Is my IP positive geared?

There is also the water rates, which will be probably between $180 and $200 per quarter, so $800 per year.

Your insurance figure looks rather low… I am assuming you are talking freestanding house since you've not mentioned any body corporate fees.  As such I would be very surprised if you could get insurance for under $800…

Further to Jamie's comment re the interest, interest is calculated daily, added to the balance, and then calculated the next day, added to the balance etc, and then at the end of the month you pay the interest.  This is known as compounding interest.  You can't calculate it just by multiplying by 0.057 as you would if you were calculating interest on say a term deposit account. You have to do it like this:

Interest is 5.7%.  Per day this is 5.7 / 365 = .015616%.  You divide that by 100 to get .00015616. So your calculation looks like this:

$212k x 1.00015616 x 1.00015616 x 1.00015616 x 1.00015616 x ,,,,, etc for however many days there are in a month.  So after 30 multiplications (30 days) by 1.00015616 you end up with a figure of $212995.40.  Subtract the original borrowings of $212k and this means you have an interest owings of $995.40 for the month.  So you pay that and then you start again at $212k for the next month, and you multiple by 1.00015616 thirty times, so you pay $995.40 in interest again.  So basically you'll pay $995.40 or thereabouts, 12 times since there are 12 months of the year.  $995.40 x 12 = $11,944.80.  It doesn't match Jamie's figure of $12084 because if you say a year is 12 months of 30 days, you end up with only 360 days.  As you know there are 365 days, so it's not exact but just trying to illustrate to you how compounding interest works.  I figure you'll get the idea.

Wow – who is the insurer?  Is it just building insurance, or is there also the landlord insurance in there?

It is important to insure as follows:

Building insurance – full replacement

Contents insurance – to cover anything considered to be a "content" in an investment property.  Normally this refers to carpets and window coverings.

Landlord insurance with tenant protection – to cover rental default, malicious damage by the tenant, putting the tenant in a hotel if damage occurs to the house and you are obliged to pay for them to live elsewhere during repairs

You also want to have public liability and legal liability cover. 

This should all come in a standard insurance policy where you've specifically asked to also have landlord insurance.  Be warned, a tenant can do $40k of damage without even trying.  You don't want to be without this cover.

Also be very clear on whether $250k can indeed rebuild.  Your rebuild cover will have to be enough to pay for demolition of existing building and removal of debris from site, council planning permits and such, the rebuild… and don't forget how expensive driveways, carports, garages and fencing can be.  Can't see how you'd get a new 3 bedder house with all that stuff I mentioned, for $250k.  And then there is landscaping and any decks and such.

Joe you are insane.  I don't see the landlord insurance component as being optional.

Either way, I really don't think $250k will get you a new house, driveway, carport/garage, fencing and landscaping.

I'd strongly encourage you to readdress what you insure for.  One incident could easily wipe you out.

Yay!  I've convinced you.  I have achieved something useful today.  Now I just need to work on convincing you to have the landlord insurance bit bolted on

There is also stamp duty, that'll cost around whatever 5% of $260k is.

It's probably prudent to include a couple of weeks without rent….and also a weeks rent letting fee to the PM.

Cheers

Jamie

In that case – I wouldn't worry about whether it's CF + or CF – 

I'd be more concerned about it being vacant for so long!

Is the asking price in line with similar rentals on the market? 

What's the PM's feedback been?

Cheers

Jamie

Hi Joe,

            With regards to your insurance its up to you how much you insure for.  You're able to work it out.  For example I recently purchased a property for $247000,  crazy as it may seem I insured it for $250000.  I valued the land at $170,000.  I'm with RACV and  also and got the multi policy discount approx $400.  Yes it would be disappointing if the place burnt down but $250000 will go a long way in building a new house if I have to chip in so be it but I can guarantee you that the property would no longer be worth $247000, it would be worth $360000+ and no reno I could do to it would bring it up to this price.

              Good Luck Joe