Hi all,
I am in the process of buying a IP house in Katherine East NT. Cost is $169500, rent return is $265 pw. Property management is 11%. The property is an ex Defence force residence built in late 1980’s. The town population is 10000+ and vacancy rates are low. Katherine East is above the flood mark. This is my first purchase, I think I have done the research but would like other opinions. Cheers Davo[blink]hi Top Ender
I’m interested that nobody has replied and 38 people have read your post.
11% of what is the management fee
If you take the management fee out then it is a reasonable investment but I’d need the other figures.
who and how long is it going to lease for.
cost of all fees etc
on the face it would be a reasonable investment( all thou I wouldn’t invest unless I checked the rest out)here to help
Ah, this is right up my alley.
I live in Katherine at the moment. I don’t think the return you have mentioned is very good at all. I wouldn’t be buying here unless there is AT LEAST a 10% return. If I look hard enough I can get 10% returns in Darwin and at least there is capital growth in Darwin. There really doesn’t seem to be any capital growth here. Also, my recollection of recent REINT stats was that Katherine had about a 9 – 10% average yield. That would make your purchase a bit low.
Have you physically inspected the property? There are some really bad houses next to quite reasonable houses here.
I also thought I’d add my two cents worth on property management. I have an investment property in a reasonably small town of about 20,000 and the management is disgraceful because there really is no competition. I will never again buy in a small town.
These are just my thoughts. Are you from Darwin? If so, I would look up there if I was you. I think you will get more bang for your buck.
Good luck
K
Thanks for the responce, sorry to be a bit lite on with the info. the 11% management fee is taken off the rent return.It is really 10% plus a yearly let fee of $220. It seems to be the going rate in Katherine. The house is in a quiet court surrounded by quality properties,( I have seen it several times)the current tennants lease expires in March, at which time I will put the rent up to $280-$290 in line with similar properties.They have indicated they would like to stay on. If not I am confident filling it, current vacancy rate is 3%.The house is in great condition, recently painted and floors polished.The capital gains in Katherine have’nt moved much in past five or so years since the flood.But I’m in no hurry. I think/hope it will be better over the next few years with the increase in military numbers, the million dollar upgrade of Katherine Gorge, the expansion of the regional health services, the growth in tourist numbers,the Ghan, the transport industry & mining possibilities. Meanwhile it should go close to paying itself off. The Reint June 2005 house rental yield for Katherine was stated at 8.5%. Thanks again Davo[biggrin]
Top Ender
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