We are looking at two properties that are up for tender for $45-70k. Both are currently tenanted for about $120 a week each. They are situated in a small country town, with virtually no capital growth. Say we purchase both for $49k, and allow for 49 weeks a year rent (5,880), we get a 12% return. This works out to approx $47 a week to cover costs (rates, repairs). How does that provide income? The eleven second solution wroks here, but is this worth it? What do others think? Should we leave this one alone? We are ready for our first investment property and its a little scarey! Help!
]What are your objectives? Does purchasing one or both of these properties help you achieve these?
What is the likely future of the town? Is it stable or is a major employer such as a council, abattoir, likely to close or relocate? I find many country towns give good income returns but poor capital growth. However, I know many people who have done well by investing for income rather than the uncertainty of capital growth.
My gut feeling would be that you won’t make much, if anything, after mortgage payments, rates, insurance, repairs, property management fee. On the other hand if you put extra money in and pay the loan down quicker you’re building equity for future investments.
It’s natural to be apprehensive. Have you considered just purchasing one and seeing how that goes?
i agree with cjr, what r u looking for?
Are you looking for capital growth or rental yeild?
Personally i would be looking for a good balanced IP, with a good return and a good capital growth oppertunity.that’s me!
Good Luck
Karan*****
Please reply to [email protected]
*****Thanks for your thoughts!
Our objective is to buy as many positive cash flow properties as we can! But on doing the numbers on these we wondered if we’d have anything to show at the end of it, or even during the purchasing of it, considering costs! So it seems a little scarey. But I think we’re at the point now where anything seems scarey! As the houses are both up for tender, I thought it would be better to tender for both of them, with the off-chance of only getting through with one. Maybe that’s foolish.
This little town isn’t dying, with many services available and its main industry is farming. It is situated 2 hours from the metro area.
Anyway, thanks for your thoughts, and we’ll see where we go from here. I think it might be time to jump.[
]STREET2J
HA HA.. JUST GOT IT 2J [
]Nice area, friends just bought up there ( everyone else..No it’s not a Great + area..just his area he lives in)
The properties do ‘fit’ the Positive ca$h flow scenario ( $45-70 is a big price range thougfh for lower end of the market ?? 25k !!)
How about if you drop in a larger deposit.. covers you in emergencies of all types and improves your cash flow.
$47 a week, that’s okay for your outlay, others have – geared properties that return -$47+
Your expenses , interest etc are deductable also don’t forget..
Research the areas well, look at population trends, average rentals in area etc, and the towns population ( i.e -if a tenant leaves you need to be able to source others, or you’ve got an expensive Holiday home )
Feel free to PM me, i’m in Perth
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
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What does PM mean?Thanks for your tips!
PM = Private message. [
]What I learnt yesterday, I know better for tommorrow – Dean
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