Hi all,
I am 22 and a first time poster – trying to learn as much as i can before starting to invest in property.
I have come across a block of flats with 3 for sale out of a block of 4. On the surface they all seem as though they would be cash flow positive, they all are tenanted, and in a decent location with low body corporate.
I was just wondering if anyone had any thoughts as to why 3 would be for sale at once. (They seem to be different sellers as they came on the market at different times and through different agents.)
I am new to this but the only reason i could think of is that there must be high costs somewhere aside to the body corporate. Can anyone suggest any other reasons or what other costs to look for?
Thanks in advance for any help…
]Cheers
Matt
[
]hi matt
a good place to start might be to ask each real estate agents why this unit is for sale.
Have a look at the area :
* is there something undesirable happening close by
* is a major business/industry/employer closing and so tenants may be hard to find
* are the current tenants staying/extending their leases
* is there a problem with one of the owners of the unit – check with body corp
If everything looks good, the numbers add up and the bank is happy but you still have a gut feeling that something is not right, you can always walk away – you have to be happy and confident about it.
Good Luck with your hunting!
[8D]Hi Matt,
We recently did a reno. on a house in a large regional town. The house come up great, but it still took 4-5 weeks to tenant even though it was priced fairly.
The prospective tenants were all inspecting, but when they did, the nextdoor neighbour was playing his BLARING MUSIC[}
][}] and scaring them all away. He was the neighbour from hell!!!![}][}].Perhaps the person in the 4th unit, is related to him?????
My best advice is try to speak to all of the tenants. If there is a problem, they won’t hold back.
Good luck,
DelHi Matt,
3 properties available in close succession may not mean anything. I bought a place (1/6) and three other properties in the block also sold around the same time (4months).
Just wanted you to know it’s not unheard of. High capital growth spurred on at least 2 of the sales….(and has continued), but each vendor had different reasons for selling. 3 years on I’m happy with the purchase.
Its REALLY good advice to ask WHY the owners are selling – Speak to them directly if you can, not just for benefits pricewise, but it will also satisfy the curiosity you have.
Good work. If the numbers add up and it feels right, go for it!
Steph.[]Matt, as a first time investor ? and at your age, I would suggest tread carefully indeed.
Matt, something called risk management, which my ex boss made me never forget was embedded in my mind in a job interview I had many years ago and failed to get. It was one of the questions that came up about a work situation and it never entered my mind that risk management would be an important factor in that situation. I have since learnt, I hope, that it is crucial that you manage your exposure to risk.
Investment experts are always talking about diversification of your investments, and the importance of it etc… Diversification is a means of managing your risk exposure to events that could adversely effect the performance of your investments. Instead of being completely wiped out when things dont go your way, diversification helps you minimise the impact, by limiting your risk exposure.
That all said, and hopefully understood, I would suggest avoid the whole block of 3 units as a risk management measure or matter of risk management principal. Now the block may be fine, absolutely nothing wrong with it. But then if it ain’t fine, you could be stuck with not 1 not 2 but 3 expensive lemons. That could sink your ambitions as a prospective investor. Perhaps just buy the best one of the bunch, if it checks out ok, then move on to another location.
If there is a fire and the whole block is wiped out, where would that leave you and your investments. Even if insured, the delays in investigation and repayment could prove costly from an investment perspective. For an old pro with many blocks of flats and other investments, no biggie, but for a new starter a potential disaster.
I suggest you start small and spread your risk. I suggest buy in different geographical areas for one.
Always think risk management and diversification of investments.
good luck
I think its good that some one of your age is getting in and having a go…I cant remember what I was doing at that age..but I wasnt thinking about investing….pitty! Just take it steady and as some one else said check out the risks. If its dangerous dont go there.
Will
Hi all,I am 22 and a first time poster – trying to learn as much as i can before starting to invest in property.
I have come across a block of flats with 3 for sale out of a block of 4. On the surface they all seem as though they would be cash flow positive, they all are tenanted, and in a decent location with low body corporate.
I was just wondering if anyone had any thoughts as to why 3 would be for sale at once. (They seem to be different sellers as they came on the market at different times and through different agents.)
I am new to this but the only reason i could think of is that there must be high costs somewhere aside to the body corporate. Can anyone suggest any other reasons or what other costs to look for?
Thanks in advance for any help…![
]Cheers
Matt
Hi HWD07
“Put all your eggs in one basket… and watch that basket carefully” Warren Buffet
and who am I to argue with the great man??[
]Cheers
David U
Good one Dave!
Hi David,
“Put all your eggs in one basket… and watch that basket carefully” Warren Buffet
” Hmm, I couldn’t bear to watch myself sinking in quicksand. I would prefer it be a small pot hole, on my way to the oasis.” HWD007 [
]Regina that’s a great idea checking body corp minutes.
If available, check body corp minutes of the meeting and sinking fund, any major structural issues?
Matt I think it is a great idea. After checking all the good suggestion here. Are any of the flats owner/occupied? The minutes would be a great source of info and after you buy you have 3/4 control over the body corp.decisions in the future.
Good luck. let us know how you get on.
LynneHello Matt,
Based on what I have read, you are not out to buy all three, you are just concerned that something may be wrong as they are all on the market.
If this is the case, focus on the one you want, and only the one you want.
The type of expenses you should consider are:
- strata/body corp fees
Shire rates
Water Rates
Land tax
Property management expenses (including costs of reoports, advertising, and miscellaneous expeneses)
Maintenance costs
Loan CostsOther factors to consider are vacancy rates, demand for the type of building, location and proximity to amenities in the area, as well as council plans(just in case they are planning to put a freeway in your backyard)
I may have missed a few points, however, this will give you a good idea of the properties profitabilty potential.
David Femia
Femia Property Group
Property Investment Consultants
http://www.femiapropertygroup.com.au
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