Decisions, decisions......about improving a property to get more rent vs. leaving as is, to get more property.
So let's start with say $500K in equity. If I buy a house here and a house there at $450K each, then ~$100K in equity gets chewed up at each purchase, limiting the number of houses to about 5. Rent from each would be about $350/wk. If I improve each property with around $100K of renos, then I have calculated a strategy to get an extra $350 a week rent.
So, assuming that I want to multiply the number of properties and hold on to them for around 5-6 years before developing the sites, would it make more sense to:
1) keep them as is, with the $350/week rent, or
2) improve them at a cost of $100K each and double the rent?
My thoughts are: NOT to improve the properties and hope that the properties appreciate 7%pa over the next 5 years, thus giving more equity and allowing me to get extra properties that way. (Although it's hard to knock back the thought of a return of $350/week for an extra $100K loan).
BUT, $350/wk = $17000K/year, over 5 years = $85000K, which with depreciation taken into account would be a break-even vs. do the extra $100K).
My goal is to buy the most properties in the next 1 to 2 years. So:
* Which way would the Banks favour at the moment, strategy 1 or 2??
Thx again,
JB
So let's start with say $500K in equity. If I buy a house here and a house there at $450K each, then ~$100K in equity gets chewed up at each purchase, limiting the number of houses to about 5. Rent from each would be about $350/wk. If I improve each property with around $100K of renos, then I have calculated a strategy to get an extra $350 a week rent.
So, assuming that I want to multiply the number of properties and hold on to them for around 5-6 years before developing the sites, would it make more sense to:
1) keep them as is, with the $350/week rent, or
2) improve them at a cost of $100K each and double the rent?
My thoughts are: NOT to improve the properties and hope that the properties appreciate 7%pa over the next 5 years, thus giving more equity and allowing me to get extra properties that way. (Although it's hard to knock back the thought of a return of $350/week for an extra $100K loan).
BUT, $350/wk = $17000K/year, over 5 years = $85000K, which with depreciation taken into account would be a break-even vs. do the extra $100K).
My goal is to buy the most properties in the next 1 to 2 years. So:
* Which way would the Banks favour at the moment, strategy 1 or 2??
Thx again,
JB
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