All Topics / Help Needed! / 1 unit 1 bath A GOOD INVESTMENT ??

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  • Profile photo of siewlinsiewlin
    Participant
    @siewlin
    Join Date: 2012
    Post Count: 19

    HI PLEASE GIVE ME SOME ADVICE.

    i have a small deposit and would like to start investing , however I'm not sure apartment type property which consist of 1 unit 1 bath 1 carport is a good investment ? i'm looking at maylands, bayswater  in Perth at the moment. the properties price range from 200k to 250 k . i did some calculation and it seems positive cash flow !!! thankssss

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi and welcome aboard.

    What size is the unit? 

    Have you taken into account all of the ongoing costs such as strata fees?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of siewlinsiewlin
    Participant
    @siewlin
    Join Date: 2012
    Post Count: 19

    hi jamie, 

    Lease ends 15.01.14 @ $270pw

    – Water rates: $689.90pa

    – Council rates: $1137.83pa

    – Strata levies: $633 PQTR

    – Reserve Levy $49 PQTR

    interest rate 5 % for loan  $170000 = $8500

    total expenses =$12316.83

    total rent + $14040

    cf  +  $1723

    did i miss anything ? plesae advise.

    i'm still waiting for the agent to reply regards the property size.

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 232

    potential vacancies

    damages to property

    increase in rates

    property manager fees

    body corp fees

    insurance

    personal costs to manage relationship with mangers

    want me to keep going?

    Profile photo of siewlinsiewlin
    Participant
    @siewlin
    Join Date: 2012
    Post Count: 19

    hey property boy , thanks for your feedback. from reading all the magazines , it does tell us that investing in apartment has lots of hidden fees and no growth in land value so  what kind of property which u will invest ? please share your knowledge thanks

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    siewlin wrote:

    interest rate 5 % for loan  $170000 = $8500

    Hi Siewlin

    How are you funding the deposit/costs? Are you using equity or cash?

    I prefer to look at the entire cost of the deal to determine whether it's CF+ and generally try to use borrowed funds over cash for IP purchases so the entire purchase plus costs remains deductible.

    So in this instance, if the property was purchased for say $250k – and I allowed another $12k for costs (rough estimate) than I'd be basing my interest repayments on a loan of $262k which annually would be around $13.5k. So after ALL costs – I wouldn't consider this to be CF+ 

    Also include insurance, property management and maintenance.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of rhino101rhino101
    Participant
    @rhino101
    Join Date: 2008
    Post Count: 31

    If you're using a property manager you would want to estimate approx 10% of your rent to be safe – in your case = $1404.  That brings your CF down to $319 just by itself, without including a budget for repairs.

    We have several units and while they can look PCF on the surface, you really need to do your research on all the possible fees – body corp fees and rates alone can make a big dent in a budget on a cheap unit. That said, it is still possible to find truly CF positive units if you do your research. Try doing the same figures on a range of property types and go with what you're comfortable with.

    Profile photo of rhino101rhino101
    Participant
    @rhino101
    Join Date: 2008
    Post Count: 31
    siewlin wrote:

    i'm still waiting for the agent to reply regards the property size.

    This is fairly important with units – often banks can be reluctant to lend on smaller than 50sqm, which, while you may be comfortable with that, it can affect your ability to re-sell down the line when less buyers can qualify.

    Profile photo of GrantMckGrantMck
    Member
    @grantmck
    Join Date: 2013
    Post Count: 36

    HI,

    I would consider looking in some regional areas in medium size towns for Duplex options. There are opportunities in some areas where you can get a 3 Bedroom, 2 Bathroom, Single Garage for under $250 k with a $300 per week rental, and vacancy rates under 1%!!

    Look abroad in various markets, if you struggle, look for a company that can provide a solution such as a Buyers Advocacy as they will do the research, find property options and complete an Analysis on the investment.

    Cheers Grant

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 232

    Dont read those property magazines they all sell a false dream but never actually disclose most peoples $10m property portfolio is funded 90% on debt (what happens if 20% decline in value takes place? do you want to be stuck in the city you invest in to manage) or the fact that they were able to get to that figure as they had equity via unencumbered property from family members to begin with. No real value add there.

     

    I couldn't think of a worse trap to get into! Just a slave to the Bank

    Profile photo of siewlinsiewlin
    Participant
    @siewlin
    Join Date: 2012
    Post Count: 19

    hey so do u mean that property investing is just a scam ??? it make us work harder for the banks?? i'm in a junction now , life is very confusing right now . i have saved up some money and wanted to study medicine however, i believe that through property investing , it can give me financial freedom if i do well . please advice

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