$80k pair of units - opportunity for bargain hunter?

[Peter Parker]

(this is in a similar vein to Kristine's thread about the $60k 1br unit in Sale)

It's in a much much smaller town but in this case you're getting TWO units on their own block and no body corporate. Unlike Sale, the architecture has no redeeming features, but tenants get a big backyard.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&s=wa&c=34296169&tm=1123320934&id=102430761

I could comment on Jerramungup, but won't until others have picked this one to bits.

Peter

 

[Bargain Hunter]

Did someone say an opportunity for me???

 

[ani]

(this is in a similar vein to Kristine's thread about the $60k 1br unit in Sale)

It's in a much much smaller town but in this case you're getting TWO units on their own block and no body corporate. Unlike Sale, the architecture has no redeeming features, but tenants get a big backyard.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&s=wa&c=34296169&tm=1123320934&id=102430761

I could comment on Jerramungup, but won't until others have picked this one to bits.

Peter

Okay I'll bite

Population 417
Farming area (workers likely accommodated on farms)
War settlement town
189k to albany,400k+ to Perth
Rates over $2000....ouch

4 x 1 bedders for sale down the road for $110k.Only 1 rented @ $80pw

Only other town in the shire is also 189k's away. Where do the tenants come from??

It would be a nice yield IF you could keep it tenanted.

Pass thanks Peter

 

[karina]

I actually rang up about the block of 4 for 110k (agent told me he thought they were only worth 80k, but after hearing more about the town thought definitly not for me.

I prefer to be able to sleep at night!

 

[Merovingian]

Population 417
Farming area (workers likely accommodated on farms)
War settlement town
189k to albany,400k+ to Perth
Rates over $2000....ouch

What would be a tenant's motivation to rent a place in a town of 417 people?

 

[Aceyducey]

Merovingian,

There are many different motivations:

1) They are a professional providing a service to the region for a period of time, say a few years, to get experience before moving to the big smoke.

2) They have family in the area.

3) They commute (or work from home) and the location is suitable plus provides a retreat.

4) They are country people!

There are many potential other reasons as well.

Cheers,

Aceyducey

 

[Peter Parker]

I actually rang up about the block of 4 for 110k (agent told me he thought they were only worth 80k, but after hearing more about the town thought definitly not for me.

Yes, I also saw that block of 4. If only it was in a larger town at that price!

My thought was that it could be made into long-term seniors accomodation.

Availability of health facilities would be important; there is only a nursing post, not a hospital. http://www.health.wa.gov.au/services/category.cfm?Topic_ID=2

There are 1199 in the Jerramungup shire http://www.abs.gov.au/websitedbs/c311215.nsf/0/3c556306c6a3b803ca256b5500799b10?OpenDocument and this is declining and ageing.

Let's say loan payments were $5k pa and other holding costs $5k pa.
Assuming we can secure long leases and $70pw rent for each unit, gross income is $14k. Thus it could earn as much as $4k pa. Even if one out of four units were vacant it would still make money.

Main risks would be:

- long-term viability of town
- vacancy
- lack of local tradesmen
- lack of local property managers

So the numbers are good, but unless you could get good management and security of tenants then I agree it would be high risk.

Rgds, Peter

 

[Burbs]

Having inspected both properties a while ago, I offer the following comments:

The 2 x 2 are two older-style transportables on a 1/4 acre block. The entrances are in the middle side of the properties, and face each other. Usually rented by shearers. Both were vacant when I looked through. You had to use the back door to enter the LHS one as the front door wasn't working.

The 4 x 1 units are across the road from the 2x2. They are tired. The back yard is common to all 4. The back leach drain had some problems, and I doubt there is a plumber in town. The property used to be government housing for teachers a long time ago.

Do you like long country drives?