One I am looking at right now, like $118K, rental would be $160 per week, do the 11 second thing and you get $80K, what if you offer $110K and put $30K down, loan the other $80K, bear in mind you are using someone elses money and also still making an income from it
At 6.99% on the $80K you borrow you would pay around $122 per week, at the same time you would be pocketing $38 per week, thus, your investment of $30K would be returning around 6% per year to you?
Does this sound logical or am I dreaming?
From what I have learned from being on here it would entirely depend on what could’ve been done with the other 30k. You don’t truly get the 11 second result since it is on purchase price but after the initial outlay it is nicely +ve cf.
If the 30k could be used to pay off an outstanding PPOR loan then of course the best option would be not to spend the extra 30k on the IP but on the PPOR.
Currently 6.99% isn’t the best by far that you can get, see what the brokers on here say [whistle].
Rags, you could put down 100k deposit but that doesn’t mean your property would be pozz geared at 40% return. What you’ve described is “cash on cash return” which is an arbitrary measure of nothing in my book, because one could put down any level of deposit- you could pay 100% of the property and receive no taxable benefits at all, but most of us are doing it for the debt, not to just pay uber-deposits.
Work out your return on full payment price and rental return. This property doesn’t fit into the 11 second thing (cute!) but it still seems like a good buy to me
kay henry
I do the 11 second solution, get the property and then try and buy it for nothing down. Also 6% is pretty poor.
Rgds.
Lucifer_auhi rags,
a property i am about to put a deposit on is exactly the same as yours in every repsect. Although ive committed im STILL not sure if i should have. Having said all that it is still the best damn deal i can find anywhere so im just gonna run with it. What the hell i do with it after ive bought it is another thing.The fact remains we still have to put in 20-30k to get it which perhaps could be more useful elsewhere ie paying off my home mortgage. After some basic math and i mean basic i THINK i stand to gain more from buying the second property. Problem is i dont want to have to come up with 20k every time i wanna buy another peoperty…what to do???? its so hard to find good enough deals with so many invetors out there isnt it
“Does this sound logical or am I dreaming?”
Not dreaming, but 38 bucks per week surplus has to cover insurance, rates, vacancy and insurance.
And maybe property management.So do the numbers on what that costs annually and it could be a property you have to pay into.
I don’t generally purchase properties with returns less than 10 percent if capital gains are likely, or 15 percent if not, so I wouldn’t be that excited about this deal on the numbers alone, there would have to be another reason (i.e. emotional (i.e. in the same street as my parents, it’s cute, i want it ) or financial (near some kind of ‘action’ that would make the property go up in value.)
this to me typifies the deal that 90 percent of investors would go for, though.
NZ Bird Dogs. SOLD OUT! More deals coming…
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