I am looking at getting into property investing and am very excited at the long term prospects.
I live in NQ and want to know if my numbers check out.I have seen a 5 bedroom property in good condition on the market for $198,000. Council rates are $1,800pa and the current rent is $300 per week.
I obviously want to put up as little (or none) of my own money up front, and on the above example I have used the following logic.
If I was able to get 95-100% Mortgage at say 6.5% my annual repayments would be $12,870, plus rates of $1,800 plus say $1,000 for other expenses giving a total of $14,470.
The rent minus 8% management fee works out at $14,352 thus in simplistic terms break even without putting any cash up front. I understand that the house may not have tennants from time to time but overall this seems pretty good.Am I missing something??
Andrew,
You will need to do your due diligence on the rent and purchase price to ensure they are in line with the rest of the market. Check what the unexpired term on the lease is, request a copy and make your offer conditional upon the vendor securing a further 12 month term if currently periodical. The contract will be subject to finance and importantly pest/building which will allow you to have the pro’s check for termites, structural faults, dying hot water system, loose roof tiles or any expense which will adversely affect your net rental return in the 1st year.
Apart from that a more or less neutrally geared property from day one is great (as long as it appreciates in capital or rental value in due course). Broader local factors such as the economy, access to services, rental vacancy rates, employment and quality of tenants will no doubt factor in your decision.Figures stack up,
Good Luck
i’d say it’s a good deal, as long as it’s not a high maintenance property.
i just sold one i had in cairns n.q. for 155,000, rent 210/w, because of the high maintenance costs.
i’ll buy a younger house next time.
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