Hi, I am looking around in regards to starting IP, I wondered what the consensus is to this relocatable home that is 15 minutes from me: It is $112 000 – 4 years old and ultra modern 1 bedroom home, laundry separate from bathroom, everything is very spacious and beautiful. Site fees $115-$120 p/w.. and the park owners said I could expect to rent it out for $300 p/w. I am not sure what interest rates are at the moment – if they are 5.5 % then it seems with those figures I could make at least $30 p/w. At 7.5% I wouldn't make anything.
When it asks if repayments are principle and interest, or interest only, how does that work out in the long run?
I appreciate feedback, I don't have a mathematical mind and I would jump in boots and all because that's the sort of person I am, not because I know what I am doing!!
Thanks
E Wolfe
Hi E Wolfe
Best not to jump in boots and all unless the investment makes sense. Not just from a perspective of whether the property is cash flow positive from day 1, but also considering factors of how easily it would rent, resell, survive a drop in demand… not to mention whether it would go up in value.
Properties inside caravan parks have been discussed before and not in a positive light.
Might be a good idea to take a step back and start at step 1. Talk to a good broker that can help you understand how much you can afford to borrow, and what sort of the property the bank/lender would permit you to buy. Give Richard Taylor a shout… he is userid Qlds007 on these forums.
https://www.propertyinvesting.com/user/qlds007
Just as a side note, given the price point you are shopping in I am going to assume your budget is low (or your risk appetite or both). Might be worth chatting with him about the option of acquisitions within a SMSF (Self Managed Super Fund) which means you can use superannuation monies to fund the deposit and buying costs of a property, and have a bank loan the balance (up to 80% of the purchase price).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
These are one of those things that can turn into a nightmare. Too many things out of your control.
There's no CG in these things because you don't own the land. Buildings depreciate land appreciates. So you have a depreciating liability with questionable tenure over the site, a rising interest rate out look, no CG opportunity and in all likelihood you'll be negatively geared before too long if not already.
I would make a comment but all I would be doing is regurgitating what Freckle said. The only thing I would add is a question which is what type of play is this because it doesn't look good from a cashflow play, a CG play or even a development play.
What are you trying to achieve?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi EWolfe
Firstly welcome to the forum and i hope you enjoy your time with us.
Secondly whoooo right there.
Your first investment property acquisition needs careful care and consideration and i for one would not be rushing in and buying a relocatable home.
Away from the fact that financing such a deal is going to be both difficult to obtain a decent lvr and secondly attract a higher interest rate as freckle has mentioned there is very little chance of capital growth.
When we work with a client we try and match the sort of property we recommend to their longer term investing objectives and assuming you are buying the property in your personal name would normally recommend a property that does is cash flow positive from day 1 with a sensible amount of gearing.
Get the first one right and there is no reason why your investing journey cannot be a prosperous one going forward.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks so much for your feed back…very valuable information and I appreciate your time – have a look at this home though –
http://www.coffsproperty.com.au//search/display.aspx?LN=1643399
to me it seemed quite amazing for the price bracket – outside not much, but inside is gorgeous – I guess that is why you don't get emotionally attached. Presently we have road construction for at least the next 4 years, which is why I didn't think there would be a shortage of tenants happy to pay a relatively high rent- at least short term- I would have thrown in house cleaning service for an extra $50 p. Is there not also a market for retirees wanting to buy into relocatable villages? The first agent I spoke to said that within the last week or so about 4-5 people had all of a sudden been asking about them.
I so appreciate your advice and am back to square one – I would appreciate being able to discuss my financial situation to at least assess whether or not I should continue to try and get into the market QLDs007, would you mind if I emailed you?
Thankyou all kindly, regards E Wolfe.
Hi Shahin, that thumbs down wasn't from me :0 I was trying to achieve positive cashflow.
Hi E Wolfe
I cannot stress enough the strong suggestion to steer clear of investing in onsite vans in caravan and holiday parks.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi E Wolfe
Sure feel free.
I am working thoughout Easter so drop me an email over the weekend and I can come straight back to you.
Email address below will find me.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
thankyou Jacqui, I will definitely steer clear as advised (but did you look at it?)
Erin
E Wolfe wrote:thankyou Jacqui, I will definitely steer clear as advised (but did you look at it?)Erin
Hi Erin
Yes for sure I looked at it. Still wouldn't touch it myself. If I wouldn't be prepared to put my own cash into a particular property, I wouldn't be encouraging anyone else to do so either.
Back to square one… defining your short and long term objectives…. the current cash pile and income you have to work with…. and go from there. No need to just rush out and buy something "because it is something you can afford". You definitely want to be more targeted than that. You want to be sure of how a property is going to fare in the market when conditions go up and down a bit.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
E Wolfe wrote:to me it seemed quite amazing for the price bracket – outside not much, but inside is gorgeous
It's your run of the mill portable. Nothing special. By the time you've seen a 100 or so the wow factor disappears and the practical side of your assessments will have kicked in.
Quote:we have road construction for at least the next 4 years, which is why I didn't think there would be a shortage of tenants happy to pay a relatively high rent- at least short term- I would have thrown in house cleaning service for an extra $50 p.Property investment is a long term game in the main. Temporary surges in demand are just blips in the time line nothing else. You need to look at long term drivers of value in long term investments. It's no good if cash flow is great for 4 years then lousy for the next ten and the value slides.
Quote:Is there not also a market for retirees wanting to buy into relocatable villages?Buyers in this market are socio-economically disadvantaged for one reason or another. Without land tenure there's nothing to support the price let alone CG growth.
Quote:The first agent I spoke to said that within the last week or so about 4-5 people had all of a sudden been asking about them.Anecdotal information from agents that purports to support the viability of a purchase where they have a biased interest should be treated with skepticism to say the least.
Absolutely bang-on post from Freckle. Very very relevant and concise.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Plenty of places that will give you cashflow positive from week say 3. You may need to be comfortable with places that are regional or interstate.
If you are able to renovate properties then there are decent properties out there.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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