Hello Everyone
I’ve come across a property purchase price $259,000 and rented for approx $500 pw. Is there any reason I shouldn’t buy this straight out? I have enough deposit and am able to borrow the balance. There’s plenty of rental demand and the area is growing.
As I’ve invested a lot of time and money in learning about all sorts of creative ways to invest in property (wraps, lese options, no money dawn strategies etc), this seems too easy and I’m wondering if there’s a catch I should know about.
I’m new in the actual investing, just having bought my first porperty last week, so have some trepidation about the whole business. But I don’t want to let an opportunity go by either …
What do people think?
thanks Jennifer
Seems like a very good deal. Just compare the purchase price and rental price with similar properties in the area and make sure the rental isn’t loaded to get the sale.
You could also word your clauses in your contract to get out of the deal if you uncover any dodgy goings-on.
It might seem too-easy but good deals still do exist, it’s just a matter of finding them or creating them. Even in this day and age some vendors have no idea of the potential value of what they’re selling.
Good Luck…G7
Sounds good if there is potential Capital growth as well as high income.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Ask to see the tenant’s rental file and find out how much longer they will be on the lease and under what conditions – as well as if there are any non-payment or property damage issues.
Do get a building and pest inspection to make sure the property isn’t on it’s last legs and due for an expensive overhaul (or put a clause in the contract to that effect).
With the warnings aside – congrats on finding a great deal. They are out there.
Happy to offer an opinion that may be useful to you, but I woud need to be provided with way more information.
Total outgoings ??
Length of current lease ??
Stability of tenants ??
Cap growth of prop over past 10 years ??
Your expectations of cap growth over next 10 years ??Just for starters…
If you are interested, post way more details.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
If it is true, go for it!
If you do your research and find the rent does seem a little high, consider this:
The Seller may know the tenant or they may be family, or may ahve a deal that they sign a short term lease that has an excellent weekly dollar figure. For example:
Property normally rents for $350
Property has a lease signed for $500For purpose of an over inflated or fast sale, a lease is signed to value of $500. Tenant “pays” $500 a week and is then reimbursed $150 each week by the seller i.e: seller pays the difference.
This may be exaggerated to show the point, but over the lease period, the cost of the seller paying the difference for to the tenant could be worth it for a much higher sale price and/or fast sale.
Hope this helps.
J.
J.
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