Im looking at buying two units. the figures are as follows:
$170,000 Purchase price (for both)
95%LVR ($11,500 own funds required)
$370 pw rent return (already rented)
11.32% Yeild
48% Cash on cash return after all fees
$106.per week cash positive
The downside is they are as you would expect not the most sought after properties, therefore could have issues selling at a later stage. One has a long term Tennant (old lady) who wants to stay on. The other I'm not sure.
Units are in Tasmania which is pretty much rock bottom prices so you could expect some capital growth when the market rises but nothing major. The units are worth probably $110k to $120k each so available equity strait away (approx 25k).
My question is would you buy it? The figures add up very well but would need to be more of a long term investment.
I welcome your opinions?
Cheers
Pagey
Sounds great to me based on the figures.
Cash flow positive with likely CG. Can't ask for much more than that.
You need to have an exit strategy though. No good if you are stuck and need the money if you can't sell them.
Are they separate titles? What's the vacancy rate? Would you need to do anything to them if you needed to get new tenants?
Thanks for the reply Catalyst. They are separate titles but in a block of units so have Body Corporate fees, but thats taken into account with the returns above.
Not sure on the vacancy rate ill get onto that thankyou!
The one with the old lady could do with a new kitchen and spruce up. about 5 – 8k worth of work would bring it up good and again increase the value.
Good cash flow.
Just remember even at 95% LVR with capitalised LMI (97% ish), you would require your 5% deposit plus 3-5% for stamp duty and legals. So I think your funds required is a little on the low side.
Are you sure you can LMI on the post code ?
As Rick mentioned i think you might have to consider a blended 100% loan over a 95% ivr as this would free up more fund.
Also remember the mortgage insurer will be unlikely to allow you to access the increased equity for a minimum of 3 months and then only assuming a registered valuer agrees with your valuation figure.
Certainly a few things to consider.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for your replys guys.
I already have 2 properties in this postcode with 95%LVR so im comfortable i can achieve that again.
My calcs for own funds required is based on buying both as one property so they may be a little on the low side.
Richard, what do you mean by a blended 100% loan?
Cheers
Pagey
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