All Topics / Help Needed! / Opinions on property offer..

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  • Profile photo of stevemarksstevemarks
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    @stevemarks
    Join Date: 2008
    Post Count: 4

    Hi everyone.

    I am the project marketing manager for Ray White in the Whitsundays, we are currently about to start marketing a new stage in a successful unit complex and appreciate that it is a tough market.

    Our offer we are about to start is aimed at stimulating investors (such as yourselves) into purchasing a off the plan townhouse despite that short term negative factors that we are all currently feeling.

    The offer can be viewed at http://www.whitsundayproperty.com.au/grove.htm but in a nutshell it is as follows.

    The property is a 2 Bed 2 Bathroom townhouse with settlement due in July 2009 plus

    • Body corporate fees paid for first 12 months
    • Council Rates paid for first 12 months
    • All management fees paid first 12 month
    • And 12 months rent paid in advance on settlement to the value of $20,000

    The purchase price is $369,000

    The question is whether or not the deal is sharp enough to attract seasoned investors.

    Let me know your thoughts.

    Profile photo of KeysToSuccessClubKeysToSuccessClub
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    @keystosuccessclub
    Join Date: 2008
    Post Count: 29

    Hi Steve,

    Firstly I would be wanting some more evidence on likely rental returns post  the 12 months paid as this is often different.

    Secondly, I would be wanting more information on likely capital growth before settlement.  There are plenty of deals around at the moment, so you are competing with opportunities where investors are able to get them under market value.

    You might gain interest with some of your perks over the 1st 12 months, but a seasoned investor would always look at the longer term numbers to see if the deal stacks up..

    Hope his helps

    Mark

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
    Post Count: 567

    Hi Mark

    Certainly one of the more subtle spruikers we have seen on the forum for some time …

    I would think that seasoned investors would be very wary of anything that promises a guaranteed rent.  Most people on this forum know that the "guaranteed" rent is built into the purchase price.

    Also, offering to pay outgoings for a period smacks of needing incentives to sell the property, that is, the property is not strong enough to sell on its own.

    Just my opinion (but I expect it is the opinion of a lot of other investors on this forum too)

    K

    Profile photo of Jon ChownJon Chown
    Member
    @jon-chown
    Join Date: 2007
    Post Count: 254

    Steve,   While I am not completly familiar with property values in the Whitsundays, this deal looks very attractive to me considering we would be hard pressed to even build a two bedroom townhouse including land in Brisbane for that amount let alone make any profit.

    Linar said'
    I would think that seasoned investors would be very wary of anything that promises a guaranteed rent.  Most people on this forum know that the "guaranteed" rent is built into the purchase price.

    There are rental guarantees and rental guarantees and a smart investor would attempt to find out what the benefits may be before dismissing them as 'being built into the price'.   When a large development settles there can be a large number of properties available for rent at the same time thus upsetting the balance of supply and demand and either forcing rental values down or increasing the vacancy rate and lengthening time taken to let.   This is the time that investors are most vulnerable and I believe that a Developer who supplies this type of rental gaurantee is acting ethically.

    Good luck with the Development,

    Profile photo of stevemarksstevemarks
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    @stevemarks
    Join Date: 2008
    Post Count: 4

    Thank you for everyones input, we have had great sucess selling this developement and have manged to secure 7 sales in the last 6 weeks. I took the advice of Mark and offered a better deal over 2 years. offering body corporate fees and council rates paid for 2 years, scrapped the rent in advance and gave a solid analysis of the performance of the first 2 stages taht showed rental return in the vacinity of $20,000. By offering the fees paid fo 2 years in it lifted the net return from 4.5% to 5.5% which was good. We have alos benefited from the new $21,000 first home owners grant with 17 enquires in the last 7 days.

    Thanks again for your advice.

    Profile photo of The ContrarianThe Contrarian
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    @the-contrarian
    Join Date: 2005
    Post Count: 97

    Hi mate,

    Good post…
    To be honest, the concept of rent paid for the first year, gives it that "serviced apartment" feel.

    Rather than paying the rent for the first year, why don't you just SELL them @ $349K (i.e. $20K cheaper).

    They will get snapped up at that price (no matter what market you're in)…

    Just one opinion.

    cheers,
    Anthony.

    Profile photo of stevemarksstevemarks
    Member
    @stevemarks
    Join Date: 2008
    Post Count: 4

    Thanks for the feedback, in the original concept the $20,000 that is paid up front would be recouped by the developer when he received rent during the year.
    We have found that the body corporate fees and council rates are what inevestors did not like as it took a bite out of the net result. by agreeing to pay these fees increased the net return by nearly 1%.

    For more information go to http://www.whitsundayproperty.com.au/grove.htm

    Steve

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