Hi all
My wife and I are looking at purchasing an investment property which can eventually give us some rental money, and at the same time also have some capital growth.
Having done some research, we came up with the Campbelltown area as it appears from all indications, the rental return is hovering around the 5.5% to 6% rental return.
The unit we are looking at is around the 400K mark, however we are hoping to buy it cheaper than that. Although in a complex of around 60+, it ticks the boxes as far as location (5 minutes from shopping centre and trains) and offices. The strata is also reasonable, around the 650 pq, and the rental is currently 430pw.
We live in Kogarah and on Friday it took us around 30 mins to get there. We feel that this area is growing quite fast and there will always be a market for tenants who prefer to live outside Sydney, yet maybe work in the area.
Someone suggested buying a house in the area at that price, however I am not sure whether from a rental point of view that would be wise, as there seem to be more costs associated with it and the possibility of tenants doing more damage.
Any input would be greatly appreciated.Simon
-
This topic was modified 10 years ago by
simondema.
My friend just bought a house in campbelltown , fully renovated at 485k, P+I loan with 105%loan and only need to top up $200 each month before tax. They have their landlord insurance as well. If they set up the loan and claim tax deduction, they might can get cash positive on their investment.
@wiwin tell your friend to be very careful and review his financial situation. its more likely that his loans are crossed at 105% lend. please advise your friend to uncross his properties.
@simondema
Campbelltown and most especially the surrounding suburb is going through gentrification. new developments are still ongoing in the area. for that budget, you are better off looking at houses than units mainly due to the demographics of the area. if you really want to invest in units as per your strategy, I suggest looking at lower priced units in the area as this gives you the same rental return as you wanted. Try ringing some real estate agents in the area and ask what sort of properties are in demand in terms of rentals.PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Thanks for your comments.
Looking on realestate.com most of the houses don’t appear to be less than 450k to 500k. Not sure whether you would be able to re-coup the rental return, especially after you add all the costs of purchasing it.
I guess the unit would suit a couple or professional, and the house a family.Simon
@php , i told them already but they said it’s already happened and they don’t wanna spend more $ to uncross it.
I think they can’t see what make it difference.@simondema – are you looking at new houses?
@wiwin – if its an internal refinance, most lenders don’t charge any fee. There really is not much benefit holding on to x-coll loans for a long period. he’s actually in a dangerous position now, if all goes south all of a sudden, he could potentially lose one if now all of the crossed properties.
-
This reply was modified 10 years ago by PHP.
PHP | Mortgage Station Pty Ltd
http://www.mortgagestation.com.au
Email Me | Phone MeGive us a call or send us an email for a free residex report.
Up until yesterday we hadn’t thought of new house, or ANY house for that matter! We thought that because we wanted a rental cashflow that a unit would be better for rental than a house. However, as you always start talking to people when you start these journeys, the general consensus (including this forum) is that for the money, a house seems a better option. It makes sense in term of the capital growth and land value. We reasoned that the differences are:
1. You are buying a 3 year old unit vs a 30-40 year OD house. I would think the depreciation on the unit would be much better.
2. The unit has nothing to spend on (it already has a tenant) while the house would probably need updating a bit.
3. The fact that more units are being built in the area, does that mean the value of units will go down due to an excess of stock, or because the people living there or moving to the area prefer units over houses?If houses are as easily rentable as units, then we will certainly look at them. We just think the initial costs of a house will be greater than a 3 year old unit, thus cutting into our rental percentage.
We are confused!!Simon
You also have to think about the ongoing costs of a unit – body corp fees. While some elements are cheaper, the strata fees can certainly bite into profits. Make sure you do your cost spreadsheets on any prospective purchase.
Thinking about capital growth, land appreciates, buildings depreciate. You can do more work (renos etc) on a house over a unit.
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
If you are buying in Campbelltown (meaning Campbelltown city, not the suburbs of) you will only get an older home for that type of money as new/newish homes have increased like the rest of Sydney. Park Central in Campbelltown is a great location with prospective tenants always preferring this area to the units north of the CBD.
Hi all
Thank you for all your replies.
I think I will change my strategy and focus on houses now. Although the unit might be easier to rent in the short term, I think the true value might come with the future capital growth in the property. Besides, I think it will be a nice change to be able to finally buy a house, even if we won’t be living in it.
I am looking at suburbs not only in Campbelltown itself, but also the outlying areas such as Bradbury.Simon
-
This topic was modified 10 years ago by
You must be logged in to reply to this topic. If you don't have an account, you can register here.
