Hello
I’m about to make an offer on my first investment property. To be obtain the first home owners grant would normally not be possible (legally anyway) – but this property has a 12 month rental agreement. Can anyone tell me whether i would be able to still get the grant if i had the intention to move in in 12 months?
I’m confident this property is a good investment, but i may just post some numbers to get further opinion.
2 bedroom unit (built in 95)
very neat, no evident problems at all
<10 minutes to city
near shops, transport etc
asking 60-65
offering $59,500
with <$1000 deposit
current tentants pay $135 weeklythe 11 second solution results at $67,500… so it all adds up quite nicely – i think anyway!
Thanks in Advance
Josh
Hi Josh,
Thanks for your post [
] and congrats on your potential purchase.Re: your question about the FHOG. I have cut and paste the following text from the State Revenue Office web site…
quote:
ARE YOU ELIGIBLE?
To be eligible to receive the grant, an applicant and the applicant’s partner must meet certain eligibility criteria.
An applicant or the applicant’s partner must
*be a natural person (not a company);
*be an Australian citizen or a permanent resident;
*not have owned a home before in Australia;
*occupy the home as their principal place of residence within 12 months; (emphasis added)
*not have received the FHOG before; and
*not have entered into a contract to purchase or build a home before 1 July 2000, or not commenced construction as an owner builder prior to that date.On this basis I’d imagine that so long as you had the intention of living in the property within 12 months then you’d be OK. Perhaps be careful to only sign a lease with the tenant for less than 12 months from the date of purchase, otherwise it could be construed that you didn’t have the intention of living in it… otherwise why would you have rented it out for >12 months?
As for your property… seems like a good starter property to learn the ropes with. Just be careful on the body corporate fees.
Regards,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
There is 11 months remaining on the lease and no body corporate… so that is positive. Have also spoken to a few people today and they are of the opinion that i shouldn’t have a problem.
Steve, thanks very much for your response, much appreciated.
If anyone is interested there are often properties like this coming up in Tasmania. Just had another agent call me with a similar unit (quite new and very low maintenance) priced between 45 – 55 (was told he was in a hurry to sell, therefore 45k is likely). It rents for $115 a week.
I would consider helping people from the mainland find properties in the state. Am interested in gauging responses to this.
Josh, very interested in your proposal. Are you looking at some kind of commission structure to assist in this particular deal?
Normally I wouldn’t be looking at Tasmania due to the fact that people are actually moving away. But then again, a desperate seller wanting to sell at $45k a property that rents at $115 p/w, it’d pay itself off in no time. Would appreciate more details. Thanx!
Cheers
WeiHi Josh
Just returned from Tassie -looking at small blocks of units. Figures looked good but vacancy high therefore what looked like a good deal did not really stack up with 25% vacancy factor.
Could I run the numbers of your suggested deal:
Buy for $60K
Rent at $135 pw = $7020 p.a.
Mortgage of say $50K with repayments at 7.5% = $3750 p.a.
Agents com. in Tassie seems to be about 9-1/2% so say $650 p.a.
Rates and taxes, water etc. – unknown but say $1k p.a.
BodyCorp if any – unknown.Income Outgoings
Rent 7020 mortgage 3750
agents com. 650
rates, etc. 1000
repairs etc. 500Total income 7020 Total out. 5900
Therefore total income for one year is only $1-1500 p.a. and I have not yet allowed for stamp duty, legals and holding costs. Also how much are these types of property going to appreciate over time. I know the percentage return on cash on cash down may seem attractive, but is the “real” small return worth the exercise! Going forward you will have tenancy change over and agency lease fees.
May be Steve can help me clarify the figures ’cause every time I look at the cheap end of the market the real returns for the effort involved dont seem to stack up unless I am buying a house to reno and add value. Now if you pay it off over time and the rent says the same I guess you are deriving about a 9% net return but your money is tied up in an asset with limited growth.
Steve, have I missed something in these numbers, ’cause I see great deals all the time but when the numbers are crunched the “cheapies” potentially tie up too much of your investing dollar with limited growth opportunity.
Peta
Peta, thanks for your comments… i appreciate it, this is my first property and it is good to consider things from all angles.
I have attempted to reply to most things you noted.High vacancy? at the moment there is a real shortage of rental properties in Tasmania. It is becoming a bit of an epidemic. I can only guess you were looking outside of the greater Hobart area. Hobart is a solid place to invest with an ever increasing number moving to the southern part of the state. The population decline is evident in the north and other less populated centres – Hobart is in fact growing and will continue to do so with current investments and future tourism boom with the 2 new ferries.
Ok enough about that. The unit i made an offer on is still, in my view, a solid investment. but i’d appreciate further comment.
as for the numbers:
body corp $0
rates fees tax etc $900 per annum
agent fees $0 (even the agent told me not to bother becasue the tenants direct deposit and still a newish unit)but you are right after all expenses i will have around $1000. is this worth the effort? yes i think so. immediately upon purchase i get access to equity (the place is valed at $65+) which i can use to secure a second property (hopefully the unit i mentioned in my last post).
It seems to me that to properties over 60k become very difficult to positively gear. I do not expect this unit to increase significantly in value, but i do expect it will pay it self off without me having to contribute a cent.
Wei..
as for my proposal, i was thinking as i was typing. Seems to be alot of opportunity here, especially for wraps. I have attained a few good contacts and would be willing to look into a few deals if people wish. “commission structure” – i’m sure something could be worked out.Hope you’re all having a good week
Josh
] and congrats on your potential purchase.
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