Deal or no deal?

How's this for an offer? Sign up for a house and land package in a growth suburb in Newcastle NSW. After all deductions the builder pays the difference for the first year. I.e. I'll be negative geared to the tune of $57 p/w which will be paid by the builder for the first 12 months and the finance company for the 2nd 12 months. Deal or no deal? Have you heard of this before? What are your thoughts?

Initial thoughts are: if it is such a strong area, why do they need to offer these incentives?

Hi Dylan, no I haven't heard of this offer however there's no free lunch and the cost would definitely be passed on to the purchaser somewhere along the line.
How do they pay? It may have awkward tax implications as well.

Generally, guaranteed returns mean you are paying a premium for the property. They have to get the money to pay you from somewhere.

If it is only $57/week negative (or around $3,000/yr) then you might be better doing some more research and buying a property off a regular vendor and getting a discount of $3,000+ on the purchase price.

Generally if you hear about guaranteed returns, or supplementing cash flow losses then I run for the hills. If it is too good to be true it usually is.

Also...just because they say it is a high growth area doesn't mean it is. Do your own research.

Plus wouldn't you want to buy positive cashflow property instead of negative?

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just A Click Away

By any means would this suburb there talking about be Fletcher just outside Wallsend in Newcastle, because there's alot of new residental construction going on there plus new schools. Alot of owner occupier there so not a real demand for renting in the area because young families are moving into the area maybe thats why the developer is willing to pay the difference.
I agree with ryan look elsewhere and try to get discount of $3000 in better growing under valued suburbs of Newy around Mayfield, georgtown.

Hope this helps

I would need to see more numbers then $57 per week.

One must ask themself, why am I purchasing this property....

Nathan Birch - W: www.nathanbirch.com.au E: nathan@nathanbirch.com.au
DEAL FINDER www.binvested.com.au