I found a positive cashflow in a country town with about 35,000 population, but it was a commission house.
Is there anything I need to be careful to invest in commission housing?Hi Maruco
i’ve bought a lot of commission homes over the years in Victoria and SA. But sold them over the past 2 years, i only have 2 left.
I few positives and negatives and thing to be aware of.
Positives
they are usually good solid homes, low maintence and cheap to hold.Negatives
they are in poorer areas of town and less desirable for the average tenant. In slower markets they are often harder to sell. When there are a lot of vacant homes they tend to be the slowest to let.To be aware of
i think you need to avoid the worst areas of a town, property managers will be more than happy to tell you where not buy. If you buy make sure you property is presented a little better than those around it, this will ensure it is rented quicker.regards westan
http://www.nzpropertytogo.com
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Properties in the USA 15-25% returns- email to join our database [email protected]Maruco,
I have a couple of Housing commision homes also in a regional area. Look at old wiring, hot water services, stoves, etc – could be significant cost in the future if need to replace. I also will not purchase if has old cement sheet on any walls, roofing, etc – asbestos – and if need to modify, replace, etc disposal can be time consuming (permits) and expensive. regional area’s can often have a higher incidence of white ants, and if in area need to be treated every year or two. I have found them to mostly be well built and solid also.
Good luckSteve B
I misunderstood what the agent said.
It was a privately owned house but in commission area.
I thought if it was a commission house, normally government has a long waiting list, so no need to worry about vacancy.
However, if it was privately owned in commission area, the question is “who want to live in those area when they have other choices?”
The agent said, “when tenants move out, quite often has a broken window.”
That suggests that it is not safe to live there.
It is a possitive cashflow in a reasonable sized town, but hmmmmm…..I think you would find no shortage of tenants and a list as long as your arm to rent.
Whilst, you certainly dont want any particular damage to the property i beleive that the housing commission if they are fronting the bond will look after minor repairs like a broken window after then tenants move on.
Cheers Richard
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Hi maruco
i think what we have here(from the information supplied) is a home that was originally built by the Government. Over the years these were sold off to the tenants (lower income people and first home buyers and often young families). In the 1990’s the State Governments who owned these properties began a program of selling them off on the open market, Jeff Kennett in Victoria sold thousands of these homes, often to investors.
Sometimes there are housing commission areas that have become great areas with many homes privately owned but in some areas they are the rougher areas of the city.
Many people choose to live in these areas because they grew up in the area and have family and friends there, other choose to because the rent is cheaper.
Check with local property managers about your area, find out if vandalism is a problem in the area.regards westan
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Properties in the USA 15-25% returns- email to join our database [email protected]Hi Maruco,
So far the only advantage I can see from this property is that it’s positive. How positive is it? And will it offset the lack of capital growth in such an area?
If none of this bother you, please make sure you carry out pest & building inspection on the property first.
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auHi,
I agree with Westan, if it is an area or street where they are mostly owned i would buy it. Its not hard to tell just have a look at the condition of the other houses and gardens in the street. If it is amongst renters i wouldn’t buy it, again look at the other houses in street or do a door knock.
Then i live in a street all owners and there is one house that looks like the worst trashed housing commission house you could find.
with asbestos fibro on exterior you can always clad it, they come up great, i do plenty around 5-6k.
If its in a good street and looks good they rent easily being at bottom end of market
Robo
http://www.bestclad.com.au
ps
The cheapest house in Coffs Hbr now is a HCH $219k
would rent for $200p/wThank you very much for all the information.
With your info, I contacted another agent and asked “which area to avoid”.
The agent put up the exact street name the properties were on.
It seems the particular street is really rough.
Probably “the worst area of the town”.How positive?
If I calculate with the asking price, the yield is 8.76%.
If I negotiate well, it might fit in the “11 seconds rule”.Well, it seemed that the town has another commission housing area which is better than the other area.
The yield is lower but sounds safer.
The agent is going to send me a town map where she highlights the areas to avoid.I want to rush into the town to have a look at the area, but it takes a half day to get there by car. And my child’s soccer team’s BBQ is on this Saturday, so I can’t goooooooo. (Frustrating.)
Well, thanks again for your help.
the yeild may actually be better if you factor in realistic allowances for vacancies and damage.
Always good to go for the better part of town, the local renters always look here first
Live, Learn and GrowLifexperience
I agree, if you are determined on that area then go for the best avilable there, otherwise there are other great areas too.. You’ll know best when you actually get there..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auFind out all the negative issues regarding this house (as you are doing) and then lower your price accordingly.
The owner my be desperate to sell by now and you may be able to get it with an 11 or 12% return.
I think all property is good at the right price.
So factor in a broken window and termite treatment etc every couple of years into your calculations and then make your offer. The wors they can do is say no.
If you don’t want to go to see the property because of family commitments then just go the next week – it may still be on the market and the owner may be more prepared to negotiate.
Yes, you are right.
I will go there next week and have a look around the area.
The agent told me that a few houses were actually burned down on this particular street…..
Hmmmmm, do I make an offer?????
I’ll think about it…
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