Hello
I really enjoy some of the posts on here and it occurred to me to ask some questions?
What do you think? I actually have no idea what I'm doing so I'm just thinking out loud really.
3 bedroom house (1 room is actually a sleepout), recently restumped, rewired and re roofed. Owners paid 205 000 2 years ago and aforementioned reno cost 20 000.
asking price 219 000. median price for location in a poorer part of a small regional city, 290 000.
I can pay cash.
rental appraisal $220 + per week.
Has been on the market for 3 months and no offers.
Recently painted, on small block sub divided some time ago. approx 450m sq built in the 1950's.
Owners have already purchased a block, so may be itchy to sell. Insulated, reverse cycle, gas, close to schools, shops and transport.
Please remember I don't know what i'm talking about, so be gentle
My plan is to buy and hold and I would LIKE CF+ but stumbled across this.
I have no idea how a depreciation schedule works but can only imagine its for newish properties, not things like this.
Appreciate your wisdom.
Thanks
If your strategy is cashflow +ve properties then this property is not for you. Even if you pick it up for 200k, if will still be negatively geared to the tune of $400 – $500 per month. Also keep in mind that interest rates will likely rise further so it will cost you even more in the coming months.
I think if you have a strategy, then stck to it.
Cheers,
LukeSjostrom if you have no idea what you're doing then may I suggest you don't do it.
There is nothing special about this deal. It is just another house. In fact it is worse than nothing special. There doesn't appear to be anything you can do to add value. The reno is done, the block is a bit small to build in the backyard, or to subdivide. There are better deals out there.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Sjostrom
A couple of other things you may want to think about in addition to comments of others, for this property or just in general:
– Agree, the rental return on the outlay is nothing special
– Depreciation Schedule – you can depreciate renovations that have been conducted, so although depreciation on a newish house would be better, still look at getting a depreciation schedule drawn up whatever you go with
– You can pay cash – use as little of your cash as you need to make the deal work. Use other peoples money where possible!Cheers,
Kaz
Further to what Kaz said; you could put down say a 20% deposit, and get a bank to pay the rest, and then park all the rest of your money in an offset account to hold off the interest on the loan. then when you are ready to buy again, just pull that cash straight out and spend it on another I.P.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Everyone
Thanks for all your comments.
I will be studying next year and won't have an income hence the idea to put my money there rather than in a bank.
I'm not really sure how it can be negatively geared when it would be purchased for cash. ?
I appreciate all your input – I have a lot to learn and I'm happy to start at the bottom!!
I think I get a bit frightened when I see houses requiring reno's but I think once I overcome the fear factor, I'd enjoy the process.
Thanks and have a great night.
The thing you must understand about negative gearing is that you aim to deliberately make a loss. A loss is a loss, even when a tax refund refunds PART of the loss.
If you can afford to pay $219k for a property, do it. But do it in the following manner:
– put down a 20% deposit and the stamp duty
– get the bank to pay the rest (you'll need a job of some kind (McDs?) to illustrate ability to cope with the "loan"
– park your money in an offset account. this will mean you will pay zero interest.
– when you finish studying and get a better job, pull some money out of the offset account and use it as a deposit for property number 2. You will be able to do this in an instant. Whereas if you had paid cash for property number 1, you will have to muck around trying to get a bank to refinance.Alternatively, just pay cash and be done with it. Worry about the rest when you finish studying. Being IN property is far better than NOT being IN property. But remember, this house in particular is not the only house on the planet available at that price. There will be better deals out there where the rental return is higher for the price you paid for the house. Or better still, maybe the rental return is just normal, but the backyard is massive. Big enough to accommodate another house a bit later on…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Where is this house by the way? Is it near a uni? If so, maybe you could rent the sleepout to a separate tenant. That'd change things….
Where are you located?
Look at Norlane VIC… even if only to get your head around buying a house on a large subdividable plot.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You mentioned that you will be paying cash so you do not see how it can be negatively geared. And you also mentioned you will be studying next year so you will not have an income.
If you do not have any income you can not negatively gear property. How will you fund the $500 per month shortfall with no income??
I am thinking along the same lines as Ajay7- if you do not know what you are doing then you probably should not be investing in this area before you do more research.
Also I agree with JacM and was thinking the same thing whan I first read your post- the block is already subdivided and the house sounds like it is renovated so you can not add further value so this does not sound like a good investment to me.
Cheers,
LukeIf you send me the address of the property as long as it is in nsw, I can send you a free rp data report on this. The report can give you an estimated value.
Shayne Betreen
Mortgage Broker
Gain Financial Solutions
[email protected]Thanks sbetreen, I have realised that my idea was rubbish and I'm enjoying learning lots trawling on here. It wasn't in NSW.
Appreciate your thoughtfulness though.
Regards
The right deal will come along mate,
and most of the best ones are created…
good luck
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