Hi all,
I’m after some advice on weather an apartment/unit I’m looking at is worth investing in or not.
Details are;
2,2,1
85m2
Level 2 of 6, middle of 3 units(overlooking gardens)
Excellent security, fringe Brisbane CBD, 2 min walk from bus, major hospital, coffee shops, event centre
Asking $410,000 – has grown by $70,000 since 2007. So $10,000 a year I guess on average.Currently renting for $455
Body Corp is $1500 per quarter
Rates $250 per quarter
Water $200 per quarterIs this a worthwhile investment? or should I let it pass?
Thanks,
Glen.
Hi, I don’t know the Brisbane market but if it’s like other cities you need to be careful when buying inner city units.
You really need to ensure the demand is there and that there isn’t an oversupply of your type of unit (and that it’s not a serviced apaetment).
Looking at the figures, can you handle the negative cashflow??
Also because it has gone up $70,000 recently don’t assume you will get that growth in the upcoming years.
You need to look at past figure (over the lasty 10 years). Property does not go up in a steady increase. It goes up sharply (boom) the can be flat or even negative for a few years before the next book. I know a lot of Brisbane is in a boom (has the city moved already? Has it’s boom run it’s course?Are you looking for Capital Growth? Because in order to NOT lose money you need it on a negative cashflow property like this one.
Hi, I don’t know the Brisbane market but if it’s like other cities you need to be careful when buying inner city units.
You really need to ensure the demand is there and that there isn’t an oversupply of your type of unit (and that it’s not a serviced apaetment).
Looking at the figures, can you handle the negative cashflow??
Also because it has gone up $70,000 recently don’t assume you will get that growth in the upcoming years.
You need to look at past figure (over the lasty 10 years). Property does not go up in a steady increase. It goes up sharply (boom) the can be flat or even negative for a few years before the next book. I know a lot of Brisbane is in a boom (has the city moved already? Has it’s boom run it’s course?Are you looking for Capital Growth? Because in order to NOT lose money you need it on a negative cashflow property like this one.
Thanks Catalyst.
No probably can’t handle the negative cash flow. I think the smoke is still around from the boom if you know what I mean…but I’d say it’s almost run it’s course for this season.
I’m looking for positive cash flow first and growth second.
Hi all,
Currently renting for $455
Body Corp is $1500 per quarter
Rates $250 per quarter
Water $200 per quarterI’ve only just started researching the Brisbane market so I’m sure other locals can confirm but 1500 body corp per quarter sounds very high, 6000 per year would definitely dent cash flow i would imagine!
Hi Glen,
If chasing +ve cashflow, this one isn’t it, surely?Currently renting for $455
Body Corp is $1500 per quarter
Rates $250 per quarter
Water $200 per quarterEven without Insurance, Maintenance and any RE fees, the fees shown above are costing $150 a week !! *Eeeekkk!!* That’s one helluva impost right there. Not looking like being +ve geared unless Purchase Price is WAY SOuth of $410k
Benny
Glen, you rerally need to do a lot more reasearch if you are wanting cash flow+ and think this will fit the bill.
You need to do the numbers BEFORE you put pen to paper.
Sit down, work out how much you can borrow and what type of properties will fit your criteria.
When you see a property that you think fits check he numbers.You must knopw how much it will cost you BEFORE buying, otherwise you coulkd be in serious trouble.
Hi Glen, the Brisbane market is definitely moving so all properties have gained capital. If you are looking for cash flow, it may be best to look at a dual income property. There a different options available with some better than others with capital growth so good research and due diligence is required.
Kylie Walsh | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors who provide Tailored Property Advice and Solutions
Thanks Stevie, Benny and Kylie for the responses.
Appreciate it…I think I’ll stay away from this one and keep looking. Sounds like a house maybe a better option.
I’d like to ask what your due diligence involves actually – is that history on the property, depreciation schedule, flood reports, pest inspections, what else?
Hi postup,
I’d like to ask what your due diligence involves actually – is that history on the property, depreciation schedule, flood reports, pest inspections, what else?
Those items you list are a good start. Due diligence is all about finding out as much as possible (especially the stuff NOT covered on paper in a contract). So due diligence should be done on finance (all aspects of it), your advisers (if you don’t yet have a trusted team), council planning (in case they propose to resume part of the land you are about to buy – eeek!!), etc, etc.
Write down everything that crosses your mind about this place you are planning to purchase, then consider all aspects of it – think of “all you need to know about it as an owner”. Think of how you could do “due diligence” on each aspect. e.g. is it the right fit for your target market? Is your target market likely to “move” into the future? Will this place still be viable if that were the case?
I think Steve has some kinds of checklists that he created some time back. As I don’t recall them, I don’t know just how detailed these might be, but they are bound to be useful. Or there may be lists already on forum somewhere. They could even be in books…..
Maybe someone in the know can point you to these? I’m struggling….. sorry.
Benny
Hi Postup
Here is a link below. This is for Victorian properties but will give you a guide as to what you should be looking for. I hope this helps.
http://www.consumer.vic.gov.au/duediligencechecklist
Kylie Walsh | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors who provide Tailored Property Advice and Solutions
Thank you for the advice all. Thanks Kylie for the link.
I found this https://www.propertyinvesting.com/store/buyer-beware/ but it looks old. And I can’t find a link on the page to buy it. Is there a new version or is the software version the go now?
Don’t want to disagree for disagreeing sake with Kylie but NOT all Brisbane properties have gained capital.
Certainly we have seen some good growth in a number of suburbs but we spend hours each week analyising deals where clients have rushed in on the advice of so called experts only to find they would have considerably overpaid for the property if they had proceeded.
With the Town Plan changes there are some definite areas that we would expect to see growth over the medium term.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Definitely agree with Richard that certain suburbs in Brisbane have seen considerable capital growth which is why it is always important to do the right due diligence on any property prior to signing any contracts.
Kylie Walsh | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors who provide Tailored Property Advice and Solutions
You must be logged in to reply to this topic. If you don't have an account, you can register here.
