Am I missing something

[wagnman]

You've missed purchasing costs: Stamp duty, mortgage duty, conveyancing etc...

I generally factor in approx 5% for these costs ie. Borrow 314K if you dont want to put any cash into the deal = repayments go up

Regards, Chris

Thanks for that info Chris.R

Ill add the 5% in for costs to that factoring. (thats 5% of the purchase price of the property right?)

i am not so worried about making a killing in the first year because Ill keep the property that I buy for good unless circumstances change and force me to sell.

BUT I do not want to buy one property and then have to wait forever for it to grow in value enough to cover all the money it has cost us to own it.

I really want to find what everyone wants to find, property that will get good growth that wont cost too much on a weekly basis to own while we wait for it to grow.

What I am really trying to lean here though is what I need to factor in when I am surfing through RE.com.au looking at properties so I know which ones show promise as an investment and which ones are real dogs that are way too negatively geared to be usefull to us at this point or are neutral geared or positive geared but have little or no hope of any substantial growth in capital.

Cheers for all the replies guys and gals.

Keep up the great help.

 

[alexlee]

Put it in a bit of perspective, wagnman. You're budgeting for borrowing everything. But any appreciation is on the gross value of the property. i.e. you're betting on getting the gains even though you didn't put down a deposit (or put down a very small one). I wouldn't expect it to cost you very little, given the potential gains you can get. (And the potential losses, of course).
Alex

 

[Ausprop]

Ausprop,

Who gives a stuff about year 1?!!!!!! Man, I only care about year 10 and onwards, as I'm sure every investor (as opposed to trader) does.

Talk about short-sighted........

alot of resi IPs for sale at present will be just as much loss makers in 10 years as they are now. Call me anti-social but in my mind, the only way to extract some value is from value add e.g subdivision, but that's just me.

 

[Land]

Ausprop,

So are you extracting value by developing (i.e. reno/sub/develop) and then selling? I'm assuming you're selling given you think there's no money to be made in holding, so then I am also assuming you are in the business of trading property - not investing in property?

I don't understand how you think a lot of resi is losing money, Perth just went through a boom, as did Darwin, Adelaide, Brisbane and Melbourne are performing very strongly, and Sydney is likely to take off once again......

Are you saying that most property investing will be losing money in 10 years time?

 

[Witzl]

another way you can get some money out of a property in the first 12 months is to buy below market value... or at the bottom of the market you are investing in.

By "buying at the bottom of the market" i mean this:
- if there are 3 houses, each 3b/1b, same area, otherwise the same, but one is all renovated, one is pretty clean, and one needs work; you buy the shabby one.
- So say the good one is worth $300k, the average is worth $250k and the crap one worth $220k.
- Spend $15k renovating/"value-adding" on the crap one (you now have spend $235k on it)... and the banks should revalue it at around $275k.... thus giving you an instant $40k in equity.

Hey presto - you've got equity to draw out and put into purchasing the next property!

The same works for buying property at a discount (around 10-20% below market value), but you cant always do this of course!


** this is my personal plan, and may not work for you.... i just thought i should share it to give you another option on how to move forward in the early stages


What i do when looking for properties, is look at how it compares to other similar properties in the same area, and how it is priced compared to recent sale of comparable properties.
You should already be concentrating on an area that you expect to get good capital growth (Peter Spann and Michael Yardney's books are excellent for learning how to pick these areas), so you are already narrowing your search to the better properties of your chosen "good area"... so then its just a matter of picking one that fits the bill.

As for what suits you in terms of cashflow on the property, thats up to the individual really and no one can really tell you what is good for you. You need to work that out yourself with spreadsheets and calculations.

It's easy to over-analyse each property and find reasons to not move ahead...... like Land said - JUST DO IT
(with reasonable research under your belt first of course!)

 

[BayView]

The body corporate rates are only $1600 per annum and with a tenant paying $240 per week until December, what more could you want?

Absolute joke.

THAT should be in the real estate speak thread.

 

[alexlee]

$1,600 doesn't sound too high to me.
Alex

 

[BayView]

$1,600 doesn't sound too high to me.
Alex

I've got 2 units and the Body corp is $315 and $350 per year respectively.

 

[alexlee]

Much lower than mine, then. All of mine are about $300 per quarter.
Alex

 

[Minxdamanx]

Nothing really constructive to add except that this post is helping me immensely as I had all the same questions running through my head as Wagnman - and they are all getting answered without me asking a thing!

Thank you!

 

[letiha]

I think its a crap return only $240 a week in Dutton Park????? for $299k.

There are plenty of properties in brisbane where you spend $299k you get $300 a week rent.

I'd look else where.

 

[Witzl]

our townhouse is about $550/qtr for strata.... but its an old complex, riddled with massive trees and subsequent sewerage problems.
... we'll be selling it if it doesnt perform well in the next couple of years.

 

[wagnman]

Nothing really constructive to add except that this post is helping me immensely as I had all the same questions running through my head as Wagnman - and they are all getting answered without me asking a thing!

Thank you!

Yeh really good juicy stuff for newbe property investors.

Great stuff.