Hi All
Can anyone tell me how to determine a fair price for a block of units. We are looking at a block of five units currently on market for $430,000, all currently leased at $120 per week – 7.2% gross yield. Is there a way to compare individual 2 b’r units on market with those in the complex to ensure we are not putting in an offer to high/low??? I’m hoping there might be a secret formula out there [biggrin]
SnowGum
I just picked up a block of 6 units in NZ and had the same concern as you before purchasing them. I looked at the cap rate (rent return) for the area to confirm that the price I paid was correct and also applied that rent return against individual units for sale or sold in the area to cross check that the price was correct.
Suggest you look at some recent sales of similar units or units currently for sale to confirm price is about right. The RE agent should be able to advise what the expected rent return is in the area (get a second opinion as well given they want to make the sale!).Cheers
FlyHigh [cap]Thanks for that. We are actually going to have a look at some 2 b/r units to get an idea of the price and the rental and compare those figures to the units we are looking at buying.
With blocks of units being harder to sell, for a variety of reasons, did you find the vendor more willing to negotiate than had he been selling an individual unit?
Cheers,
Snowgum<<<five units currently on market for $430,000, all currently leased at $120 per week – 7.2% gross yield. >>>>
Dont forget thats not a great yield with interest rates at 7.07% What if rates rise another 1-2% over the next 2-3 yrs. That yield suggests to me there may be some room to negiotiate the price down further.
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