Duplex purchase Cairns Northern Beaches

[TryHard]

Hi forum - I posted this in "Where to buy" and got quite a few views but no comments. I don't know if I'm allowed to re-post here but in the same style as my investment (lack of) strategy I thought I'd try it and see what happens

I am trying to make a decision on the potential of this deal before I drive Rolf over the edge (we are an interesting customer to say the least - sorry Rolf!) :

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We just purchased a pair of duplex units at Trinity Beach in the north of Cairns. Here's the deal :

Purchase : $245,000
Current rent return : $300 per week ($150 per unit)
Land size : 960 sq metres
Position : Excellent rental territory near shops and schools

FORS
Big block, dwellings well positioned means we may be able to add a further unit in future
Group titled, with a party wall in centre, meaning we could strata title if necessary (I'm told)
Independent appraisal suggests we can easily increase returns to $340 per week ($170 per unit) as they are under-rented
Addition of an ig pool (given the area, climate and rental market demands) will give $400 per week
Building and pest showed all in reasonable condition with maybe $1,000 to spend

AGAINST
The cashflow isn't what I had originally worked out (I'm new at all this analytical stuff and I buggared it up )
Built prior to 1985 so no special building allowance in depreciation
Minor issues in building inspection report

UNKNOWN
They are on a small body corporate scheme with $1500 in the sinking fund and $950 contributions per annum - the agent told me this was to get better tax advantage - sounds like a hassle to me - anyone got experience doing the body corporate thing for a property that is entirely yours ?
I don't know if the fact they're a duplex provides any better benefit for the future - anyone like or dislike duplexes for any reason ?

SO
Any thoughts appreciated.

Anyone know the area ? Duplexes - good or bad ? Returns look ok ?

Feel free to mock, I believe it will toughen me up

Cheers (and thanks) !
TryHard

 

[hwd007]

sorry i didnt read the full story until then. the deal looks ok, so long as you do you numbers and they are correct the returns look good, I'm assuming its brand new of course for depreciation benefits.

Cairns bothers me as im told you cant swim in the beaches cause of the jelly fish. And if you dont have a pool access i'm wondering who will want to live in it given the jelly fish are living in the sea so im told. hehe.

could be a non event but just thought i would mention it.

 

[TryHard]

Duplex - no go ?

Hi HWD

Thanks for the reply - but can you tell me why ?

Cheers
TryHard

 

[bkw319]

I think the deal is ok but would have been better had it qualified for the building write off benefits of having been built after 1985.

However, Trinity Beach is an excellent area that will only get better in a great part of the world.

With a duplex you may not get all the capital growth of stand alone housing but you get 2 lots of rent. Personally, I would go the option with the swimming pool if you genuinely believe it will allow you to up the rent to $400 per week.

Bear in mind you will be able to depreciate the cost of the pool. Please do all your figures thoroughly.

Cheers Brett

 

[TryHard]

Hi Brett

Thanks for that advice

You're right on the figures. I gradually learned during this exercise not to use PIA to throw in the first set of figures that pop in to my head to help justify what I know I want to do anyway. Rather when I did some more sensible modelling with it to help me make a decision instead of making a decision then getting PIA to make it look like I was right, things got clearer !

I am told pretty certainly from independent property manager those rental figures with pool are achievable, of course I need to factor in how hard it will be to bring a pool project in on time and budget if managed from Brisbane

One thing I learned about the north is that while most areas in rentals you'd be avoiding pools because of the hassle and upkeep, the properties are so much more sought after up there with even a small saltwater ig pool. The property manager I spoke to has a standard policy that the owner contributes $30 per month to pool maintenance, but the tenants pay for chemicals. This apparently encourages the tenants to keep the skimmer box clean etc. Just an aside, a bit off topic, I'm in one of those stressed rambling modes

Thanks again for the comments Brett

Cheers
TryHard

 

[INVESTRON]

it's not really important, but a duplex is 2 units side by side, a pair of duplexes would be 4 units.

 

[TryHard]

Pair - Duo

Hmm thanks Investron

I'll go make sure there aren't 4 of them - they might be quite a good buy at that

Cheers