Hey everyone,
some of you may remember my introductory post a few months ago in which i was trying to get a deal on 2 maisonettes (connected)… and it fell through..
anyway, ive just got a contract on another one, not quite as good but i am happy with it for my first. i am only 20y/o (though i am feeling old) so i figure i have plenty of time to find better deals, and the first one will be a great learning experience;
the vendor was asking $72,500 for this property. he has bee owner/occupier for a year or 2.
at first i came in with an offer of $60,000 which was declined. a month or so later (as i hadnt found anything else thus far), i came back with an offer of $65,000 after doing my figures better (the previous offer was just to test the water really).
after a little thought, i tried to come up with a few different scenarios that would work in our favour (both the vendor and i). so i crunched the numbers and was perfectly specific to arrive with a few different options. i made up a spreadsheet and was looking at what would provide the best cashflow and allow me to retain maximum capital. i was playing round with different deposit sizes/loans values and arrived at a few offers which i then presented to the vendor. these all included a condition of the signing of a 1 year lease by the vendor (as he wanted to stay on for a while and was offering to pay $110p/w which was below market rent). anyway, they went as follows;
-$68,000 @ $130.00 p/week
-$68,500 @ $135.00 p/week
-$69,000 @ $140.00 p/week
the minimum rent that we concluded would be viable on the open market was around the $130 mark, so the later were slightly higher, but reasonable.
the vendor agreed on option 3 ($69,000 @ $140.00 p/week).
so we currently have a contract and am awaiting finance to come through and i should have my first IP in the very near future!!! yes! [biggrin]
i think that by making multiple offers, i had the vendor more interested in which offer to take rather than if he should or shouldnt take the offer…
now its not much less than the asking price like i would have hoped, but im happy with it, as; if it didnt sell to me, it would have sold to someone else! the vendor was extremely set on $70,000 and after long negotiations i could sense he didnt want to budge… much..
a great thing about this property is it has everything done already! (as opposed to the earlier deal) it is fully painted, has 2 airconditioners, polished floors, new water system, etc…
and its on a big corner block![biggrin]
now maybe this isnt the most creative deal, but i am certainly happy with myself and just thought it would be good to share/discuss with like minded people on here!
Cheers All.
Jake
Dear Jake,
congratulations and best of luck with a hassle free settlement![cool3][biggrin]
e x
HI Jake,
Here’s a wot if…
Wot if the tenant decides to move out just 2-months into the 12-month lease?
You said market rent was $130pw… But you’ve done your figures on a guaranteed 12-months rent of $140pw.
If you had to accept $130pw do your figues still stand up?
Just playing devils advocate here.
Cheers, Nobleone. [biggrin]
“Making mistakes is just another another tool for learning.”
emcdonald: Thankyou! i hope everything goes well too. ill post up here when its all finalised.
Nobleone:
yeah at 130 p/w i would still easily cover costs.
he will be there till the end of the year anyway because he has an employment contract so i doubt that he would want to move or buy another place… all his belongings are setup there and he wouldnt find a nicer place without paying a lot more in rent, so it seems like it will be safe to bet on the 140p/week coming in!
cheers.
Jake
Hi
As long as your figures are done on the worse case scenario, then you should be fine
[biggrin]
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