Thanks Derek,

The property is up for sale at $135000 and the annual rental is $13780.

After applying the 11 second solution, this looked attractive and worthy of closer inspection.

However, after the Body Corp fees of $4338 were applied, this started looking more like a negative cashflow.

After duplicating a possible outcome in a spreadsheet with decreasing values of $5000, I discovered that this property would not attract a CoC return of more than 10% until the price was $90,000.

Now a little about the property:

This is student housing. A 1 bedroom, twin share apartment. It is managed by a reputable non-profit organisation. As such, I would not be permitted to live there or supply my own tenants (even if I wanted to), as that is arranged by management.

The agent says that the vacancy rate is 2-3%. The agent also thinks the original 1998 price is not much less than the current asking price as there has been little or no capital growth on this site. The lease is only ever for 12 months, given that students may only attend the uni for a year and then go home.

Since there is little or no capital growth, I can’t understand how the current investor can possibly have made any money from this property. Perhaps that is why they are selling. Would it be rediculous of me to offer $85,000 and see what happens?

This property might not be a goer, but am I thinking like an investor or a dreamer?

Cheers,

Jonathan.