All Topics / Finance / 2 Units or 1 Brand new home???

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of BRWTBRWT
    Participant
    @brwtito1978
    Join Date: 2016
    Post Count: 3

    Looking for feedback from anyone please,
    Brand new 4bd, 2 bth Home $490K excl Stamp, Solicitor etc……
    Rent Appraisal $385 pw
    About 20km out from CBD, and capital growth of 7% per annum,

    or

    2 Units, each has 2bdr, 1 bth, 1 carpark (both built in late 80’s early 90’s)
    Unit 1:
    Selling at $235k
    currently tenant at $295 pw (tenants happy to stay on board)
    Body corp $11 pw

    Unit 2:
    Also selling at $235k
    rent appraisal at $285pw
    Body corp $32pw

    By the end of Sept 2016 I would have saved $70K
    I have NO assets
    No Loans, good credit history
    Credit Card Limit $5000, amount owed right now is $500

    Really stuck on this one. Havent spoken to anyone about this. Just wondering what is the best path to take. Your feed back is greatly appreciated.

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    Depends on your strategy? Is it cash flow or capital growth you are chasing?

    Generally land increases in value and building decrease in value. In saying that the older style apartments usually have a greater land component than newer similar properties.

    Rule of thumb for land / building ratio is 70 / 30 so this may help you determine your strategy.

    Also would be a wise move to ask for last 2 years financials and minutes of the AGM from the strata manager via the selling agent to check what works are in the pipeline as older buildings will need ongoing maintenance.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of RexRex
    Participant
    @rmb124
    Join Date: 2016
    Post Count: 6

    Hey Colin,

    I’m considering the same thing. So do you believe that if my plan was to buy and hold for at least 10 years and I have the option of two apartments or 1 house, (both apartments are slightly positive cash flow and the house is slightly negative), I am likely see better gains from the house long-term than I would from two apartments (all in the same area).

    Cheers

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    @rex, let the figures guide you.

    What was the previous 10 years growth on the apartments you are considering v the house you are considering purchasing?

    I like to look for houses that I can add value to either via a renovation or even better (potentially) retain and subdivide or knock over and replace with multiple properties.

    Depends on how involved you want to get. Developing is not for the feint of heart but can be lucrative if you get it right.

    I have an eBook development course I am happy to email to you.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of FintrackFintrack
    Participant
    @fintrack
    Join Date: 2013
    Post Count: 15

    Looks like you are in a good position. I suggest only buy the new property as after 10 years the older established properties will need heaps of work. How do you know you will get 7% capital growth?

    Sometimes it is wiser to be conservative and assume say 5% for capital growth and work the numbers to make the investment stack up after all Capital growth rates are purely opinions…

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Looking for feedback from anyone please,Brand new 4bd, 2 bth Home $490K excl Stamp, Solicitor etc……Rent Appraisal $385 pwAbout 20km out from CBD, and capital growth of 7% per annum,
    or
    2 Units, each has 2bdr, 1 bth, 1 carpark (both built in late 80’s early 90’s)Unit 1:Selling at $235kcurrently tenant at $295 pw (tenants happy to stay on board)Body corp $11 pw
    Unit 2:Also selling at $235krent appraisal at $285pwBody corp $32pw
    By the end of Sept 2016 I would have saved $70KI have NO assetsNo Loans, good credit historyCredit Card Limit $5000, amount owed right now is $500
    Really stuck on this one. Havent spoken to anyone about this. Just wondering what is the best path to take. Your feed back is greatly appreciated.

    Hi BRWT,

    Colin is right. Nobody I reckon can give you an answer to the “what is the best path to take” without knowing more about your goals and also your financials (a few examples would include: would negative gearing hurt your next purchase? Do you even intend to make more purchases? Are you after cashflow?).

    A few things that may be worth noting:

    1. Banks look at your credit card limit, not the actual balance so if your borrowing power is borderline, it might be prudent to cancel the card all together (a mortgage broker or a lender can easily run scenarios with you, no worries).

    2. One of the disadvantages I found with units is that you don’t have the same control as with a house. Tenants are complaining that the roof is leaking? With a house, you call a tradie and s/he fixes it. With a unit: you notify the body Corp, they might drag their feet, then source 3 quotes, then debate who to go with it and only then they book the chosen one. So what could take you 3 days to fix with a house is a 3 weeks saga with a unit (true story).

    Hope this helps? :-)

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    @rex
    I have an eBook development course I am happy to email to you.

    Hi Colin,

    Can I put my investor hat on and ask for that ebook? If an offer I’ve put in last week gets accepted, I’ll be on my way to my first dev project. Fingers crossed! 😊

    Cheers,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    @ethantimor flick me an email on [email protected] and will gladly send you a copy.

    Cheers.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Thanks, buddy! Will do!

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

Viewing 9 posts - 1 through 9 (of 9 total)

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