All Topics / General Property / A good Deal ?

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Just recieved an offer from a friend wishing to sell his property, believe it’s a fully serviced unit for holiday makers and i asked a few questions, i’ve posted his response..as follows:

    So many questions….

    ****** , Price $265K to $280K Fully furnished,

    **** has seen it plus I just paid $2700 to get it repainted about 2 months ago.

    12 units in total in the group with pool and tennis courts and BBQ as common.

    The unit is *******, 3 min to shops (video, tavern, supermarket, Thai restuarant, etc and less than 1 min to beach.

    Total out goings including management fees $1500. per 1/4 plus $80. p/w for cleaners.

    1 master bedroom with ens and robes,
    1 large double room with robes,
    1 double room with single beds,
    1 loft with two single beds that can sleep a lot more.
    2nd bathroom / laundry with washing machine,
    dryer, iron equip etc and much much more….

    Rental changes per season but at the moment (peak season) $2270 per week

    income last year $22’000.00[/i]

    “doesn’t fit the 11 sec rule at all but my question to you -what do you think of this deal ?”

    REDWING

    “The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”

    Profile photo of NamasteNamaste
    Member
    @namaste
    Join Date: 2003
    Post Count: 35

    Hi Redwing.

    Was just running thru your figures. It’s not a bad -ve geared property (almost neutral geared too) but being a holiday unit I believe it carries with it a higher risk. I have heard that holiday units are harder to sell than other types of property and of course you have the risk of it being affected by an off season and the inconvenience of irregular payments.

    You can get the same type of -ve geared deal with a traditional property any time you want so why do it with an IP which has a higher risk attached?

    Regards,
    Karan.

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Hmm
    just had a basic look at the figures..

    $80 p/wk for cleaners x 52 = $ 4160.00
    $1500 p 1/4 management fees x 4 = $ 6000.00

    $4’160+
    $6’000
    = $10’160

    $22’000 per year profit –
    $10’160
    = $11’840

    Resulting in about $227.69 p/wk cash coming in.

    Thats assuming all goes well, can’t seem to bring up any “mortgage calculator” graphs on this computer so don’t know what the repayments would be on a $270 K Loan ?

    There’s better deals out there and i believe with these type of things management choose the cleaners, usually themselves ( the caretakers) and all repairs and maintainence are handled by the management for which top dollar is paid and they sometimes get a fee of the contractor for using him.

    Was interesting to look at and a nice place.. but not a good investment.

    As BLOWIE said in another post there may be stipulations that you have to get new carpet every five years or re-paint etc also what happens if the tenants the management put’s in place trash the place etc, use a dodgy credit card or such, as generally it’s short term stays.. just had a horrible thought “schoolies week” [}:)][B)]
    REDWING

    “The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”

    Profile photo of NamasteNamaste
    Member
    @namaste
    Join Date: 2003
    Post Count: 35

    Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:

    Purchase price 270000

    Initial cash spent to aquire prop
    Deposit 0
    Closing costs 13500

    loan
    Principal 256500
    Type Interest only
    Term 30
    Interest rate 6.20%
    Weekly repay $305.83

    Annual cash flow received
    Rent per week 420
    weeks 50 (assuming 2 weeks no tenant)
    Total cashflow received $21,000.00

    Annual cashflow spent
    Loan repay 15,903.00
    Management costs 6,000
    Shire Rates and Water Rates 0
    Insurance 200
    Repairs Maintenance 4,160

    Total cash outflow $26,263.00

    Annual cashflow position
    Total cashflow in $21,000.00
    Total cashflow out $26,263.00

    Annual net cashflow -$5,263.00
    Weekly net cashflow -$101.21

    Cash on cash return
    Annual net cashflow -5,263.00
    Initial cash needed 13,500.00
    cash on cash return -38.99%

    As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.

    Regards,
    Karan.

    Profile photo of blowieblowie
    Participant
    @blowie
    Join Date: 2003
    Post Count: 41

    Namaste,

    Could you please send me that spreadsheet. Im always after new gadgets to fiddle around with….

    My email is [email protected]

    cheers
    tim

    Money is an elastic resource, it can be created. Time is not.

    Profile photo of annaw2annaw2
    Participant
    @annaw2
    Join Date: 2003
    Post Count: 178

    Hi Redwing,

    Re the holiday unit, is it let through an agent or does it have on site management?

    We were thinking of selling a 2BR holiday unit with on site managers but have decided against it, one reason being that the manager buys the management rights at considerable cost and it is his business so he is prepared to put in a lot of time and effort to run a good business to get his own income.

    There certainly are costs involved and there are seasonal returns, but we purchased this particular one a year ago for $95,000, paid 10% deposit, IO loan, and the returns have been good, up to $1500pm nett for a few months. We’ve just had a look and talked with the managers and were impressed with how they are running the unitsand keeping the whole block to 4 star standards which I gather is based on how the property presents, inclusions, eg dishwasher, etc. They are in the process of some refurbishment and external painting, the latter paid by B/C, we agreed to pay for new bedspreads and curtains.

    I answered a post recently where I thought less of the ‘pooled’ type of letting but having seen more and asked a lot of questions when we were there, am happy with the outcome. Gives a varied portfolio anyway. The previous onsite managers were lazy, these took over early in the year.

    Anna

    Profile photo of adambcadambc
    Participant
    @adambc
    Join Date: 2003
    Post Count: 145

    quote:


    If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.

    Regards,
    Karan.


    Hi Karan,

    If you could send me that spreadsheet too that would be great please. My email is adam.baden-clay (at) defence.gov.au

    Thanks in advance,

    Adam

    Don’t Let Life Get In The Way Of Living

    Profile photo of stargazerstargazer
    Participant
    @stargazer
    Join Date: 2002
    Post Count: 344

    Hi Karan

    if its ok i would appreciate the spreadsheet send to [email protected].

    thanking you

    regards
    alf

    Profile photo of rebecca2rebecca2
    Member
    @rebecca2
    Join Date: 2003
    Post Count: 54

    quote:


    Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:

    Purchase price 270000

    Initial cash spent to aquire prop
    Deposit 0
    Closing costs 13500

    loan
    Principal 256500
    Type Interest only
    Term 30
    Interest rate 6.20%
    Weekly repay $305.83

    Annual cash flow received
    Rent per week 420
    weeks 50 (assuming 2 weeks no tenant)
    Total cashflow received $21,000.00

    Annual cashflow spent
    Loan repay 15,903.00
    Management costs 6,000
    Shire Rates and Water Rates 0
    Insurance 200
    Repairs Maintenance 4,160

    Total cash outflow $26,263.00

    Annual cashflow position
    Total cashflow in $21,000.00
    Total cashflow out $26,263.00

    Annual net cashflow -$5,263.00
    Weekly net cashflow -$101.21

    Cash on cash return
    Annual net cashflow -5,263.00
    Initial cash needed 13,500.00
    cash on cash return -38.99%

    As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.

    Regards,
    Karan.


    Profile photo of rebecca2rebecca2
    Member
    @rebecca2
    Join Date: 2003
    Post Count: 54

    quote:


    Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:

    Purchase price 270000

    Initial cash spent to aquire prop
    Deposit 0
    Closing costs 13500

    loan
    Principal 256500
    Type Interest only
    Term 30
    Interest rate 6.20%
    Weekly repay $305.83

    Annual cash flow received
    Rent per week 420
    weeks 50 (assuming 2 weeks no tenant)
    Total cashflow received $21,000.00

    Annual cashflow spent
    Loan repay 15,903.00
    Management costs 6,000
    Shire Rates and Water Rates 0
    Insurance 200
    Repairs Maintenance 4,160

    Total cash outflow $26,263.00

    Annual cashflow position
    Total cashflow in $21,000.00
    Total cashflow out $26,263.00

    Annual net cashflow -$5,263.00
    Weekly net cashflow -$101.21

    Cash on cash return
    Annual net cashflow -5,263.00
    Initial cash needed 13,500.00
    cash on cash return -38.99%

    As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.

    Regards,
    Karan.


    .
    Hi Karan,
    I’m new to this site and property investing and would love your spreadsheet.
    Regards
    Rebecca.
    [email protected]
    fanx

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Hi KARAN (NAMASTE)

    Would love to recieve your spreadsheet to evaluate, thanks [:)]

    Please e-mail to barrytspencer “at” yahoo.com.au

    Thanks also for the loan repayment figures, don’t know whats wrong with the computer re; calculator graphs such as westpac, realestate.com… i’ll have to search out better calculators or one’s without a graph!

    Annaw2

    His property is let by the on-site managers

    REDWING

    “The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”

    Profile photo of kelvinhkelvinh
    Member
    @kelvinh
    Join Date: 2003
    Post Count: 37

    Great to see people makin use of my spreadsheet creation… Yeha…

    Its a very simple way to differentiate between what sound like a good deal and what IS a good deal…

    Profile photo of NamasteNamaste
    Member
    @namaste
    Join Date: 2003
    Post Count: 35

    Hi kelvinh,

    I have told everyone I have emailed the spreadsheet to that I can’t claim the credit for it. Sure has saved me a lot of work and helped cull the crap from the possibilities.

    Thanks again

    regards
    Karan.

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    KelvinH and Namaste

    Thanks for the spreadsheet… the quick response!

    REDWING

    “The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”

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