment. It is however within commuting distance of Whakatane. As with many of these towns there are good and bad streets. With the recent increase in prices in Whakatane apparently a few retirees have been selling up and moving to Kawerau.
Rental demand is quite high for 3 bedroom homes, not as good for units/townhouses. I don’t think you would have 8.5% empty houses at the moment.
Rod.
Hi mini,
I think the 17% was on the $120pw on westan’s original purchase price of $35K.
You are quite correct, the new purchaser is only getting 9.1%.
Rod.
Hi Bridgette,
You’ve been given some good advice here so far. I’d just like to back up what westan said. If you’re looking at the lower (<$35K) end of the market you really need to take some time to go over and have a look around to get the feel for the different towns. Some towns have a completely different feel when you’re actually on the ground walking around. The internet only gives part of the picture.
As mini said, unemployed need to live somewhere too. You just need a good property manager.
Good Luck,
Rod.
Crashy,
The 200 feet isn’t really a clue as feet is the unit of measurement for alititude used in aviation internationally.
You are right though, this has been around for a few years. By the way Qantas has had accidents, it’s just that they were a long time ago and they don’t ever mention them anymore.
Rod.
I pay 6% in QLD and 5% in Melbourne. In both cases the agents are managing 2 IPs which helped me negotiate a lower rate.
Rod.
Primary Place of Residence. (In other words – it’s where you live).
11pm to 5.30am (with a bit of catch up on the weekends (when the kids let me[
])).muppet, do really sleep 19 hours a day.[
]rod.
Hi mini,
you’re either extremely astute [
], or you’ve been peeking on the housemouse site to see who posted that comment.Rod.
Because property is about people.
Positive cashflow property is much more about the tenant (as that is where your cashflow comes from), whereas negatively geared property is more about the property (capital gains).
Rod.
Hi Marc,
I believe the Melbourne expo is October 17-19 at the Exhibition Centre (Jeff’s shed).
Rod.
That’s my understanding as well (48.5%). But as Terry pointed out the distribution does not have to be a physical payment – just a journal entry in the trust’s records.
Rod.
Hi Dannads,
Non cash deductions are deductions for expenses which you haven’t had to physically pay for in cash. The main quoted one is the 2.5% building allowance for property built since 1987. This means you can claim 2.5% of the original construction cost of the building each year over a 40year period. eg: if you buy a new $160K property and the value of the building (excluding chattels and land) is $100K you can claim a $2500 tax deduction for 40 years.
If you do a search you’ll find many references on the forum about this – search for posts on quantity surveyors.
Rod.
quote:
Remember that the difference between gearing and cashflow is that cashflow is profitability without considering tax deductions, and gearing is profitability taking into account tax deductionsCrashy, Ireckon you’ve got this the wrong way around.
Whether a property is positive or negatively geared is the situation before any tax deductions related are taken into account. ie if a the income from a property is greater than all the outgoings related to that property (interest, repairs, insurance, rates etc) then the property is positively geared. If it doesn’t then it’s negatively geared.
It is possible to turn a have positive overall cashflow with a negatively geared property if there is sufficient non cash deductions (eg depreciation allowance) which can be offset agains other income (usually from job). The problem is if the other income (job) stops then you lose the tax deductions and the cashflow can become negative again.
Rod.
Hi Erwin,
As I said in my first post the numbers are borderline for positive cashflow. Any excessive renovation costs could really destroy your return. Billfromoz is 100% right, you really need to know exactly what your costs are going to be before the auction. As a first IP in an area you’re not that familiar with I’d probably give it a miss.
Rod.
It really comes down to your own personality as to the level of direct involvement you want with the tenant. I don’t go out of my way to meet my tenants (some I’ve never met), but I certainly don’t avoid them either. Those I have met, usually when doing an inspection or some minor maintenance, don’t have my direct contact details. So if they want to contact me they need to go via the agent.
Rod.
Muppet’s right,
A good PM is a goldmine of information. If you can manage to talk to one when there isn’t a salesperson looking over their shoulder you should get the real facts. They should also be able to let you know what makes a difference. In some places a garage will make a difference to the ease of renting (and the weekly rent) in others it won’t. In some towns the renters want units in others they’ll want 3br houses. A good PM will tell you this.
Rod.
Lease Options.
What are you aiming to get out of this deal?
If you’re aiming for positive cashflow then it sounds like a borderline proposition. If the $70K is under the “real” value and/or you expect good capital growth then it may be a goer.
Rod.
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