Block of units - Griffith NSW

[Dazzakun]

Hey all,

Have just popped in after a nice holiday trip over to Bali - one word - cheap!

I have been looking at a block of units in Griffith NSW, being a population over 20k (from ABS), a town with no flood within the center and with this particular property can come across a near 9.5% yield, anyone have experience with 1. block of 4 units and in a area such as Griffith? (6 hour drive from Sydney) Is this a good buy?

The only downside I can see is its an older brick units conjoined (1960s) and griffith lacks the govt support as the basin plan got scrapped which may affect the already pretty stagnant (unless over 10 years?) population size.

The numbers in term of cashflow look good - but growth is the major factor, would there be any in the next 3 years?

Property is 420k
4 properties at $175 rent = $700
loan of 340k, repayment is around $1413
Rates - $1-2k a quarter

Profit - $250/week sounds good!

 

[BRUTE]

Lived there for 20 years and have watched the market closely, not much has happened, there are lots of units in the same area as the ones you have mentioned, growth is absolutely flat, we sold a house in 1992 for 209k, it has just gone back on 20 years later for 290k. Council has made a few bad decisions in land purchases for future growth and will not see any return at all.

 

[scha9799]

It's a good return.

Nature CG maybe very little, see if you can strata subdivide the unit and sell them individual, which can achieve some CG by the time you sell them.

 

[twobobsworth]

The numbers in term of cashflow look good - but growth is the major factor, would there be any in the next 3 years?

Property is 420k
4 properties at $175 rent = $700
loan of 340k, repayment is around $1413
Rates - $1-2k a quarter

Profit - $250/week sounds good!

I think you are missing some numbers - management fees, vacancy, insurance, repairs, water, land tax.

 

[Dazzakun]

@scha9799
That was the initial idea - but to subdivide at this current time wouldn't be worth it with houses selling in the area at relatively low prices - theres no reason to get a unit over a house with land under a 70-90k difference? Maybe in the next 10 years again ...

@twobobsworth
management fees are relatively high compare to sydney (8.8%), vacancy are supposedly low from the rental market on REA.com.au, water & council rates are within the 1-2k a quarter calculation. with insurance on top - it should push down to $225/w cashflow ($300/y per unit) which should still be OK - given the growth is at a quarter rate than major cities - is this enough to risk such an investment? (possibly look better on your next loan?)

 

[geoffw]

@twobobsworth
management fees are relatively high compare to sydney (8.8%), vacancy are supposedly low from the rental market on REA.com.au, water & council rates are within the 1-2k a quarter calculation. with insurance on top - it should push down to $225/w cashflow ($300/y per unit) which should still be OK - given the growth is at a quarter rate than major cities - is this enough to risk such an investment? (possibly look better on your next loan?)

twobobsworth mentioned repairs. They could be significant on an older block. Also the land tax- which would depend on what properties you already have in NSW and what structure you will hold it in.

I'm not saying don't do it- but do allow for them.