I have pre-approval for my first investment property (up to $90k). I would be grateful for some feedback as to “essentials” for my first purchase.
I have found a lovely QLDer, at a purchase of say $82k, it is presently returning $120 wk, however spend of $3,000 for new floor coverings, and general tidy will yield $150+, when current tenants leave. Growth is slow, but the house is solid and tenancy steady. Whilst I know there are better returns out there, I thought this might be a steady first timer for me. All feedback much appreciated.[blink]
Hi Mischief,
Figures (price, rent, returns) are a little subjective and an individual’s reaction to them will vary based on their personal beliefs and investment choices.
Without knowing the area (and I advise you keep that to yourself) it is hard to comment about the specific property but………
Make sure you are paying market price (or better) as there are some regional centres where local residents are rubbing their hands with glee as out of towners pay top dollar purely on the basis of a good rent return.
You wil also need to have the building inspected for pests and structural problems, check flood zonings if appropriate as this could impact on insurance premiums and see if there are any major local planning changes in the wind that could adversely affect the property values in the area.
You will also need to look at long term viability of the area. What atttracts people to the area? Are people coming or going? Employment opportunities also need consideration.
If everything stacks up, and you are comfortable with your choice, then go for it.
Do not forget to insure the place.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi guys,
I agree with derek,although you’ve done something other’s only ever talk about THE FIRST STEP TOWARDS BEING AN INVESTOR.
Do your homework thoroughly and make a decision.
You’ve come to the right the place for help.
GoodluckJoseph Scarcella
prime real estate agents
property management specialists E: [email protected]Hi Mischeif
i agree with the other guys
but want to add get an “independant” rental assessment on the property to confirm your figures, be aware you are not buying a cash positive home and will need the property to appreciate for you to make some money.
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
If you get the $150/wk you are getting a tad under 8% return. This covers the mortgage and management rates but not maintainance and council rates.
I say thats good enough because if as in most cases you have $1300 rates and maintainance allow $1000 per year it will average out for you.
As rent increases your costs reduce so before to long this will be positive with a few rent hikes.
Good luck and go for it.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Hi Mischeif
don’t assume the rents will be increasing this home is a long way off breaking even, i’ll show you why
Rental 150 x 50 week = 7500
cost mortage @ 7% = 5,950
rates 1,300
insurance 400
property management 600
repair and maintenance 1,000
Total cost 9,250
LOSS Per Year $1,750,
Rents will need to rise over $30 per week before it breaks even, Then you will have a few more increases to pay you back the losses you have already incured.If you are after cash positive you need to buy a property showing at least 10.5% returns. It is wrong to think that rents will always go up, it comes down to supply and demand if this town has a lot of vacant properties i find it hard to see rents going upwards.
all the best, let us know your final decisionregards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Agent update advises: current market rent appraisal $145 – after repair $165 – $170.
This is very different to the numbers given in the first post Mischief. If I was in ur situation I would seriously do some independant research (outside of the selling agent).
The figure of 120 vs 145 is a massive difference in percentage terms.
It would certainly press a few warning buttons in my mind.
Regards,
TimDiscussion with agent was current rent $120 and tenants have been in place a while. Receipt of actual details show current rent $130 until April 05.
Agent suggests move these tenants on, as they are not the most tidy – freshen the place up, replace some floor coverings, and re-rent.
It sounds viable to me, but would appreciate anything to look out for here.
Originally posted by westan:but want to add get an “independant” rental assessment on the property to confirm your figures,
Hi Kylie,
As Westan mentioned and Agile alluded to, you should verify your expected rental figures with an agent independent of the selling agent. This way you’ll be able to confirm or reject the rental figures which may assist in the price negotiations.
Give a coupe of other agents a call and see what they have to say. Ask for a list and details of similar ‘to rent’ properties in the area and so on. This is all part of the hard yards you need to do to ensure your decision is a good one.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Other agents have confirmed rental figures – however I didn’t ask for rental lists – so I will now.
Thanks for the tip there. All comments much appreciated.
Being untidy isn’t the worst thing that could happen. If the tennants keep the place in a ‘satisfactory’ condition, pay their rent on time and wish to stay on, do you really want to move them on? Is it worth it?
Ali G
Hi guy’s
Get the agent to do a rental appraisal letter with comparable properties, plus you’ll find most brokers will ask for one.
This way it’s in writing and the lender can get on the with finalising the paper work.
Make it as easy as possible for them.cheers
Joseph Scarcella
prime real estate agents
property management specialists E: [email protected]
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