Just after any advice anyone can give me on investing in Display Homes. I've done my research and the numbers stack up nicely with 8% return plus depreciation with a rental agreement for 2 years and possible extensions. Anyone have any experience with these types of properties and suggestions for things to look out for?
Can you put your maths here ? Coz 8% return sounds like you are buying the property with a 50% discount
8% rental return plus depreciation to be added to it
Compare the purchase price to the surrounding similar properties. Display homes are notorious for adding the rental component to the purchase price. Simple example, normal rental would be $400 per week, you are offered rent of $500 per week, wahoo says you, but in the background, $5K has been added to the purchase price. This instantly offsets the vendors increased rent and over hte life of the loan will cost you more than you will get in the extra rent.
That said if it is in a high grwoth area, it may be worth the premium. Withour further details (not needed here) it is hard to make the call. So look at your numbers and research, research, research, dont get stars in your eyes over the 8% return, find out if that is realistic and sustainable.
All the best,mick
No stars here mate, this will be ip property numbers 8 & 9, i've done my due diligence i've just not purchased this type of property before, yes they are in growth areas, and yes they have a slight premium on them, but they are also finished to an extremely high standard, and in areas with high rental demand, so just wondering if anyone else had any tips.
hmm…8 and 9 IP… Sure you have more experience that most of us
Just ensure that the display home company will undertake a suitable refurb before vacating- a show home is high wear and tear especially on cupboards, door furniture, light switches etc.
Check the comparables in the area and the rentals as part of the dd
what area did you buy your property?
regards
reddy
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