Hi,
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would purchasing a IP for $205,000 with a rental return of around $175 be OK? I know that this is not the 11 second rule, but how low a percentage would be acceptable?thanks Dot[
]p.s I am putting in “due diligence” now I am spending hours on the computer after work as well as during!!!
Hi Dorothy,
No-one else has come in yet so thought I’d make a statement.
In my mind, depends very much on your strategy and plan. If your going for +ve only I would have to say keep looking. If your group includes good buy & hold’s for CG ( & this meets that requirement), doesn’t seem too bad on the surface.
Information is limited so hard to provide any firm views.
Good luck
Essykay.
$175 x 52 weeks = $9,100 p.a.
$9,100 / $205,000 x 100 = 4.43%That’s a pretty average gross yield so i’d expect the property to be in a great location, probably within a few km’s of the city centre and with expectations of high cap gains.
Unless you have a big deposit, this property will mst likely be neg geared depending on how you finance it.
Remember properties do not have to be close to a city centre to appreciate. Think near railway, runway, fairway, freeway with continuing private and government investment.
I’m with Essykay on this on Dot. Acceptable to you or me or anyone else is subjective to your own needs. Remember though that cashflow is present and in your pocket. Capital Growth is subjective and in the future.
Do whatever gets you closer to your goal (the one you have written down).Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinHi all,
Thanks for your input.
it looks like “back to the drawing board” for us. After having read through everything on positive IP’s, I think that’s the way to go for us.
Quention, thanks for the formula – I felt too silly to ask how to work it out![
]P.S. What population level would you start looking at for country towns? Even if agents tell me its a good rental town, Im weary when population is only around 1600??
Thanks again,
I have learnt soo much from this site already.
Dot [:X]
Hey Dorothy,
As to population I always think If I have to sell this property quickly for any reason can I. In a small town the chances are much reduced. Also Is the chance for a smaller town to shrink or a larger town ??Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinHey Andrew,
Looks like this town is growing, but I think I will stay clear for now.
When we buy, it will be our first IP, so we are feeling a little nervous. Perhaps when we have more experience we can look into this again[
]Thanks ! Dot
Hi Dorothy,
By way of encouragement – most of us have been throught those nervous first stages, some of us still have questions and are learning all the time. It sounds like you are taking the right approach – research, asking questions etc. When the right one comes along (and it will) you’ll know it and it will look good (numbers) and feel good to make it happen. THis is all part of the fun of investing. It does get a little easier as your experience builds.
Happy hunting
Gus
Thanks for the vote of confidence Gus.[
]>$175 x 52 weeks = $9,100 p.a.
>$9,100 / $205,000 x 100 = 4.43%yeah, a little lame, and that’s not taking into account less 10 percent to get it property managed/and or, ‘work’ being a landlord/property managing it yourself…advertising for tenants, repairs and maintenance…it also doesn’t take into account rates, vacancy, closing costs….
hmmmm….
even the bank would do better than that for you
How many have you looked at???
Dolf de Roos says look at 100 properties to find 10 you like. put offers in on 3, and end up with one. It sounds a lot, but i am sure that by doing that you get a feel for the market and you will be able to tell the good deals from the bad ones. hopefully!!
cheers-
Minithanks Mini, ALL advise welcome.
We are taking it slow and learning a lot.
Regards Dot[
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