We have placed under contract a house in a North Queensland coastal town that is currently undergoing major mining and marina projects. The house has been converted into 4 units (2 up, 2 down) and returning $590/wk.
Considering our accepted offer of $300K, we consider the deal to be of substantial benefit as it has full tenancy with long leases.
There is a high demand for rental properties in this town due to transient fruit-pickers, backpackers, mining staff and project workers.
My question is: On face value this appears to be a good deal (too good to be true). So I ask this……………..Is this too good to be true, or are we missing something?!
Bangers
“The answer is already “No”……Unless you ask!!
The return on investment sounds good. What sort of condition is the property in? Have you had a building and pest inpection done yet? Are the units approved by Council? Do they meet fire regulations? Is the property in a flood prone area? (check with Council). Can you get Landlords insurance for the units? Why is the vendor selling?
That’s just a few things ‘off the top of my head’ to consider. Other forumites might have more suggestions.
I hope it works out for you.
Todd Burns
http://www.freepropertyhelp.com.auThank you Crusher for your tips……Will check those details ASAP.
“The answer is already “No”……Unless you ask!!
Don’t waste time worrying about whether it’s too good to be true. Put your time into checking market rents for similar units/houses to see if the rent is fair, and that market value is also fair (if not already done). In our experience you will usually get a higher rent return on a property that has several dwellings, than if being used just as a house. Check the types of things Crusher mentioned which should not take long, and if it seems OK, it probably is.
The beauty of such a place is that if one unit is vacant, you still have money coming in. We have a similar IP in a QLD mining area which I suspect is near where you are looking, We bought on a 8.5% yeild 2 yrs ago and it is now on 11.3% based on our cost, and 8.5% based on its current market value. Only 1 day vacant between tenants.
Good luck.
Wake
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