Hi All, I think this is a great forum and this is my first post. I have three questions for you all.
Firstly, what is the useful life of an apartment? When I scan the classifieds, I usually make a rough estimate of rental yields and the best value apartments seem cheap and are a little tired. If I manage to build a portfolio of cheaper investment properties, what will they be worth to me in 15 to 20 years when the mortgages are finally paid off?
Secondly, some of you cite rental yields that are surprisingly good, for example, $45,000 units renting for $100 per week. Is this realistic, what sort of areas are you investing in? Where does one find properties life this in WA?
And thirdly, a renovation question. Do bagged and painted brick walls add value to a property. I like bagged and painted walls but what about everyone else?
Thanks all,
Brendan
Firstly, when they are paid of in 20 years they will be worth at least double, and maybe 4 times what you paid (assuming you look after them), plus you will have received rent for each year, and – if you still work – you will have had great tax advantages also.
Personally I like bagged and painted as well, and an example in Ballina of an old unit block that had it done, and now each unit is worth a motza – if you can afford it, it works.
Good luck.Hi Brendan,
Thanks for your post and welcome to the forum. I’ll take a stab at trying to answer your questions.
Firstly, what is the useful life of an apartment?For tax purposes, you are generally allowed a income producing building writeoff of 2.5%. This suggests that the tax office expects the building will last 40 years.
Of course, a building will last a lot longer if the proper maintenance is carried out.
what will they be worth to me in 15 to 20 years when the mortgages are finally paid off?Nobody could tell you this accurately. What I would do to form an expectation though is to take the longest trend for median house price (units) and then apply it to your investing timeframe.
Is this realistic, what sort of areas are you investing in? Where does one find properties life this in WA?I don’t know if you can get similar returns in WA. But you’ll never know unless you go and look. I wouldn’t have believed that you could get a unit in Vic. for $45k either! But I did.
Do bagged and painted brick walls add value to a property.I don’t know the answer to this one. However, anything that adds visual appeal to a property will probably work. BUT as an investor, you need to identify what will provide the biggest bang for your renovating buck.
As such, if I planned to sell the property as someone’s home then maybe I’d do it. But if I was renovating a rental then I’d focus on painting inside and improving the kitchen and bathroom area.
I’ve found the essence to renovating success is to set a budget and then stick to it!
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve – I’d be interested as to where you can get a unit for around $45k. Was it in a growing area, or not, or were the circumstances of the vendor such that they had to sell urgently and cheap?
Looking at the web listings, there are heaps of properties for sale in the Latrobe Valley (esp Morwell) very cheaply.
With low population growth, they are unlikely to show much capital growth, and it might be a hard to get a tenant, but the cashflow should be excellent (assuming around $100pw rent).
What do people think about buying cheap property in a declining town, hoping that they’d get tenants, but making a good cashflow profit if they do?
Peter
Hi,
With low population growth, they are unlikely to show much capital growth, and it might be a hard to get a tenant, but the cashflow should be excellent (assuming around $100pw rent).Remember that I invest for +ve cashflow so I’m not so fussed about the cap. growth prospects.
The issue of the tenant is very valid though. I use a range of incentives to find and keep quality tenants, so I’m confident that I can find tenants in all markets using the philosophy of treating them like the assets they are.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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