hi all
trying so hard to find a positive geared property thats worthy.best figures i have found!
2 units both 3×1 no strata on 1638sqm ($89000)for both.
both currently tenanted at $90 each ($180)p/w($9360)p/a
i/o loan at 7% repayments at $6230p/a
property management fees 8.8% drops rent to $167p/w($8684)p/a. so.
cost both units $89000
rental return $8684p/a
i/o loan at 7% repayments $6230p/a
landlord+building insurance $835p/a
land rates $1000p/a
maintenace at least $1000p/a
total return -$381p/a
now this place was built in 1973(brick) so i think no depreciation. this property will recieve little or no capital gain too .will i recieve 30% tax deductions on this to eventually come out in front i dont know?
also have i missed anything .
u must admit when u see the property first off u think this is going to be great still is what u call 10% return rate?anyway am i along the right lines. cheers any help would be great.the boy..Beer
Sounds like a good investment to me. I think you have allowed too much for maintenance in you cals though, especially as it is a brick building. Usually allow 5% of rent per yr.which would be $450. Also if you did up the units you may be able to increase the rent.
CheersSuze
thanks suze.
judging by all the replies my topic must be a little mumbo jumbo or boring which is understandable.
basically what i am trying to say is i cant find a return with better numbers on a property than this and i still dont make a cash return.
i might get a tax return but the idea is to bump up the old weekly earnings so i can eventually slow down at work.
negative gearing u have to become a slave to your property to service the loan.positive gearing seems to be fluffing around with small amounts to with no capital gains.i would love to see what steve is showing them in his millionare map classes.i am disheartened a little at the moment as i have been pre approved by the bank to buy. but cant find cashflow pos.dont worry i dont expect good things to come easilyI agree with Suze about the maintenance. Also the insurance seemed high. Are there any cosmetic improvements that could increase the rent? Is there really no chance for capital growth? I sympathise with you. I’m not really attracted to properties that have little chance for capital gain. I also want them to be cash +ve as well. One property returning $50 a week doesn’t seem like much but if you have 20 of them, it’s not so bad. Where are you gonna find 20 though at this time? A different strategy might be called for.
Regards
JudiHi Beerboy,
I’d agree that maintenance and insurance sounds high, but that might depend on the area. Also you said no depreciation, but I’d suggest get a Quantity Surveyor in anyway as things like HWS, Stoves, a/c’s, curtains etc often can be depreciated, but a QS can work out the values etc.
PK
Beer,
From the figures given I think it is a good buy, but that is the depend on the area and population as well. Good luck.
Warm Regards
ChanDollars
[The bridge between where you are right now & where you want to be tomorrow is knowledge]thanks for your positive replies crew.
Quick calculation , and thanks for asking to check the figures, because it give me chance to check the figures over.
Can you get the price down a bit, now i did one lots of numbers on your numbers. you know some things vary a bit in the end result, but i got around what you got.
Now for the second one i factored in a lower mainenance rate of about 4%. And did it based on if you could get a few grand off the price of the house.
11 Second Solution:Rent = 180
Occupancy rate ‘3 Weeks’ = 94.23%
Solution = $84800.00
Asking price = $89000.00
Deposit 20% = $17800.00
Other closing costs = $3025.00Morgage details:
Loan P&I = $71200.00
Interest rate = 7%
Term = 25 Years
Weekly loan repayments = $116.13
Total repayments for life of loan = $150969.00Summary:
Total annual rent = $8819.20
Total annual morgage = $6038.89
Total annual costs = $2885.00
Total annual cashflow = $-104.69
Total funded costs = $20825.00
Risk free return = $833.00 bank interest rate of 4%.
Annual Cash On Cash Return = -0.50 %
Cashflow Positive Weekly = $-2.01
…..[V]…………………..[V]………………….. [V]…..Based on if you could get property price down a bit and a lower maintenance and too maybee manage it yourself. the figures didn’t come out a whole lot better. though i gave it the thumbs up for this one because around $26 a week in your pocket each week is not bad. I rekon if there’s a will there’s a way with this one. Though it only just scraps in[
]!
11 Second Solution:Rent = 180
Occupancy rate = 100%
Solution = $90000.00
Asking price = $85000.00
Deposit 20% = $17400.00
Other closing costs = $3025.00Morgage details:
Loan P&I = $67600.00
Interest rate = 7%
Term = 25 Years
Weekly loan repayments = $110.26
Total repayments for life of loan = $143334.00Summary:
Total annual rent = $9360.00
Total annual morgage = $5733.65
Total annual costs = $2259.40
Total annual cashflow = $1366.95
Total funded costs = $20425.00
Risk free return = $817.00 bank interest rate of 4%.
Annual Cash On Cash Return = 6.69 %
Cashflow Positive Weekly = $26.29
…..[^]…………………..[^]………………….. [^]…..************************************
This seems to be about demographic arrangements.Beerboy,
One 3-br unit costing 44.5k? Ummmm, you won’t get much better than that. I say go for it! [:o)]
kay henry
Jaffasoft
Thanks for some of your in-depth responses to some of these posts, it’s allways interesting to look at the ‘numbers’ of a deal..[^]
Beerboy, do your ‘research on the property and the area, with deals such as this you want to make sure, befdore you jump in, as any unexpected costs ( tenants leave, and low tenant base in the town “or” Hot water sytem dies etc will turn the deal expensive )
Agree with still using a QS
if all the numbers work out and you feel comfortable – then go for it [^]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
thanks for the the detailed reply jaffa.
i have no deposit for it .oh and the bank said they liked the return but said i should keep looking for a more capital growth area. bassically didnt recommend the area i wanted to purchase.bank manager suggested a few towns to check out which he thinks will have high growth in the future.he said he had some clients investors buying in these areas graet having a yarn to him this is learning the ropes each and every interview love it.thanks again…Beerboy,
Fine to get the opinion of the bank manager, but also remember that his financial plan wouldn’t necessarily be the same as yours ie: many are still conditioned to -ve gearing.
Good Luck
PKHi beerboy, I would probably look at buying that deal.
the insurance and maintenace appear very high at first glance – as do the rates for that value, although I guess they could be realistic.
Basically I would look at perhaps a ‘clean up’ on first purchase, which should also cut the yearly maintenance figure, plus may well increase the rent – a win on two counts.
Maybe you could also strata them and sell one/both of them?
Cheers
Melmelbear
i got a quote for the insurance from westpac.
it costs a little more because i have to insure both units seperately.
but i must admit i did over estimate the maintenance.
i like the idea of strataing.
its still up for sale i was gonna have a look when i get time off. pictures look o.k needs a clean up definately.thanks all for your tips.
]!
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