Hello everyone. I’m new to the game and seeking advice. I’ve found an appartment (not sure what they are like in terms of an IP) but in the add it says currently returns 5%net. So just wondering wether this is good deal and what the 5%net actually means. The property is listed at 180000
and i am eligable for first home buyers grant in victoria (how much is that again ?)
and have a 20k deposit to put downWhat are your thoughts on this investment ?
Thank’s, regards Jarred.
Hi jarred
this is your deal
180K and rent of 5% which works out at about $9,000 income per year. even less if vacant.you will need a mortgage of about 160K at 6.5% this will cost you 10,400. Rates, property management fees and insurance will cost at least $2,500 per year. So this place will cost you 3,500 per annum which you can write off against your tax.
A lot of peole on this site prefer to buy properties that will put money in our pockets each week, these tpyes of properties will actually improve your servicability with the banks making it easier to buy more properties.
personally this is not what i would invest in.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Thanks Westan, That puts things into perspective a little better, i just sent and email to you a little while ago, asking to be added your database, so do you have any investments you could suggest
Thanks, Jarred.Originally posted by jspri:
[brWhat are your thoughts on this investment ?
As far as I know you are not eligible if you buy ip’s
the quote was ment on First home buyers grant
you must live in itI am pretty sure that to be eligible for First home grant you have to live there for a minimum of 1 year at least. Or else you will end up paying it back with interest. So please keep that in mind….
Originally posted by arungounder:I am pretty sure that to be eligible for First home grant you have to live there for a minimum of 1 year at least. Or else you will end up paying it back with interest. So please keep that in mind….
Just to clarify the above comments…
To be eligible for FHOG you must live in the property for at least 6 months, not 1 year. You do not have to move into your purchased property straight after you purchased. Theoritical, you can actually rent you property out for 364 days, move in on 365th day, stay there for 6 months and rent your property out again.
Kind regards
Jet Dollars
[Retire Young, Retire Rich]
Share Investing Forum: http://www.aussiestockforums.comjspri,
It’s hard to know if the property would be a good investment without knowing more details. 5% net means it yields 5% after management (body corporate and possibly onsite property manager if applicable) costs are taken out, presumably. Gross, the property might yield 7%- but we really don’t have many details.
If you are looking for what might be considered a “growth” property, then you might be looking at the following for the property:
* location: views? near water? (ocean is better, river/lake is good too)
* unique qualities of unit?
* small block is better (below 35 units in block)
* size of unit
* garage or designated parking
* architect or corporate designed
etc etc etcThe unit could be a studio like many others… or it could be a 3-bedroom apartment in a beautiful part of australia. As we don’t have details, it’s hard to say.
Westan is talking about property that puts money in your hand per week. I am referring to property that may have longer-term capital gain, but probably costs you money per week. It just depends on your strategy and what you’re looking for.
kay henry
After looking at the returns of a number of properties, I noticed that to achieve +ve cashflow I would need a gross yield of 7.5% and above (assuming 20% deposit).
I now use this as a general rule of thumb when looking at properties and assessing if they have the potential of being +ve cf quickly.
bennido,
I don’t include a deposit as an assessment for CF+ You could have a 50% deposit, but then you’d have lower expectations of yield. I just think of the purchase price, and the dollar amount rent. So if a place is 100k, then to me, it has to yield $200 a week to be CF+. That’s my lazy way of doing the 10.4 thing that Steve describes. Just double the price and determine rental yield. It’s lazy and imprecise, but it’s close
kay henry
Yeah, Kay, I know what you mean. Just that after a month of searching, I still haven’t come across a property that would match your criteria. Probably because this will be my 1st regional investment and I do not want to go to far away.
So I kind of lowered my expectation a bit, but still +ve cf … [happy3]
I believe that this baby step will help me to earn a lil’ bit of cf while still enhancing my knowledge and experience.
Thanks for all the replys, i’ve shined away from the appartment/s for the moment and for a first property i think a residential place will be best. Currently waiting for some info to be sent back to me on 3 NZ properties, for 50k each, supposibly returning about 125 a week each. Anything major i should look out for there ?
BTW, The appartment is on williams st in melbourne, looks over the yarra and crown.
Regard’s Jarred.
bennido,
I believe the CF+ (after deposit) is the CoCR notion that Steve has- so it still fits in somewhere
It’s the return on the cash you put in- not on the whole price.I hear you about not wanting an investment too far away. I live in sydney, though, and finding properties that are suitable… well, sydney is only one market- and there’s a big world out there. For example, you can find beautiful properties in other markets, that in sydney, you’d be buying a dogsbum property for equal price. So if I didn’t look out of my own backyard, I feel i’d be cutting off my nose to spite my face. Sometimes there’s comfort out of one’s comfort zone. hehe- sorry for the bad metaphors- it’s been a long day
kay henry
Thanks Kay, yeh i have never really thought of only looking for investments in my own town, knowing well i would be hitting my head against a brick wall in melbourne. Being 18/young doesn’t help as much as i have to study a lot and travelling would be to costly, but hopefully a site unseen will be the solution.
Thanks all, jarred.
Hi Jarred
if buying in NZ there are some very important things to do.
1. speak to at least 2 property managers in the area and ask about rental expectations for your property. Get them to view the home, and check the neighbourhood. We just signed up a great house then found out a Gang member lives in the house that backs on to this one.[blush2] We wont be buying this one.
2. check with the LIM that it has all the permitts needed.
3. You must get a building report, maybe even a electrical check. By the way a Builder should check the LIM for you.
4. If possible get on a plane and come to NZ and see the places that you are investigating. I know a lot of people can’t find the time but it is worthwhile.regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Originally posted by jspri:Thanks Kay, yeh i have never really thought of only looking for investments in my own town, knowing well i would be hitting my head against a brick wall in melbourne. Being 18/young doesn’t help as much as i have to study a lot and travelling would be to costly, but hopefully a site unseen will be the solution.
Thanks all, jarred.
Jarred,
Never let your age be a barrier or consider it a reason to be trampled by agents or anyone else. Your age is your greatest asset since you are starting so young. I’m 23, but have never considered myself to be “too young” or inferior to anyone else because of my age. The only drawback is that you may not have as much experience as someone else, but don’t forget they wwere once in the same situation as you, only they were probably a lot older than you are when they started out.
Read a lot, talk to a lot of people and you’ll go far. You’ll work out what you’re trying to achieve, and what the best strategy for you will be.
Regards,
Boyler RoomDuckling Business & Investment Network
http://www.duckling.com.au
Why Walk When You Can Fly?
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