Hi all,
my name is jamie and me and my wife are both 25 we currently own a house in perth,wa worth $640,000 and have a morgage of $187,000. I have relitives in bendigo and i go there quite often. My cousing recently bought a brick and tile neat 3*1 house for $220 and he is receiving $240 per week rent.
So i thought if I sold my house and managed to get 400,000 in the bank for it. then i borrowed another 480,000 i could buy 4 properties in bendigo and reveice a weekly income of $860 (960 – 10% management). My loan repayments on a loan of 480,000 is $816 per week… Which means i have 4 cash flow positve properties that are being paid off for me by the tenent. I have to take into account the fact i will have to rent in perth ( it is not worth buying here) and also the drought in bendigo. Any advice would be greatly appreciated.You will also need to factor in other expenses such as council rates, maintenance issues, land tax, water levies, vacancies and the like. This may well put a dampener on the idea. But good luck with it. You may find it a better option to borrow on the equity you have in your existing house.
Well done for looking to take the plunge!
My sister lives in Eaglehawk (suburb of Bendigo); good place.
Another option to consider rather than selling your house is to move out and rent your house out. You will rent somewhere else of course.
You access the equity in your house to fund the purchases of the properties in Bendigo and have your house as an I.P as well. This way you have cap growth and rent on 5 properties instead of 4.
The only problem is the figures will be different as you are borrowing more and using less cash, but you are getting more rent.
As a guide;
– Allow for 20% of the rent to be eaten up in holding costs of your properties (it is usually less, but this will cover any surprises and also allows for 1 month vacancy per property per year). This will cover every single expense you can think of; including management and insurances etc.
– Allow for 6% of the purchase price of the I.P’s to be extra for purchase costs (again, usually a bit less, but covers surprises).Also, look at getting Depreciation Schedules done for each property; including your own house(cost around $400-$500 per property and is tax deductible) to maximise your tax return (see an accountant about this part).
Don’t forget to get good Landlord’s Insurance on all properties (about $200 per property per year and tax deductible)
You will need to set up the right type of loan for this purpose; one of our great forum Mortgage Brokers can assist there.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hi Jamie’
I havent got too much to offer with regards to figures for CF+ IP in Bendigo, Marc seems to have covered that part quite well.However, I was born in Bendigo, fam still out Eaglehawk way, and I now live in Perth.
I have recently bought an IP in Bendigo, one comment I wanted to make is that in Bendigo there is a shortgae of rental properties, so rent returns are tipped to grow over the next year or so.
In Eaglehawk a large gold mine is due to open soon or maybe next year. This may create further rental demands out that way.
It was just interesting to see the bendigo, eaglehawk links on this forum.
Good luck with it.
Terry
[hair2]
The reason i want to sell my house is becuase i dont see any future in owning a house in perth. I paid $198,000 (built) my house in 03 i have probarly spent about 50,000 on it and now it is worth well over 600,000. I cant see it going up 7% a year over the next decade i think it will stay very much the same as it is now… I want to sell it to invest the money elsewhere…
Also what about the drought in bendigo If things get worse there the whole town could disappear. I have heard of 3rd generation farmers who now have no water and the goverment is forcing them to kill all their cattle…Originally posted by jamiedellam:The reason i want to sell my house is becuase i dont see any future in owning a house in perth. I paid $198,000 (built) my house in 03 i have probarly spent about 50,000 on it and now it is worth well over 600,000. I cant see it going up 7% a year over the next decade i think it will stay very much the same as it is now… I want to sell it to invest the money elsewhere…
Also what about the drought in bendigo If things get worse there the whole town could disappear. I have heard of 3rd generation farmers who now have no water and the goverment is forcing them to kill all their cattle…Hello Jamiedellam
I have heard somewhere along the tracks that once a city reaches a certain population that it is relatively self sustaining. The figure that was given to me was 70,000. Bendigo was about that size when I lived there over 15 years ago (for less than a year). I wouldn’t think that the plight of agriculture would have a severe effect on a major regional centre like Bendigo. Mildura, where I am from, is nowhere near as big and we also don’t suffer as much as we did years ago when things were bad; still hurts, but the town doesn’t die!The experienced investors (which I am not) say that don’t put all your eggs into one basket. You could keep your house in Perth (in the long run I think it is a good investment) and buy maybe two in Bendigo. A couple of years later you can buy again either in Bendigo or somewhere else if your finances alllow it.
You think also about what is the housing market for future sale in Bendigo. What will you do if you need money for something in the future (eg investing into a better deal) and you can’t liquidate all your assets. I have a house in a small place and we could not sell it when we wanted it.
Just my thoughts.
the idea is to own 4-5 properties in a place like bendigo and then in 10 -15 years i will have a + cashflow of over $1000 a week
Hi Jamiedellam
I think your idea is a good one. Crunch your figures well and go for it.
I have a five yr. plan,as I’m getting on a bit and haven’t got the time for long-term planning. I also want to have at least 5 IPS, with 3 completly paid for, and receiving at least $1000 per wk.
I plan to buy and hold some,(I’ve got 5 already) and buy, renovate, and sell some, to pay into the 3 I’d like to own outright. I am also looking for equity partners so we can buy multiple properties to sell after 3-5yrs. for a profit.
Any advice, or opinions that could help??
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