All Topics / Help Needed! / What do you think about this??

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of SjostromSjostrom
    Member
    @sjostrom
    Join Date: 2006
    Post Count: 7

    Hello

    I really enjoy some of the posts on here and it occurred to me to ask some questions?

    What do you think?  I actually have no idea what I'm doing so I'm just thinking out loud really.

    3 bedroom house (1 room is actually a sleepout), recently restumped, rewired and re roofed.  Owners paid 205 000 2 years ago and aforementioned reno cost 20 000.

    asking price 219 000.  median price for location in a poorer part of a small regional city, 290 000. 

    I can pay cash.

    rental appraisal $220 + per week.

    Has been on the market for 3 months and no offers.

    Recently painted, on small block sub divided some time ago. approx 450m sq  built in the 1950's.

    Owners have already purchased a block, so may be itchy to sell.  Insulated, reverse cycle, gas, close to schools, shops and transport.

    Please remember I don't know what i'm talking about, so be gentle :)

    My plan is to buy and hold and I would LIKE CF+ but stumbled across this.

    I have no idea how a depreciation schedule works but can only imagine its for newish properties, not things like this.

    Appreciate your wisdom.

    Thanks

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    If your strategy is cashflow +ve properties then this property is not for you. Even if you pick it up for 200k, if will still be negatively geared to the tune of $400 – $500 per month. Also keep in mind that interest rates will likely rise further so it will cost you even more in the coming months.

    I think if you have a strategy, then stck to it.

    Cheers,
    Luke

    Profile photo of AJay7AJay7
    Participant
    @ajay7
    Join Date: 2010
    Post Count: 5

    Sjostrom if you have no idea what you're doing then may I suggest you don't do it.  

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    There is nothing special about this deal.  It is just another house.  In fact it is worse than nothing special.  There doesn't appear to be anything you can do to add value.  The reno is done, the block is a bit small to build in the backyard, or to subdivide.  There are better deals out there. 

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Kaz YoungKaz Young
    Participant
    @kaz-young
    Join Date: 2010
    Post Count: 25

    Hi Sjostrom

    A couple of other things you may want to think about in addition to comments of others, for this property or just in general:
    –  Agree, the rental return on the outlay is nothing special
    –  Depreciation Schedule – you can depreciate renovations that have been conducted, so although depreciation on a newish house would be better, still look at getting a depreciation schedule drawn up whatever you go with
    – You can pay cash – use as little of your cash as you need to make the deal work.  Use other peoples money where possible!

    Cheers,

    Kaz

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Further to what Kaz said; you could put down say a 20% deposit, and get a bank to pay the rest, and then park all the rest of your money in an offset account to hold off the interest on the loan.  then when you are ready to buy again, just pull that cash straight out and spend it on another I.P.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of SjostromSjostrom
    Member
    @sjostrom
    Join Date: 2006
    Post Count: 7

    Hi Everyone

    Thanks for all your comments.

    I will be studying next year and won't have an income hence the idea to put my money there rather than in a bank. 

    I'm not really sure how it can be negatively geared when it would be purchased for cash.  ?

    I appreciate all your input – I have a lot to learn and I'm happy to start at the bottom!! 

    I think I get a bit frightened when I see houses requiring reno's but I think once I overcome the fear factor, I'd enjoy the process.

    Thanks and have a great night.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    The thing you must understand about negative gearing is that you aim to deliberately make a loss.  A loss is a loss, even when a tax refund refunds PART of the loss. 

    If you can afford to pay $219k for a property, do it.  But do it in the following manner:
    – put down a 20% deposit and the stamp duty
    – get the bank to pay the rest (you'll need a job of some kind (McDs?) to illustrate ability to cope with the "loan"
    – park your money in an offset account. this will mean you will pay zero interest.
    – when you finish studying and get a better job, pull some money out of the offset account and use it as a deposit for property number 2.  You will be able to do this in an instant.  Whereas if you had paid cash for property number 1, you will have to muck around trying to get a bank to refinance.

    Alternatively, just pay cash and be done with it.  Worry about the rest when you finish studying.  Being IN property is far better than NOT being IN property.  But remember, this house in particular is not the only house on the planet available at that price.  There will be better deals out there where the rental return is higher for the price you paid for the house.  Or better still, maybe the rental return is just normal, but the backyard is massive.  Big enough to accommodate another house a bit later on…

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Where is this house by the way?  Is it near a uni?  If so, maybe you could rent the sleepout to a separate tenant.  That'd change things….

    Where are you located?

    Look at Norlane VIC… even if only to get your head around buying a house on a large subdividable plot.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470
    sbetreen
    Participant
    @sbetreen
    Join Date: 2010
    Post Count: 6

    If you send me the address of the property as long as it is in nsw, I can send you a free rp data report on this. The report can give you an estimated value.

    Shayne Betreen
    Mortgage Broker
    Gain Financial Solutions
    [email protected]

    Profile photo of SjostromSjostrom
    Member
    @sjostrom
    Join Date: 2006
    Post Count: 7

    Thanks sbetreen, I have realised that my idea was rubbish and I'm enjoying learning lots trawling on here.  It wasn't in NSW.

    Appreciate your thoughtfulness though.

    Regards

    Profile photo of Ben KBen K
    Participant
    @ben-k
    Join Date: 2010
    Post Count: 103

    The right deal will come along mate,

    and most of the best ones are created…

    good luck

Viewing 13 posts - 1 through 13 (of 13 total)

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