I have 2 deals that I'm looking at currently.
One in the outer suburbs of Adelaide, 2 maisonettes on one title. The agent has either rung me or emailed me for the last 3 day since I attended the open. The properties have a combined rental income of $445. One unit is in good condition, the other needs a few repairs eg. skirtings with gaps, broken kitchen handle. They are on the market for $320-350,000. My offer would be much lower than this (clearly they don't have ppl running to buy them).
My issue is that they're on 1 title but the land is 1300sqm. The area is being renewed with many of the maisonettes knocked down and next door there is four houses built on the one block. I would have to borrow over 80%lvr.
The other deal is in surfers one street back from the beach. Old 2 bedroom unit. Have only seen external photos but internally said to be in original condition. This property is well under $200,000. Rent is around $220pw. I have enough money to be under 80%lvr.
Any opinions on which one might have better capital growth, which might have a bigger gain in rent? Any other opinions to help me in my decision making? I wish I could have both but can't afford it (anyone got a spare $50,000 send to me please)
lila77 wrote:My issue is that they're on 1 title but the land is 1300sqm. The area is being renewed with many of the maisonettes knocked down and next door there is four houses built on the one block. I would have to borrow over 80%lvr.
Not usually an issue arranging finance for a few securities on the one title above 80% LVR
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Remember whilst borrowing > 80% is available on multiple titles when you knock the property down you will only be able to borrow on the land value so need to make sure you have cash up your sleeve to reduce the loan if necessary.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You'd be rolling a pair of dice to work out which of the two mentioned investments have the better long term growth.
The first one is mentioned in Surfers … one block back from the beach. What tends to kill a lot of the Surfers Paradise investments is the continual sets of new apartments that are released onto the market.
But here's the funny thing …….. If its 60s and a little shoebox with basic accessories .. its reasonably easy to get an 'adequate' tenancy. If its 80s and fully featured with decent carpets and tiles and a kitchenette .. FORGET IT. People head towards the newer more flush apartments and will only settle on a 80s style apartment if it has a great position, a reasonable deal of space or is underpriced. Dont forget that some of these places come under management schemas that cost a certain amount PER DAY. Thats often never factored into the mix when considering a Surfers investment.
Surfers Paradise is also dealing with a saturated apartment market at the moment. Be cautious on what you think is a bargain. All markets right themselves eventually. But sometimes that can take years.
The Adelaide property (outer suburb left undefined) seems to have an upside in that there is the possibility of bringing it up to spec (cleaning and fixing it up). However from your description of it .. why are people not running to buy it? Is it a gem in the rough .. or just a polished rock? 2 income sources would lower your risk level on the property repayment financing, but it also increases your expense slightly (2 x rates notices, 2 x any bills).
The question you will have to ask for the Adelaide property is .. if i lost all my investment money tomorrow .. could I live in here? If the answer comes back from yourself … that you couldnt .. despite all its numbers working .. MOVE ON. If you cant see yourself there, why should anyone else? HOWEVER, if you can see its potential, and thats not currently visible .. then dont be afraid to step up to the plate. Sometimes a bargain is hidden as the wrong type of investment.
Have you thought about advertising for the extra 50k? (I'd ask for a little more so you have a little flexibility). The current scenario is .. there are lots of people out there with pensions and superannuation schemes looking for a bit of extra income over and above the avg 5%+ they get now. Work out what you can offer to attract them in this current market. I would suggest that like vendor finance .. an extra 2-3% would get people interested. Advertise in the money column of the paper for 50k (or more) at 7% or greater. You should get a bite. Ask for that to be fixed if possible or annual renegotiations. If you are smart like this .. you can get two investments. NOTE HOWEVER : The bank will always step in and get priority on the property should you default. Secondary creditors may find themselves screwed out of the deal in a foreclosure. Talk to a lawyer for all paperwork.
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