Is this a good deal??

Viewing 3 posts - 1 through 3 (of 3 total)

nzuvo09
Member
@nzuvo09
Join Date: 2009
Post Count: 11
March 13, 2010 - 9:51 am
Just wondering if the following is a good deal for a first IP.
Looking to put in a deposit of $15k at the moment.
Current sinking fund for the complex of 6 units is $24k .
http://www.ljhooker.com.au/property_profile.php?propertycode=2126795&propertytype=residential
Help needed urgently. Thank you in advance your help guys.
basbog
Participant
@basbog
Join Date: 2010
Post Count: 58
March 13, 2010 - 10:30 am
Hi
If you are putting a cash deposit down + you have to pay the buying costs, then your loan would be 134k. Based on 7% + 3,000 p/a in holding costs this should cost you 2,500 p/a to hold before tax. Is it a good buy, Cairns has boom & bust cycles because it relies so much on tourisim, at the moment tourisim is low, gfc, unemployement is high, so you are not buying at a peak, so it could be.
Just do your homework, enjoy the ride
Barry
Ryan McLean
Participant
@ryan-mclean
Join Date: 2010
Post Count: 547
March 15, 2010 - 11:49 am
We can’t answer whether or not it is a good investment. What might be a good investment for me might not be a good investment for you. I have seen good investments go bad because of bad investors and seen what looked like a horrible investment make a ton of money because it was run by a great investor.
To determine whether something is a good investment or not I would first need to know your investment strategy. What are your goals? What do you want to achieve?
Do you want to achieve positive cashflow? If so this property probably isn’t the most cash flow positive property. Any cash flow you make will be eaten by the strata fees. You are looking at paying almost 19% of your YEARLY rent into strata fees. That seems like dead money to me. I would much prefer to buy a house and LAND!!!
If you are after growth then it is speculative whether it is a good investment property. As Basbog said, the market in Cairns is boom bust. So it could be good, it could be bad…it depends how the market responds.
If it is positive cash you are after stop chasing units with less than 7% rental income. I find better details that that everyday and share them with my members. Have a look at my site (link in my signature). If you need help then my site could be the place for you.
So, in conclusion, get a goal and an investment plan. Then weigh the property against that investment plan and see if it fits in. My investment plan is to invest in positive cash flow property so for me this is a BAD investment. What is it for you?
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click Away
Ryan McLean | On Property
http://onproperty.com.au
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