HI PLEASE GIVE ME SOME ADVICE.
i have a small deposit and would like to start investing , however I'm not sure apartment type property which consist of 1 unit 1 bath 1 carport is a good investment ? i'm looking at maylands, bayswater in Perth at the moment. the properties price range from 200k to 250 k . i did some calculation and it seems positive cash flow !!! thankssss
Hi and welcome aboard.
What size is the unit?
Have you taken into account all of the ongoing costs such as strata fees?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
hi jamie,
Lease ends 15.01.14 @ $270pw
– Water rates: $689.90pa
– Council rates: $1137.83pa
– Strata levies: $633 PQTR
– Reserve Levy $49 PQTR
interest rate 5 % for loan $170000 = $8500
total expenses =$12316.83
total rent + $14040
cf + $1723
did i miss anything ? plesae advise.
i'm still waiting for the agent to reply regards the property size.
potential vacancies
damages to property
increase in rates
property manager fees
body corp fees
insurance
personal costs to manage relationship with mangers
want me to keep going?
hey property boy , thanks for your feedback. from reading all the magazines , it does tell us that investing in apartment has lots of hidden fees and no growth in land value so what kind of property which u will invest ? please share your knowledge thanks
siewlin wrote:interest rate 5 % for loan $170000 = $8500
Hi Siewlin
How are you funding the deposit/costs? Are you using equity or cash?
I prefer to look at the entire cost of the deal to determine whether it's CF+ and generally try to use borrowed funds over cash for IP purchases so the entire purchase plus costs remains deductible.
So in this instance, if the property was purchased for say $250k – and I allowed another $12k for costs (rough estimate) than I'd be basing my interest repayments on a loan of $262k which annually would be around $13.5k. So after ALL costs – I wouldn't consider this to be CF+
Also include insurance, property management and maintenance.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
If you're using a property manager you would want to estimate approx 10% of your rent to be safe – in your case = $1404. That brings your CF down to $319 just by itself, without including a budget for repairs.
We have several units and while they can look PCF on the surface, you really need to do your research on all the possible fees – body corp fees and rates alone can make a big dent in a budget on a cheap unit. That said, it is still possible to find truly CF positive units if you do your research. Try doing the same figures on a range of property types and go with what you're comfortable with.
siewlin wrote:i'm still waiting for the agent to reply regards the property size.
This is fairly important with units – often banks can be reluctant to lend on smaller than 50sqm, which, while you may be comfortable with that, it can affect your ability to re-sell down the line when less buyers can qualify.
HI,
I would consider looking in some regional areas in medium size towns for Duplex options. There are opportunities in some areas where you can get a 3 Bedroom, 2 Bathroom, Single Garage for under $250 k with a $300 per week rental, and vacancy rates under 1%!!
Look abroad in various markets, if you struggle, look for a company that can provide a solution such as a Buyers Advocacy as they will do the research, find property options and complete an Analysis on the investment.
Cheers Grant
Dont read those property magazines they all sell a false dream but never actually disclose most peoples $10m property portfolio is funded 90% on debt (what happens if 20% decline in value takes place? do you want to be stuck in the city you invest in to manage) or the fact that they were able to get to that figure as they had equity via unencumbered property from family members to begin with. No real value add there.
I couldn't think of a worse trap to get into! Just a slave to the Bank
hey so do u mean that property investing is just a scam ??? it make us work harder for the banks?? i'm in a junction now , life is very confusing right now . i have saved up some money and wanted to study medicine however, i believe that through property investing , it can give me financial freedom if i do well . please advice
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