Hi There,
I’d appreciate peoples thoughts on the following.
Purchase price $720,000
Rental = 8% = $57,600 pa (might be able to squeeze another 1% rental return – based on negotiation I hope.)
Annual Cash outlay = $55,000 (based on $680k mortgage at 7%)
COCR = 3%I’m relatively new to property investing. We have a young family and live in company provided accommodation. We see the opportunity to purchase this property and then pay additional money of the mortgage. The intent would be on our return to the city to maybe sell the property in 3 years time and take the capital gain plus what we have paid off the mortgage.
What do you think ?
Couple of things to consider:
1. Do you have a tenant now? If not what is the vacancy rate in the area & what are you basing you return on. If the property is vacant for a while can you manage the mortgage on your own? If you don’t quite get the rental return you want can you manage a negative cashflow?
2. Have you factored in costs into your calculation like council fees, maintenance etc?
3. Are you considering a fixed rate mortgage? If not, what happens to your model when interest rates go up and can you handle it?
Otherwise it looks like a terrific deal to me. Go for it.
Kim
This is a very expensive property for someone who is fairly new to property investing. If all goes well, you may make good money. However, if things go wrong due to lack of experience, the cost of the lesson may be high. You are faced with a common decision – do I have a go at the big money or do I do something smaller with less risk and try the big stuff later on, when I’m more experienced? I wish you success either way.
Regards
teabagted
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