I ve just got off the phone with a RE agent regarding a set of units. I was a little slow off the mark recently and this set went under contract to another investor. The deal has fallen through due to an adverse building report.
The cost of rectification is about $70k. Purhase price probably about$500k
Gross weekly rent $840 per week.
Rates about 3.5k pa.Great rental area near all the good stuff shops rail etc. The rents should be higher ($20p/w)but the place is a bit tired looking, but easy to jazz up. The underpinning work in the repair quote scares me a little not knowing what is involved. I will need to borrow the entire amount, but have heaps of equity and high end tax margins as a PAYG salary earner.
Interested in the experts crunching the numbers and some advice based on experience about the underpinning repairs.
Would you touch it?????????[blink]
jtwhi jtw
you need to give me the growth rate for the area if it is below 10% I wouldn’t take it.
The return is a tad over 7% and not enough without growthhere to help
Hi jtw,
Had underpinning work done at Ashbury NSW and the cost was $10000. $70 k for underpinning seems a bl**dy lot of money.
Borrowing the full 500k will cost you $647per week for interest (I.O), maybe $38/39 for rates, Agent comm=abt $69, (Check for water and sewerage xtras) but interest,rates, comm= $754/week. What do you think of those numbers??? You do the sums.!!
Get the price down or rents up,or both, negotiate the comm, and have the repairs included in the purchase price to aim for better return, maybe.
Good Luck. Cheers for now Lenhi camder
do you know this site and what do you think.here to help
Thanks for the imput. Based on the figures (which is similiar to what I came up with) it still makes a small profit ($approx $84 P/w). At present the tennants are getting a great deal and are well below market on rent. $20 per week per unit would be achievable without reno of the interior. The $70k quote was the engineers estimate and included rendering the exterior of the bricks, repaint interior of the one unit effected. Interestingly he told me that the units were about 30yrs old and the cracking was recent due to the exceptionally dry conditions in SE Qld. If the place had been looked after it wouldn’t have happened. The market growth in this area will be substantial, it may be quiet in Brisbane for a few years but this still seems cheap for 6 x 1 bed flats. Before the cracking became an issue, the other investor went to contract at about $600k.After looking at hundreds of real estate deals this one pays for itself right from day one, admittedly it doesn’t make a fortune but I can get into it for nothing upfront.
Do you think I could do better? What would you consider a reasonable rate of return? I am interested in what experienced investors look for in a deal like this. Advice greatly appreciated.
jtwG’Da JWT,
I don’t consider myself experienced, but from a starters perspective, a positive is a positive. If it gets the wheels rolling it is a good thing. The old story – it’s easier to turn a moving vehicle than one standing still. But I don’t like the given reason for cracking – being the current weather conditions. This may be a valid reason, but I would really want a more expert opinion on the matter. Remember, we will always have the weather! Next year it may be too wet!Harley2
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