Following the purchase and study of Steve’s Buyer Beware kit we are preparing to look at some potential IP’s this weekend.
When completing the Financial Analysis template at/before 1st inspection should we use “guide” figures for items such as stamp duty, val fees, letting fees, insurance, etc or impose on others for “precise” figures at this stage (especially given that of 3 or 4 we’ll be looking at may only eventuate in 1 purchase (?))
If “guide” figures are satisfactory for initial broad analysis any suggested figures would be welcome
Ray
To begin and not succeed is not to fail
To never try is to faillearay, if you look at margaret lomas website, she has a free download program that can work out stamp duty and other things for you.
As for letting fees, I’ve found it’s a weeks rent, or 2.3% of yearly rent (which is almost the same).
If all the prices of houses are approx the same, you’d probably only need to get a rough idea once and you’d be about covered….
Cheers
MelHi Learay,
When doing ‘rough calculations’ I use 5% of the property cost to calculate your loan and purchasing costs.
A week is fairly typical as a letting fee and insurance varies considerably depending upon the location of the property.
I believe there is an insurance website around that gives indications of likely insurance premiums. Someone may know the address.
The local council will be able to tell you exact rates for the property in question.
Landlord insurance – allow $220 and you’ll be fairly safe.
But all in all ‘educated’ rough figures are OK at the first stage of property investing. I would be more concerned with ensuring the fundamentals of the property are accurately researched.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Good to see you’re using the templates and not some computer program so that great.
I learnt it to be able to draw it in the ground with a stick.
As far as general guessing figures, that’s Ok. But I would get the accurate Stamp Duty amount because that can change a bit depending on what state your in? If you’re a first homebuyer it can be exempt? And the inspection fee should generally be the same around $350, and the rental management won’t vary all that much but generally at 7% though I have seen Real Estate Agencies just trying to start up a clientele base and they want rental properties to rent for you and will offer 6%. So combining the variations in these figures can really change the outcome, if you’re looking for positive cashflow property investments?
Let’s say you generalized on a Stamp Duty of $1,000 and did not know you could get it for free (because of the exemption) and we divided $1,000 by the amount of weeks in the year 52 = $19.23c. So that’s $19.23 cashflow positive. Where calculating the running costs and purchase costs you could easily be out by $1,000 each way. And that will dramatically change your positive cashflow analysis.
I would say guess, a little at the beginning, but get as accurate as you can once narrowing down to a property you want to buy! I do it right down to the last decimal cent.
And it’s all about trying to get $20-$30-$40 cashflow positive into your bank pocket each week.
Thanks for teh responses. Much appreciated.
Unfortunately, the properties we looked at over the weekend (and only 1 was suitable) all worked out marginally CF- (around 0.07% for us) so we’ll be continuing the search.
Looks like we;ll have to go further from Melb than we had first thought necessary – but gives us great excuses for weekend trips!
Ray
To begin and not succeed is not to fail
To never try is to failMelbear, in WA the letting fee is 2 weeks 1 charged to you and one to the new tenant. Another rort from the ‘greater than thou’ property manager state.
Be aware all states are different. Tassie they want a 3% or 2 1/2 week fee. I soon set them straight there. Most agents in Launceston charge 9-10% +GST management which his a joke. WA is worse but slowly waking up to themselves. I have a Freo agent on 7.5%+GST. Still on Dos accounting systems(dark ages)and use this as the excuse”our system cant do a mid monthly payment.” So be very careful about which assumptions you make on management.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
7% is way enough, I think they should have brackets of rates, up to $130 rent 7%, and 130 to 160 8%, so on. No other hidden costs.
Rental manager wouldn’t be a bad job.
100 houses 7% , $700 a week. Plus the buying ans selling properties there earning money on!
Property Management its a very tough job.
If it not a whinning tenants complaining about co-webs, its owners who refuse to do any essential maintance.
I think that you are shooting yourself in the foot if you try to get a manager below the areas normal commission.
You will get better results from them if you pay and treat them well.
With our property manager we found out when her birthday was and every year we will send her some gift.
If you think that PM are a waste of money, rent it out yourself and see how many problems you have to deal with. I know my time is worth more/
I’ve been the property manager here for four years, it’s a peace of cake. First the tenants that you choose to put in your property.
I had real estate practacally begging in the street, “We OFFER 6%” , “WE OFFER 6%” take us.
Most I’ve known and that’s not much (compared to how many are out there) but seems each real estate I have asked offer a 7% negotiable rate deppening if your an investor or how many properties you might want managed. I think it’s rediculous in some places i.e. Tasmania at 12% or something.
Ok if you want to stick up for property managers, but I suggest you go out and stick up for them.
It wouldn’t be higher then 7% if that’s not what the people would accept.
I appreatiate the job they do. I was actauly saying that it’s a good job. And giving myself ideas of how that would be a good job to do.
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