Hey peoples, need a little help with some basic stratagies I think are a starting place for me to buy an IP.
When I read 'median house prices' and 'median rents' in the area are they a good indication to base your purchase price on?
For eg. if median prices are $268k and rents $230 and I have found an ugly duckling or 'problem' as steve puts it for $170k. quotes from professionals and my services to reno $30k, closing costs included $210k.
The rent I want is $280/290 wk still negative but as close as I have found yet! I know steve says always work on what it is being rented for so I presume in this case it is the median (230)? The agent told me $280/290 after renos should'nt be a prob! I dont believe agents any more than mechanics though so after talking to all the tradies who quoted, they assured me the rent I was asking was reasonable especially for working famalies. Basically what I am asking is buying below median and renting above median a good place to start!
Love to hear answers from people living investing!
NejasA couple of points to note – how many sales have been used to determine the median? what are they comprised of (ie are they comparable sales or sales of glitzy palaces or dogs with fleas (are the sales skewed or are they a good representative sample)? How does this property compare to the median or those which have sold?
Speak to other real estate agents in the area who have a substantial rent roll – ask them whether they manage any houses in that street (or nearby) – check them out externally to get a rent comparison. I say speak to a different agent (sure they will try to get your business by talking it up however you aren't yet in a position to give them the nod, yet).
Thanks for the advice. No's sold 120 last 12 mths days on market 55. Understand about glitzy places and dumps! In this area $250k and under need work. 4 agencies have 2/3% vacancy rate, all have said under $300 a week go within the week. One said 300 rentals on their books 1 available at that price. Veiwing comparable properties are'nt an option as I am 7 hrs away, when investors look at properties outside their area how do they go ahead with them, surely they dont fly or drive to every area to inspect, then again maybe they do!
It is all a matter of risk & how you undertake your due dilligence. I visit each area of interest, usually more than once (unless you rely on others to undertake this work).
Get to know the agents, the good, the bad & the ugly.
How will you know when you are being ripped off either on purchase price, rentals or repairs/refurbishment?
Your right, a little money and time spent could save thousands in the future!
I have just finished owner building and being a tradie have a fairly good idea of costs involved in reno's. When you talk about being ripped off on purchase or rent can you please elabourate? Or are you talking about not seeing the property in person?nejas wrote:When you talk about being ripped off on purchase or rent can you please elabourate? Or are you talking about not seeing the property in person?
Nejas, the risk increases on both sides when you have not seen the property in person. As you haven't seen the property you may not be aware of any externalities (agents and others may be painting a rosier picture) eg property may be next door/across the road from a brothel/bikie club house etc which would dramatically explain why you can't get the expected rent or a tenant at all.
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