Ok, this is my first post, I just recently joined this forum.
Anyways to my query.There is a property up for sale ~ $900,000, now.. It is also located in a core area where Diplomatic Chancellors are allowed to reside there. I have in fact got an Embassedor from Morocco that is desperatly seeking for residencial place for the next 4 years of his term in Australia. This property is more than large enough for their needs.
Now here is the crunch.
I’ have $250,000 for deposit.
I’l need to borrow $700,000 from the bank (lets say at 7.32%) for 30 years. my monthly repayments will be around ~ $4,800
The embassy will sign a 4 year term agreement, for $1,400 per week, with 12 months in advance. ($72,800 lump sum, at the begining of each year for 4 years).
Even taking into account of Land Tax and Rates (i live in the ACT), The rental income more than covers these costs, but what i am still weary about is, the large loan.
Is there something i am missing?Naume
Hi there beemer!
How do you rent the house out after the four years is up?
How do you go about selling it in the future? (Your exit strategy is just as important as your entry strategy, just as getting into debt is as important as getting out?)
Have you read Steves books, they’re brilliant.
Is the property “too” exclusive to be marketable in the future?
Whats the median price range, is the property under or over valued? (Forget the rental potential and look at the CG potential just for an exercise.)
The list goes on and on, read through the posts in here there is a stack of detail relating to all you have asked about…
The lure of big money or “un-believable” rental returns on a higher end property (dependant on your income bracket as to if you see this as high end) can provoke a strong emotional response, emotions and investing dont mix, do your due diligence over the long term of the loan, look outside the square, could the potential “renters” do with an investment property themselves? You could wrap it to them and leverage their money and their time and lose the worry of finding tenants for the next 30 years though this then gives you the work in establishing the vendor finance and servicing the needs of such an agreement.
Sounds like a great deal but not a great market to fill rental vacancies in that spectrum of property price…
Could you offer to long term lease it to a country at a slight reduction to entice more security in rental yield?
Flip the deal and make some quick bucks?
There are quite a few people on this site whom deal in higher end properties who could add to this, theres been some great posts on Singapore…
Sorry i cant be more technical or helpful i am no expert though keen to see you succeed and learn from your experience…
Sincerely, Jarrah
“ask and you shall recieve”
++CASH FLOW PROPERTY HUNTER
(Climbing & Consulting
Arboricultural Services)
0431433288“be ye angels?”,
“nay we are but MEN!”Wow, thanks for the quick response! (esspecially at this time of night)
well, as long as Australian and Moroccan Diplomatic relations are normal (if we dont decide to invade them within the enxt few years or so… hehehe) they of course would be happy to stay their indefinatly, as not only will that be the Chancellors Residence, but also their head office. Therefore, even after This current chancellor’s term expires (they usually have a 4-year stay, and then move to another country), the Superseding Chancellor will continue their stay there. So, in short, yes, after 4-years a new lease is drawn up for ANOTHER 4 years, and so on…
Embassies dont have much choice as to which property they would like to lease out (or buy in some circumstances), as only very selcted parts of only 3 suburbs in the whole of ACT, which allow Diplomatic Chancellors to reside.
In Canberra, Houses such as these, ALWAYS have a buyer willing to pay top dollar in the furure. in terms of property appreciating in value, its very high, and when the market drops (like currently its very weary and kinda bearish), the value of the property would not fall, just stay at its current level.Ohh and also… Beemer = BMW motorcycle [party]
Again, I really am astound at your quick but mindful repsonse Thanks again.
Naume
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