All Topics / Help Needed! / Unit on a main road im looking at tonight – Need advise please!!!!

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  • Profile photo of Chris89Chris89
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    @chris89
    Join Date: 2011
    Post Count: 49

    Hi Guys, thanks in advance for helping :)

    Im looking at an IP for my first purchase. I have arranged an inspection for the below property.

    http://www.realestate.com.au/property-unit-tas-hadspen-108728301

    What are your views on this property? Is it a major issue that it is on a main road? The property is for sale for 179,000, a possible return of 220-230 per week. The unit is across the road from IGA (mini mart), post office, hair dresser and bottle shop. It is a 100 metre walk to the bus stop and a 5-10 minute drive to the middle of Launceston.

    It might also be worth adding that this town is approx 5,000 people and a big supermarket (coles / wolworths) may be coming to town down the track.

    What do you all think of this as an investment? Any feedback would be great.

    Profile photo of Chris89Chris89
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    @chris89
    Join Date: 2011
    Post Count: 49

    It is also worth mentioning that the town has a bypass highway

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    It's always a good sign if a major supermarket chain is moving to town.  When is Bunnings moving in?

    What is the demand for rentals in this town?  Is the vacancy rate nice and tight, hovering below 2 percent?  No point buying something if nobody will rent it.  Talk to a few managing agents in town and find out if people are signing onto waiting lists for such rentals.  What is the historical capital growth for this town and other peripheral towns of Launceston?  You'd want it sitting above 7 percent as a minimum.

    I could not imagine anything worse than living in a one bedder for the rest of my life but ultimately, there is less space to have to clean, it keeps the bills down, and you don't have to share with a housemate.  I have noticed rental managers commenting that one bedders are in very high demand for these reasons.

    I always thought that main roads were an absolute no-go zone, but ultimately, there are only a certain number of properties in the immediate surrounds of shopping centres, and of those, only a certain number are rentals.  I've literally been at viewings for properties for sale and observed prospective renters walk up asking if it was for rent and if not, did anyone know of any rentals in the area.  I've also just acquired a place smack across the road from a shopping centre that a couple of middle aged ladies were gagging to move into, after just having to move out of another property smack across the road from the same shopping centre… on the other side of is perimeter.  The only reason they were moving was that the landlord wanted to renovate.  Seems to me that people wanting to rent small dwellings or things near shopping complexes are happy to stay forever.  Moving is expensive, and with demand for rentals being high, they are stressed about finding themselves in a situation of being evicted rom one, and not being able to secure another.

    I suppose as the cost of living increases, there will be a growing contingent of people that figure a big expense that needs to be eliminated from their lives is that of owning and maintaining a car.  If you live across the road from the shops, the commute home with the groceries is virtually no different to commuting from the supermarket checkout to the carpark.  So long as there is public transport that will take you into town for all the other services, all is good.  Remember that middle aged and older folk are a big part of the demographic that lives in one bedders, so be sure that medical services (doctors, pharmacies, hospitals) are nearby, or within an easy commute. 

    Check to see if the unit is a part of a body corporate and if so, what the annual costs are for the body corporate fees and/or its insurance.  Investigate if a portion of this is for communal lighting and gardening and be aware that you will be unable to control this fee if the good people at the electricity company hike their rates up a lot.  I was mortified to observe on a 2 bedder unit recently that the council rates were over a third more than for a block double its size round the corner that was on its own independant title with no body corporate… that the body corporate fees had gone up more than 10 percent a year for the last 3 years, and that the electricity and gardening in the "communal areas" (otherwise known as the street grrrr) were suspiciously higher that a regular electricity bill.  If it turns out that such holding costs mean you might has well have bought a larger dwelling on a larger block (ie spending the cash on mortgage rather than body corporate fees and electricity), it is something worth giving some thought.

    All that said, if you decide it is a goer, hopefully nobody will snap this one out from under your nose.  Might be safer to just mention the general info on the property rather than the actual address

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    ps it does sound like is has everything a renter needs.  without researching the town and the property myself, it sounds like a good property

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Tracey BTracey B
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    @tracey-b
    Join Date: 2009
    Post Count: 158

    Hope your inspection went well…..my only hesitation would be the promise of a tenant/rent rate as the rental market is not as strong as it was 12 months ago – make sure you prove to yourself that you can get a tenant at the rent you expect, maybe make the contract subject to securing a tenant @ $x per week.

    Food for thought: Here’s another property you might like to check out which has a higher yield than the Hadspen one: http://www.realestate.com.au/property-unit-tas-riverside-108548436. You’d pick up a single one of these for $130K and they rent for $175 per week. Not as pretty but the tenant is already in place for 12 months….and there’d be an opportunity to renovate and increase yields….there’s one in the complex that has had new carpet and some paint and rents for $210 per week.

    Hope your first investment goes smoothly.

    Profile photo of jarradb3jarradb3
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    @jarradb3
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    I would always check if it is for Investment purposes, what the previous rent was. If you need any assistance in that or if you can gear the property in a way that would suit. Let me know I can see if I can help

    Profile photo of Chris89Chris89
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    @chris89
    Join Date: 2011
    Post Count: 49

    Thanks guys, there is no body corp as it is only 2 units on the block. I will look into this further :)

    Correct, I probably shouldn't of posted the address. With that said im not necessarily in the best posituion to invest, so im not too phased as to whether I putr an offer in or someone else purchases.

    I think more what I was asking is if this property would pose a higher risk. I don't want to make a bad decision for the first IP I buy. Do you think this would bring a higher risk then any other property?

    Thanks heaps though guys :).

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Chris89 wrote:
    With that said im not necessarily in the best posituion to invest, so im not too phased as to whether I putr an offer in or someone else purchases.

    Perhaps it's best to wait until your situation improves before purchasing your first IP. If cashflow is the issue – you really don't want to overstretch yourself early on. It won't be a nice experience.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Chris89Chris89
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    @chris89
    Join Date: 2011
    Post Count: 49

    For that I would be comfortable but still not 80% of the purchase price, more like 12% or so. Thanks for the advice Jamie.

    Profile photo of RickgRickg
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    @rickg
    Join Date: 2011
    Post Count: 11

    Hi,
    When appraising the anticipated sale price of main road properties, consider the type of road & reduce the sale price by a predetermined percentage.
    A Highway maybe around 25% a major arterial road maybe 15 to 20% & so on.
    Imagine picking up the house & moving it a few streets back to a close suburban street, work out what the expected sale price is, then discount the anticipated sale price by the predetimened percentage.
    Regardless of the type of property or suburb, this method works very well & is constant regardless of market conditions.
    I hope this helps.
    Thanks

    Profile photo of Michael 888Michael 888
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    @michael-888
    Join Date: 2005
    Post Count: 260
    Jamie M wrote:
    Chris89 wrote:
    With that said im not necessarily in the best posituion to invest, so im not too phased as to whether I putr an offer in or someone else purchases.

    Perhaps it's best to wait until your situation improves before purchasing your first IP. If cashflow is the issue – you really don't want to overstretch yourself early on. It won't be a nice experience.

    Cheers

    Jamie

    ^
    ^
    ^
    ^
    What he said. Don't rush. Leave yoursself enough buffer and breathing room if your finances struggle for any reason.

    Also a (potential) six and a half per cent gross yield in a town not even in Launceston itself is hardly a great investment IMHO.

    Profile photo of biggaz13biggaz13
    Participant
    @biggaz13
    Join Date: 2011
    Post Count: 62

    Always consider your exit strategy.

    Will it take a bigger fool than me to buy the house when I go to sell it……….

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