Just thought I’d share a story that happened to me today.
A company selling townhouses in Acacia Ridge Queensland dropped in to see if I’d be interested in purchasing a unit (or two…).
They are two bedroom townhouses selling for $126,000 and renting for $170 per week. My quick calcs showed them to be reasonably priced so I started to ask a few questions:a) How is the employment in the area?
b) What is the anticipated capital growth for the next 1/3/5 years?Funnily enough the selling agent didn’t know the answers to these questions. I realise that I will need to do further research myself on the area in question before I go further with them.
Any comments would be appreciated.
Thank you,
Mike.
Mike,
You are obviously a Brisbanite like myself so Hello. I’ve been over a few times (4-5) looking at properties all through that part of town and the prices from these companies seem a bit high.I use Steve’s practice of the 11 second solution. On your numbers they are outside the parameters. One of the things that really caught my vision with Steve (and other like him) is their advice to only buy positively geared property (aside from Tax considerations). I have bought two such properties so far and am looking for many more. One of the advantages of Poitive geared property is Capitl growth is somewhat irrelevant as the property pays itself off. In regards to Employment in the area that can play a part but I usually like to see how many properties are for rent right now. Going around to various agents and getting their rental list is very interesting because you can then see what others are receiving for rental and how many rentals are out there.
One deviation from my last statement though is that even with a few rentals out there you can always differentiate your property. This is discussed in Steve’s material.
It is interesting what agents don’t know at the appropriate time… makes you think they don’t do their homework or don’t want to know the answers. Trust nobody but yourself when it comes to research.
Hope this helps.
Andrew DHey Mike,
My question I would like to ask is how did you do quick calcs to work out if it was a good deal. And how can I learn to do you do these “quick” calcs?
Regards,
TonyHi
Great site.
QLD property; above all, be careful about how much the outgoings
are, eg rates, body corp.
Especially body corp in QLD can be very high, it can a significant sum
of your bottom line. I also wonder about capital gains, this will to some extent depend on population growth.
ReginaHi,
Re: Qld property
I had to cut a chq for $18,000 for stamp duty on 21 units I purchased in Qld for $530,000 before settlement – which is not until October!
This was news to me as in Vic. stamp duty is payable on settlement.
Just another reminder about the different laws in different States and the everlasting education as a property investor.
Re: calcs. In the ‘Links’ area there are links to several useful online property calculators. People who buy the Wrap Library also get access to several calculators that I have designed and published that are specific to wrapping.
Regards,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve & Dave
I’ve been looking at QLD props in Logan. On the face of it, they have good rental yields (over 10%).
however on a 40k unit, body corp is $600- $1200 pa and the rates are over $1200 pa.
rent management also seems pretty high too.Anton
Thanks for the information on body corporate and stamp duty. These are things that quite often get overlooked during the sales pitch.
Andrew, thanks for the welcome, but I am not a “Brisbanite”, I hail from the Central Coast of NSW. I am simply looking for where my small starter fund will get me the most “bang for the buck”.
I am currently looking around on the coast for properties to either renovate or +ve gear, but due to massive capital growth rates in the area, this is going to take some time.
Mike.
Steve,
I notice that settlement is not until October this year. That’s at least a six month contract. How were you able to negotiate such a long contract and why did you?
I understand that with more than 4 units financial institutions regard that as a commercial proposition and therefore will not lend finance in the form of an investment property loan. My enquiries so far have revealed that the maximum LVR is 80%. Do you know of lenders who will lend on 90% LVR?
Cheers
MarkMark,
Re: the long settlement… we asked for it!
We will be doing an 80% lend on this deal, which is our standard finance terms that allows us to continue to borrow money.
In this case, the lender that we are using is the NAB.
Can I ask who you have sourced at 80%?
Thanks,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Steve,
The Bank of Queensland would do 80% but there were some conditions – that was about three months ago. We didn’t quite have enough for 20% deposit at the time so didn’t pursue it any further. It was a real shame because the 9 units yielded about 14% gross and I was able to put $800 positive cash flow in the pocket a month.
No doc loans may be worth investigating?
Cheers
Mark Sprenger
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