found property in regional centre rent at moment 525pwk but if tenant moves could get 400-450 pwk at current rent income 27300 fix interest rate @6.25% strata agent cost repairs costs between 20399-20919 per yr borrow 100% so current profit 6381 but if leaves 400pwk 200 p/yr profit or 450 pwk gets 3001 per year, is 2br 2bathroom 1year old so get depreciation tax allowance say its building cost 135k, 2.5% is $3375 tax deduc. on 40% tax cash back is 1350 on profit. so min of 1350 + 199=1549 max of 1350 + 6381=7731 is it worth it compared to the smaller priced houses in regional areas!
What are you aiming for here, posative cashflow or capital gain?
If posative cashflow, how long is the current lease? Have you asked the tenant what his/her plans are? Are there many rental properties availavle in the area?
If capital gain, what is happening in the area? Developments? What is the council up to? Is the population increacing?
Firstly decide what srategy you are planning to use then decide if this property fits the strategy.
Looks tempting though, make sure you have the downside covered. Look at the worst case scenario.
I have probably given you more questions than answers right now, but you need to consider them when making your decision.
Keep at it
Best Regards,
Andrew.
***************
Be Great today!
***************I think Andrew asked an important question about what the current tennant is doing.
With higher costs your negative cashflow could break you if the current tennant moved out. How long could you afford to keep up the payments if you were unable to find a tennant straight away? 1 month, 2?? (I don’t know what your situation is, you may be able to cover it much longer, just something to think about.) The reason I say this is that my Mother taught me to look at the worst case scenario first. If the worse case scennrio is still comfortable, then you should be fine. Just don’t assume that the best case will stay forever or you could end up in trouble.
One question that springs to mind, why is the current tennant paying so far above market value?
My final word is, research… Make sure you know all the nitty gritty before basing a decision on what the real estate agent tells you. You know that their agenda is!
Good luck, I hope it works for you. Let us know.
Victoria
Reason can answer questions,but imagination has to ask them. — Ralph Gerard
Can you guys actually read that post?
found property in regional centre rent at moment 525pwk but if tenant moves could get 400-450 pwk at current rent income 27300 fix interest rate @6.25% strata agent cost repairs costs between 20399-20919 per yr borrow 100% so current profit 6381 but if leaves 400pwk 200 p/yr profit or 450 pwk gets 3001 per year, is 2br 2bathroom 1year old so get depreciation tax allowance say its building cost 135k, 2.5% is $3375 tax deduc. on 40% tax cash back is 1350 on profit. so min of 1350 + 199=1549 max of 1350 + 6381=7731 is it worth it compared to the smaller priced houses in regional areas!Am I missing something? Some of the figures don’t seem to make sense to me – such as “strata agent cost repairs costs between 20399-20919 per yr”.
If that was the case I wouldn’t touch it.
What are you aiming for here, posative cashflow or capital gain?If posative cashflow, how long is the current lease? Have you asked the tenant what his/her plans are? Are there many rental properties availavle in the area?
If capital gain, what is happening in the area? Developments? What is the council up to? Is the population increacing?
Firstly decide what srategy you are planning to use then decide if this property fits the strategy.
Looks tempting though, make sure you have the downside covered. Look at the worst case scenario.
I have probably given you more questions than answers right now, but you need to consider them when making your decision.
Keep at it
Best Regards,
Andrew.
***************
Be Great today!
***************aim to reduce my negitive gearing of 30k ,lots equity to use by buying positive properties, company rents these places ,vacant no longer than a day or two in stong demand area capital growth over past ten yrs 7.7% pa not many properties for rent that is my total costs borrowing 100% of property
Quote:Am I missing something? Some of the figures don’t seem to make sense to me – such as “strata agent cost repairs costs between 20399-20919 per yr”.If that was the case I wouldn’t touch itquote]here are the cost interest on 246k 6.25% fixed 5yr =15375, agent 8% income on 27300 =2184,strata cost 365per qu x 4=1460,rates 1600,repairs say 300 total cost to hold borrowing 100 % =20919 pa,so break even point is 402.20 per wk
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