currently looking at two properties that i think are positive but i would appriciate a second opinion as maths isnt one of my strong points.prop 1 asking 225k rent450pw =5 flats am told there is room for increases all units are furnished by landlord there is no management fees rates are $3045 pa excess water $750pa insurance $800pa would borrow the lot at 8% io pia program.2nd prop $270k rent$520=4flats=$130pw ech management fees8.5% rates$2677pa furniture supplied by landlord also so good depriciation of 8000 for first year
thanks for any help[cigar]
413
Why dont you work it out for yourself and we can check the figures to see if your right.
That way you can learn from any mistakes instead of being spoon fed.
I agree,
That’s how we learn the IP game. If we don’t get it now, then we will never get it.
Broome,
Do you want to be paid when people pay their telephone bills.
http://www.homebizleaders.com/4537I hope you are not basing your purchase on yield alone. Is it in a good area? Good growth prospects?
Terryw
Discover Home Loans
Mortgage Broker
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Mayneiac
Allow for the extra repairs you will need to do to furnishings. (especially appliances….6 new fridges, 6 new washing machines, 6 broken couches.
I will give you a lil’ help doing your sums on first property (you must learn maths to be a good investor!!!!!)
COST(based on 20 % loan)
$225000 price +(5% closing costs)
=$45000 deposit+$180000 interest only loan from bank+$11250 closing costs
INCOME
ANNUAL RENT – VACANCIES FOR YEAR (say 80% for flats)
$450 * 52 * 80%
=$18720 for year (conservative estimate)EXPENSES
Interest on Loan 6.5% * $180000 = $11700 pa
Ongoing Bank loan fees = ?
Council Rates = $3045 pa
Water Rates = ?
Excess Water Charges = $750
Insurance = $800 pa
Real estate agent to manage properties = 9% * 18720 = $1684.80
Repairs = ??????? (very important, how old is property etc. etc.)TOTAL EXPENSE = $17979.80 pa
So you are making a Cash on Cash return of.
(Income – expenses) / Total Cash out of pocket
($18720 – $17979.80)/($45000 + $11250)
$740 / $56250
1.3% positive cash per annum (not including repairs and thats at 6.5% loan not the 8% you spoke of. I agree with Terry, I would only buy this if the area was a strong growing area.
Try doing the sums with your deposit amounts for the two properties…..post them online and we’ll have a look.
It looks neutral geared to me at 225000.
If it was a far out country town with little prospects I would offer $150,000 to make it a nice little positive cashflow investment of about 10% return.[greedy]
May all your dreams come true. (except for those evil dreams and maybe that dream where you had no pants on in school, oh, and that other dream with the invading martians and the……………)
Lifexperience
If you don’t want to manage the first property yourself is there a managing agent available? Can be a lot of hassles in self management. Have you checked yourself if rent increases are possible or are you just going on the vendor or his agent. Furnished can be good but they can be a hassle too.
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