Hello
Im thinking of buying a property in a decent coastal area in NSW with lo vacancy rates and probably holding even though they will not likely be any capital appreciation in the short-term, doing a small cosmetic renovation and adding another dwelling. Good positive cash flow (approx 8-9%), Would you be happy enough with good cashflow and not appreciation in the short term, or would you want better options. If I did need to sell id make a loss, is this all too hard and noth worth persuing?Purchase Price: $320K
Cosmetic Reno: $25K
Rent: $300 per week
Close to 100% finaced through already exisiting IP
Borrow a further: $100K to build/construct 2nd dwelling
Rent: $300 p/wTOTAL BORROW $445K + holdcosts/purchase etc.
TOTAL RENT $600 per week
TOTAL VALUE ON COMPLETION APPROX $440K
Approx Gross Rental yield 8%Sounds like a hard way to do it.
You need to ask yourself why are you buying it if it’s not about getting growth.
Over all the plan sounds good if everything comes together, but you have no exit strategy which is the most important thing to have in the business of buying and selling property.
What are your longer term goals? What are you looking to get out of doing this as part of your bigger plan?It does sound a little hard. I thought it was a relatively easy way to get in and learn a bit more about IP while having positive cashflow.
My aim is to quit work in 5-7 years and have income from IPs to live the life I want. I thought of doing a few of these sort of properties and then selling one or so to pay back some of the debt and buy more over time (thats my exit startegy), but the capital appreciation just might not be there quick enough to make this a worthwhile investment. So i might have to look further abroad, I just wanted to get some valeuable opinions as I want to make sure im doing teh right thing.
Cheers
Deandangermouse99 wrote:It does sound a little hard. I thought it was a relatively easy way to get in and learn a bit more about IP while having positive cashflow.
My aim is to quit work in 5-7 years and have income from IPs to live the life I want. I thought of doing a few of these sort of properties and then selling one or so to pay back some of the debt and buy more over time (thats my exit startegy), but the capital appreciation just might not be there quick enough to make this a worthwhile investment. So i might have to look further abroad, I just wanted to get some valeuable opinions as I want to make sure im doing teh right thing.
Cheers
DeanDean, like everyone, your heart is in the right place with your ideas, but its the head that needs to keep things in check.
Property is a slow animal. If you try and push it you will get burnt.
I hurt my neck quite badly a few years ago and it took me 5 years to be able to do the things I loved again. I was doing all sorts of things to try and hurry up the healing process, many of which looking back probably did more damage than good.
The point is, you can't rush things that aren't meant to be rushed. Property is a great investment, but you need to take your time and look for property that suits your goals and also gives you enough room for the what if's.
There are easier ways to do it, just need to have a look at what other options are available.yield versus capital growth comes down to your overall strategy. a lot of investors are happy to forgo growth in favour of yields as it can provide a quicker way of achieving financial freedom. having said that, some people believe overall wealth accumulation over the long term is far better when you pursue capital growth. it's all relative to what you want at the end of the day.
just be careful not to over stretch yourself especially borrowing at close to 100%, you're leaving yourself wide open financially…
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