Hey guys,
I have found a deal that i think looks quite good. Have a glance over and tell me what u think.Single Bed Apart.
Popular town, hi growth.
Purchase Price: $60 000
Body Corps pa: $ 3 300
Rates: $ 1 256
Weekly Rent: $ 180
Mgmt Fees currently @ 8.5%Flat appears to be in good condition. Coat of paint and a little modernisation wouldnt hurt, but calculation of approx $500 to do this, would suffice.
My calculaations show that the prop would return approx 6.67% of purchase price after listed expenses. I have not included insurance or closing fees on the property.
Tell me what you guys think.Thanks.
Hi Charchie,
One thing that pops into my mind, is the floor area of the apartment. Some banks have a problem if it is too small.
The figures look pretty good to me, but I am just a novice…
Sue [
]“Be careful not to step on the flowers when you’re reaching for the stars”
Charchie- heya :o)
The bodyt corp fees are pretty high at 3,300. Is it university accommodation or something? some places with a gym or other high maintenance equipment require owners to periodically pay a special levy to update the equipment. You might wanna check that out from past B/C minutes.
i have a rule about BC fees- I won’t pay over $1000 per annum. But then again- 60k for an apartment is bloody cheap, so perhaps the annual costs seem very worth it.
As with Sue, I’d be interested to know what size it is. Also, if it is uni accommodation, there might be a possibility of taking out a long lease with the University.
kay henry
mr Charchie
this is the way i’d look at it
if i put in 20% deposit and borrowed 80% finance how does the deal look ?
so $60,000 means 12,000 deposit plus 2,000 purchase costs. Total cash into deal $14,000Now income if rented for 50 weeks per year $9000
now expenses remember you are borrowing 48k at 7%
interest $3,360
rates $1,256
B/c $3,300(ouch)insurance should be included?
management $765
total expenses $8,681
profit $391 (not much at all)
so the return on your investmnent of $14,000 is $391 or a 2.79% return.
so this property is not really a cash positive one at all, it would have to have a high capital growth potential for me to even consider it. High Capital growth is unlikely in most of Australia.
regards westanHi Mr Charchie,
Sorry but i have to agree with Westan here, im not sure if you are fully 100% financing the loan, but if you are, you need to be aiming for a minimal 14% return on your rental gross yield, for this property to be even positive cashflow.
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlhey Charchie,
$60k is dirt cheap… i would guess the floor area would be small (40m2 or less), and if this is the case you may have a little more trouble getting finance if you want to borrow over 75% lvr.
When it comes to body corp fees, though…. o my gosh. My guess would be: highrise, a few elevators, gym, pool, sauna… These can be a real killer. Body corp shouldnt be your biggest expense. Elevators usually mean high maintainance costs, which means big costs for small units.
best of luck in your hunt,
blowieMoney is an elastic resource, it can be created. Time is not.
Hi all,
Thanks for your input and advice in regard to this. U have made a few observations that i have overlooked.
After taking your advice and speaking with others about this property, i have decided not to purchase this property.
I will clarify i few things in regard to the property though:
Floor area is 47 square metres
Ground floor apartment
Apparently the excessive BC fees are due to the size of the land that it is on. Backs on too rainforest. Doesnt justify $3300/yr though.Thanks again for your help.
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