Figures to use when evaluating IP's?

Hi peoples,

Following on from Rolf's post about using a 10% vacancy rate when analysing properties.....

What are some other figures that people plug in to help evaluate a property? A few that I can think of are (Please add to the list/debate the figures etc etc);

1) 106% of purchase price seems to be used to cover legal fees and other purchase costs

2) As stated above 10% might be a good figure for vacancy rate?

3) 10% rental yield also used as a rough guide to a property being +ve or -ve?

4) Banks presume cashflow neutral at 12%?

Am very interested as to various peoples approaches to evaluating an IP.

Cheers
Chris
 
G'day,

How about not relying on any more than 65-70% of the actual gross weekly rent for interest repayments?

To have expenses of less then 30% of the gross amount for a fully insured and professionally managed property seems to be very hard to achieve.

This just seems to be a good figure based on my experience.

Rick
 
What about a percentage or amount to allow for maintenance depending on whether it is a unit or a house ?

PIppety :cool:

(I have lots of questions and not many answers - lol)
 
Chris G said:
Hi peoples,

Following on from Rolf's post about using a 10% vacancy rate when analysing properties.....

What are some other figures that people plug in to help evaluate a property? A few that I can think of are (Please add to the list/debate the figures etc etc);

1) 106% of purchase price seems to be used to cover legal fees and other purchase costs

2) As stated above 10% might be a good figure for vacancy rate?

3) 10% rental yield also used as a rough guide to a property being +ve or -ve?

4) Banks presume cashflow neutral at 12%?

Am very interested as to various peoples approaches to evaluating an IP.

Cheers
Chris


No:2 10% vacancy rate is outrageous. I and most investors wouldnt touch an area that has that 1 in 10 rental properties vacant.

No:3 The rental yield determining if the property is pos/neg geared depends on the prevailing loan interest rates. If interest rates are at 10%-15%, 10% yield is definitely negative.

No:4 See No:3
 
Here are the figures that I use as a guide,

 Property expenses such as rates, insurances, maintenance, mowing etc. costs between 15% and 30% of the rental return, and up to 50% of the rental return on a holiday unit (managers, cleaners, furniture, sheets etc.)

 Property expenses and purchase costs (stamp duty and conveyancing) is approx 5% of purchase price.


 Loan costs, (Mortgage insurance, mortgage stamp duty, registration of title etc) will fall between 1% and 3% of total loan.


cheers
 
Top