Have been looking into my first deal (local area first) and am after some feedback/comments if possible.
This one I have come across is a small 2 br unit in a complex of 30, with renovated kitchen. Asking price is 105K. Other similar units in the complex rent for 170 pw. Several agents told me yesterday rental demand is picking up.
Have looked from the outside, seems to be quiet/clean/tidy. Spoke to a tenant who said it was a good place to live, and quiet. It’s close to facilities.
Have accessed some sales history on this unit complex and found the following: the one for sale now sold in 01 for 40K. As for other units, most recent sale in 10/04 achieved 120K. Four other units in the complex sold for ~140K during mid – late 03, several others came close to this mark. According to the calculations (thanks to the Jaffasoft calculator!) this deal comes out at neutral or very slightly CF+, depending on final purchase price.
So, that’s a summary of my research to date on this place. Do you think this is a good place for a newbie to start?
ps. My situation = 90K equity, don’t own property (yet). Looking at getting started. Visiting a mortgage broker this afternoon for borrowing capacity & pre-approval.
pps. First time poster, but have been reading/learning for about a month, and this site is great for that purpose – thanks everyone!Fin,
I’m just starting learning too, so I’m no expert, but if I were you and starting out (which I hopefully will be in a few months), I’d be looking at something a little more guaranteed to generate +ve cash flow and less on the “rental is picking up” side of things…
But that depends if that’s what you want.
Anyway, I guess what I’m saying is that if it were me $105k would probably be a little high on my price scale.
I know it’s not really advice, but that’s what I reckon (with my limited knowledge so far).
Cheers.
Regards,
Christian
PS. Did you take into account body corporate charges, etc?
I am interested in knowing how you have $90,000 in equity if you do not own any property yet?
How much cash do you have available to put into the deal?
How much will you be asking to borrow?
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdFin, I would be fairly cautious with this decision. If you have 90K up your sleeve, could it be better put to use in another way? For example, purchase a house on subdividable land, or two titles, that you can immediately split? Recently we purchased a home on 3 acres, 230K, but we are splitting almost 2 acres off it which should bring in more than 120K after costs. This leaves us with a property that cost $110K and will rent for $250 per week.
To begin with it wouldn’t have been very cf+ but soon will be.
I personally would be hesitant to purchase a unit in a block of 30 unless they were stunning. And with body corp fees and all the other stuff that one has to cough up for, I’d take a very close look before I signed on the dotted line.
Redhaven.
Thanks for the tips so far.
Redhaven, shows me I need to think more outside the square!
cbrenner, yes, I added those figures to the right box in the calculator.
Mortgage Advisor – I have that from saving over time (I’m 34 & to date I have been investing in shares & managed funds). Hindsight is great and I now know that I should have been much more proactive with my investing, ie. using good debt. Lack of knowledge & procrastination led me missing out on the boom[angry2]! As for available ca$h, I could access 35K immediately, but the remainder is also pretty easy to get at. Based on my current income, the broker I visited today told me I could access a 280K loan no problem for a PPOR with a 70K deposit, avoiding mortgage protection insurance. He also said I could access more if I was investing, but is getting back to me with a specific figure.
I have some plans/goals in my head that I really should get sorted and on paper before jumping in, because I really want to make the most of what I have available.
Cheers, Fin.I am at a loss. I am a newbie and live in the Newcastle area of NSW. The average ‘cheapie’ in this area seems to be of the order of $250k which attracts a rent of about $240-$250 per week. Those numbers would seem to be a zillion miles away from the +cashflow that is the mantra on this site. Where the hell are you guys finding deals in the current market which even get close without buying in the back end of the black stump???
Frank
Hi,
I’m afraid I have to disagree with Redhaven. I own a property in a block of 24. There’s nothing stunning about them, but they’re in a great position and are never empty for very long. The property has also nearly doubled in 5 years. So If you think you could see some capital gains, I’d go for it.
LandtHi there Fin,
Its probably not my place to give advice, considering Im a newbie and all (2nd post[confused2])…
I was looking at metro area (Adelaide) property, but have since relented and am looking for a CF+ place in another area out of the major cities. Most of the places i was looking at were similar (price, rent etc.) to what you have described.
I have done lots of research, read books, etc. and had advice from many successful property investors and came to the conclusion that in order to expand my portfolio in the near future, I will need to start with cheaper CF+ property. I dont want to go into it too much or this post will be beyond readable.
just thought id briefly tell you my experiences with searching for the ‘first deal’…
having said that though, it doesnt sound to bad, given that you will get the $170p/w rent. But it may be better for you to look around for longer until an even better deal is found!
good luck mate.
Jake
Where the hell are you guys finding deals in the current market which even get close without buying in the back end of the black stump??
Frank – Simple answer is that they aren’t finding many places at all in places such as Newcastle. I get enquiry from people who have found the most remote places.
Looking forward to catching up next week.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Fully Accredited With Derivex PTY LTD and IFHL PTY LTD
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Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Our strategy is to buy within 45 minutes of a major centre in a town that hasnt been touched with the growth wand.
This means you actually have to spend many hours doing RESEARCH.
We have found examples in all states.
I met one guy who bought properties almost exclusively in Lightening Ridge NSW – Not my choice, but he is now a wealthy man. So given that – who really knows?I am from Adelaide and would be curious to know where you find a unit in the city that is earning such a nice return.
Frank please think outside the square. Adelaide is a great place as is SA and there are many deals here.
You know people can live here on the dole with a mate and live comfortably. Cost of living is a lot less than most other states and hence housing is cheaper etc.
nothing wrong with owning property around the black stumps. We are in a large country and surely you could consider looking further than Newscastle. I find that could also be considered the black stumps for me. J/K.
There are currently small units in Adelaide City selling giving gross returns over 10%. So don’t tell me they aren’t here.
Byronent
Adelaide SA
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