I have not long purchased Master class home study and i must say it is very good and worth the money, after studying it a few times i have found this property and i would like peoples opinion on it
advised 85000+, sale price 101000 has been offered 70000 not excepted, house is in need of kitchen up date and bathroon update, and paint throught out,steve says to look for something scaricty this is a 4 bedroom house that is in big demand in this area, advised by agent that vendor may take 80000 he wants it sold, prices for 4 bedrooms are selling above 140000, land size 600sqm has been restumped, back yard needs help, would rent up to $160pw once cleaned up, i am not able to work all the numbers out as im not sure if you should hold or sell, how do i find out about the interest on the loan, is there a way to work it out. I have not been able to get through the property as yet.I have that fear factor hit me
can I get advise please
regard
Trish[thumbsup2]
P.Stickels
Trish
There are too many variables, but at that price I would say it is small regional.
The numbers stack up, but without knowing the area, etc it is hard for anyone to say yay or nay.
For example – Is there mining close by, or is the town dying due to drought. More due diligence is required.
The other thing here – never trust the agent selling the property is telling you the correct rent. There are some that do inflate, as they are working for the seller – not you. check with other agents. You could also have a rental clause in the contract.
Finance – well more variables, based on your employment situation, and the location of the property.
Expect a rate from 6.95 to 7.75% – use IO and the worst rate for calculation .
Regards
JohnInspired Finance
(02) 9944 7776crunch some numbers here http://www.jaffasoft.com and find the ‘number cruncher’ its free and very good or you could buy steve mc knight’s ‘investment detective’ a little more complex and pricey (i still havent got my head around it) but i suppose i am still a novice!
Thank you for replying,
I have done some more due diligence and yes it is a regional town population 20000,
yes there is a mining town close by, however the council have just agreed to another 25yrs of operation, no the town is not dying from drought at the moment,
I have contacted more agents and rents in the area for a 4 bedroom rent from 140pw to 250pw
If I use IO does that mean I should hold onto the property and after reno done get it revalued and get the equity released to go again.
The only thing that concerns me is that unemployment has gone up in the area, but I have sourced the area and there are very few 4 bedrooms for rent and not many for sale in the area.
Thanks again for your advised
regards
Trish[biggrin]P.Stickels
IO is just about increasing cashflow.
Whether you hold it or sell it depends on your own investment strategy.
But it is increasing hard to find reasonable cash flow properties – if you sell it, then someone else gets the ongoing benefits. And the yield with a 20K population is good.
Regards
JohnInspired Finance
(02) 9944 7776You need to look more into the town itself. What is the main employment in the area? And is that employment looking like it will stay strong for a few years? What is the council like? Some are backwards in these sorts of towns and will wreck the town.
Here is a trick i used, i rang agents in surrounding areas of a town i was looking at, and asked their opinion. Most were more than happy to help, and i got some great advice. Its free and it cant hurt.
How many property managers in the town? if there is only one, your investment could go haywire. You have to know that the PM is good, because if there is no competition in the area, they dont neccessarily have to do a good job because they know there isnt anyone else.
I’d say at this price, and with that rent, id use it as a buy and hold, and no i would put this one at principal and interest, seeing as your yield is going to be high. Let the tenants pay it off, not just meet interest payments. That way you can always access equity. You cant access equity on an IO loan, because there wont be any there!
Good luck with it all, it sounds like youve found a little ripper, just make sure you do more due diligence than ever with regional properties.[biggrin]I like that advice Audrey, about ringing surrounding suburbs.
Whether P&I or IO should depend on your whole strategy.
IO means more cash in your pocket for servicing other loans, still alows you to pay extra if you want, and nowadays comes with redraw.
Regards
JohnInspired Finance
(02) 9944 7776Trish, my concern is confirming the rent and the vacancy in the area. If it is a mining related town what is the term of the rent ie 3 months,6 months. Cost of rerenting could be one weeks rent each time. Gloria
Thanks for your replies everyone,
I like the idea of ringing agents in the surrounding area, next on my list, There are 5 property managers in the town, Do you mean ask locals about the PM in the area??? With the vacancy rate in the area, some property’s have a two year lease.regards
Trish[biggrin]
P.Stickels
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