After what seems like months I have finally gotten a seller to not only drop his listed price on his property from $650k to $575k and he is also prepared to vendor finance the property to me for $2000 per mth for 5 years with interest of 7.0%. Upfront deposit of $15k.
The 2 BR apartment has 2 Bathrooms, 2 separate living areas and 2 car parks (17 squares approx). Apartment is located in Southbank, fringe of Melbourne CBD.
I’m thinking of either wrapping this property for $650k or it can be an investment property for someone who would like to have an apartment and not have a liability associated with the property. Rental for this property is estimated at $550 per week.
As I have a bunch of other wrap properties does anybody feel like joint venturing with me if so call me on 0414 584 320 or email me?
KazIsn’t 4.4% gross yield (on $650k):
a) rather unappealingly low?
b) very optimistic?
There are plenty of deluxe 2b apartments in Southbank available for $350 – $450pw fully furnished with balcony and city views. Additionally, the Melbourne apartment market is still in massive oversupply. My measure of this is the number of ‘serviced apartments’ I have to choose from when I’m working in the city… believe me, there are a lot.Does your ‘bunch of other properties’ contain any better deals? I’m not having a go, and I do in fact intend to purchase a city apartment within the next few years.
Cheers, F.[cowboy2]
Hi Foundation,
The gross yield may not be that high but you’re going into the transaction with only $15000 deposit which is very low for an apartment (only 2.6% of purchase price). Plus the benefit of not having a bank liability shown on your books for the next 5 years which could assist on future serviceabilty if you intend to keep expanding your portfolio.
The apartment is classified as a mini penthouse with split levels (2 storeys) so it’s not really a standard 2 BR apartment. It also has city and bay views and is on the 22nd floor with a balcony included. The $550 rental was the actual amount paid by the last tenant of this apartment.
Kaz
I’m with foundation on this one Kaz, no matter what the entry point is or exposure how can you say this is a good INVESTMENT.
I would emagine that the body corp fees will be high being on the 22nd floor and the short fall would be too low for a low income earner with this very negative geared INVESTMENT – have you done an out of pocket expenses for a 60k income earner???
D
HI Wealth4 life
How do you define a good investment? The opportunity of being able to buy a property without a bank loan may be good for one person – in the end it all depends on one’s situation. If I could invest with using as little of my cash as possible I deem that a great opportunity as the cash on cash return would be infinite.
A person who would enter into this transaction would need to earn a fairly decent income to qualify if they were going to buy it on vendor terms as I wouldn’t be encouraging someone who is struggling to make ends meet go into this JV with me- just because it is vendor finance does not mean it’s for a low income earner. There are people out there who may earn a great income but may be new to the country or not have a sufficient deposit or may not have a savings history who may find this a great opportunity. They either lease option the apartment or buy on vendor terms or maybe an investor may just rent this out straight. There are opportunities [exhappy]to do something with this apartment due to the financing arrangements that go along with the property.
Kaz
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