Hi again
2 properties.
1….House & Land package on the Bellarine Peninsular. 32 Sq home $425,000. Builder rent back as a display for 1 year paying $21,250. “$425,000 purchase price-$21,250pa rent = $403,750 actual cost in 12 months and the value will be $460,000+ = $56,250” so the builder said. We will have cost of the loan also. OR
2….3 Bedroom Townhouse in the South Eastern Suburb of Melbourne. $272,000. No rent guarenteed.
Which one should I look into more? Or…should I just walk away from both?
Please….thank you……
I wouldn’t touch the display home. Rent guarentee is just a mask. They normally inflate the price to cover the rent guarentee. Also check for special conditions attached to the guarentee. They wont loose but you may. These guys are pros you are dealing with. After year 1 you may own a property that wont rent for what they have covered you in the first year. So many unknowns.
The other I would consider if it was near new, otherwise for the price well I wouldn’t touch it either.
If this is your first investment, I would look for brand new 2 bed with ensuite and courtyard or balcony. This is where the market is at for rentals. Aim for somthing under $250K.
You be the judge though I suggest you do some property market research. If you are bold, head to brisbane if you can get you head around having a property in another state.
Always get a independant professional property valuation on your first investment, until you know who you are dealing with. [8]
hwd007
Thanks for the prompt post. Yes it is our first and there is a lot of uncertainty with the first one. The second is Off The Plan in Noble Park. Would you still consider that? I noticed that another brand new townhouse in the same suburb is going for $239,000 and I did think the price of $272,000 was a little high.
Won’t mind rental property in another state. Would be a good excuse to go for a holiday…[
][]Gavalynn, there is so much to consider beyond price alone and that simplistic dare I say 11 second rule. The area for one, against the price of the brand new property. I mean you don’t build a 1 million dollar home in noble park and try to rent it out at $1000 per week. I mean anyone who can afford that rent would not want to live in Noble Park. Thats just an example on one of many things to consider. $239K sounds the best option on the face of it. But again you would need to do alot more research and get more info on the property itself. You see $239K for that area and the affordability of the tenants in that area sounds about right, for a first time investment. Does it have ensuite ? or courtyard or balcony?
I would get more detail on this one. then get back to the forum on it. If you serious, put down a small deposit conditional to accurate market valuation, then get it valued independantly by a professional valuer. this can cost between $200 and $500 but well worth it for a first timer. This will normally include a rental appraisal. Also get an apraisal from the estate agent in the area.
Dont forget though Stamp Duty around $11,641.94 for the 239K unit making it $249K where as the off the plan unit would only attract minor stamp duty components of around $1500 I think, not sure on that one though, ie on borrowings and transfer fee.
Before you buy you must ! do the numbers on it. Run it through a negative gearing calculator or two or 3 for saftey. here are a few useful links
http://www.rhq.com.au/nanango/calcstamp.html
http://www.yourmortgage.com.au/calculators/can_i_afford_investment_property/
http://www.yourmortgage.com.au/calculators/
good luck
hwd007
I live outside of Geelong. Was told that Noble Park was close to Monash Uni. I do have the floor plan for the block of 7 townhouses but it is in the room where my nieces are sleeping at the moment. I will get back to you on this later.
I got a Financial Report done with M.Lomas’s company and to become a client there is a fee attached. I am considering paying the fee for somebody to watch over meYes well depending on your confidence that may be a good idea. You need a good property acountant, and conveyencor / solicitor specialising in property. Also as mentioned get an independant valuation, i.e not from the company selling. Its worth paying a bit extra to make sure the job is done properly until you build your knowledge. I personally would not buy property from a marketing group promoting seminars etc..
It could take you 6 months to get up to speed with knowledge and confidence to call your own shots. It took me that long still heaps more for me to learn. Just do heaps of research. plenty of info on the net. about Australian property investment.
cheers
Hi Gavalynn,
In my humble opinion
I advise do your research no matter where you buy, search http://www.realestate.com.au/ both homes for sale and houses sold. Compare these with your target property. If your target property compares then go further. I recomend that you undertake an independant valuation of the property if you are still unsure.In relation to prperty one, if its aqdisplay home you can bet the home is well built, no builder in their right mind would display a home any other way, and because they use the home to up sell their customers the fixtures and fitting generally are of a high standard. If the dispaly home is in a stage release area then you can also be assured of capital growth because as each stage is released the land gets more expensive which naturally pushes the prices of the first stage release higher.
At the end of the day you need to do your home work and if your still not sure, ran an add in the respective areas as if you had already bought the properties and gauge the response you get to determine whether the rental you are seeking is correct, too high with little to no calls, too cheap with many calls either way you your self can determine the demand. Think creatively what you can do to minimise your risk. The more questions you have an answered, the more risk. Minimise your risk by finding out all the answers before you buy.
regards
JohnJust my 2 cents… display homes can be difficult to finance becuase it normally has a condition in the contract that resticts the vendors (and mortgagees) ability to sell the property during the “display” period. Just thought you should be aware.
Cheers
Stu
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