Hi all,
Can I have some honest opinions on the start to my property portfolio? Area is NewcastleProperty No 1.
Built approx 1984ish townhouse/unit in a complex of about 45 (end town house)
Belongs to a elderly relative who hasn’t lived in it for about 20 years, unit is in original condition.
as agreed to sell for 205 K (a family friend RE agent said would realistically achieve 210 – 215).
Was agreed to sell for 210 minus what agents fees would have been.
In totally original condition, planning on doing a reno costing about 10 -12 K.There is one other in complex for sale totally renoed (except bathroom needs another reno but still not in original condition like ours) and is listed at $239 (owner will take $235)
Others in complex are renting easily for $260 p/w
5 mins walk to major shopping centre complex, buses
Property No 2.
2 bed Brick town house, age????? 1900 ??????? typical small terrace
2 bed up, 2 living down, kitchen, downstairs bath.
New roof, original wood burning stove in what would have been original kitchen, now 2nd living.Kitchen and bath probably done maybe 10 years ago.
Has a walk way next to it that used to be the access for the dunny man and has that extra space upstairs over the walkway- thinking a good space to put in 2 ensuites?
Vendors accepted an offer of $290 K, did some research and found out they paid $208 in 1999.
Location is about 3 k from city centre, slightly industrial suburb, but lots of new residential developments being built + marina.The current tenants have a lease till May 2009 for $245 p/w which I’m told is at least $15 – 20 p/w under conservative market value. Have even been told that this suburb is VVVVV popular and agent would tend to push her luck a bit and try for a higher rent.
Took a lot of convincing to get my husband to agree to buying this one. He’s English so has a real dislike of terraced houses and thinks it’s not such a good idea to buy it. He thinks detached houses with garages are better.
I however see a house of which there are very few left in Newcastle (novelty value), can put in ensuite to the two bedrooms so would be attractive to people sharing house, and I want to reno to be a classy inner city house.
Have had a building inspection and there is some rising damp (but not uncommon in this type of house) fixable. Bathroom downstairs needs replacing, but will take out and just leave downstairs toilet maybe?
I am very nervous about this one. Have heard from various sources that this suburb will take off soon? Rent return at the moment isn’t as good as the first property but I am thinking it has the potential for good capital growth.Am I getting ripped off??
Am I doing the right thing?
Any way does any one have any pearls of wisdom, thoughts on my purchases?
Haven’t signed contracts yet. All constructive criticism gratefully acceptedbespocke
To me it sounds like you are doing your home work and thats the most importaint thing. Its only you and your partner that need to make the desishion. The good thing is you have not siged anything yet. Gut feel can be a good indicator as long as you dont get emotionally involved with any of the properties. Do your sums and consider if you have the time to renovate and the true cost involved. Some times even after we have done the home work we tend to be unsure I think you will find in time your choice will be the right one. Both sould ok I like the No 1. myself. You may be able to bargan a bit harder on the 2nd as they made ok money on it, use the rising damp and repair cost as a tool.
Good luck with it all.
T………Hi Bespoke,
I think it all comes back to what you are trying to achieve through your investing. Which property is going to get you closer to your investing goal sooner? What is your investing strategy? Once you know this, run the numbers and see which one has the better return for what you want to achieve.
Wendy
http://www.realestatewomen.com.auWendy Chamberlain | Chamberlain Property Advocates
https://www.wendychamberlain.com.au
Email Me | Phone MeMelbourne Buyers Agent & Sellers Advocate | Independent | Flat Fee
hi, my 2 cents worth.
you're starting your portfolio late so no boom to drive your investments. Good is that no rose coloured spectacles to cloud your vision.
your yield is quite realistic thus 'too low' thus bargain for a lower buying in price.
you need to look for a yield of around 6% if you can.
Property 2 : reno cost is going to kill any return you can get unless your property has the potential to achieve the cap gain to offset it. Salt damp costs minimum $15-16K to fix.
Look too at the seller's point of view. 1999 to 2009 is 10 years. He gets what? $82K minus costs. Net yield around 3.5% almost exactly what he'd get letting money sit in the bank. Is that what you'll get from this property?
Property 1 : I'd add on the costs of transaction i.e. your selling costs. A bit hard to bargain when a reli is involved.
End result still the same – you're the only one who can make the decision.
Question: is there another property freestanding, with devt potential further down the track?
Good luck,
KY
You must be logged in to reply to this topic. If you don't have an account, you can register here.
