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From: Mike .


Would you jump on this?
From: Jacques
Date: 12 Jan 2001
Time: 23:16:14

Looking for a 1st IP, I came across this add:

---quote---

INVESTORS WANTED! Beautiful 3 bedroom home with 2 bathrooms, ducted heating, air conditioning, dishwasher, window shutters and parking for 4 cars. Current owner would love to rent back property to keep their kids at the local school. Must See! Buyer Enquiry Range $130,000-160,000

---unquote---

The price may be right (I still have to check), but wouldn't the fact that the vendor wants to stay in the property make investors jump on this? (it's a bit like my previous post on sell and stay!)

What is your advice / opinion / comment ?

Cheers, Jacques
 
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Michael Croft

Reply: 1
From: Mike .


Re: Would you jump on this?
From: Michael Croft
Date: 13 Jan 2001
Time: 06:45:40

Salut Jacques,

Too many unknowns to comment at the moment. What is the rental return likely to be, will they pay a premium for staying in 'their' home, is the location good for cap gain? etc. It may be that the only benefit is no vacancy factor, letting fees and the like and so a one of saving of a couple of hundred bucks.

What is their motivation for sale? Are they bankrupt? May be good for a wrap, who knows?

Sorry not much help at this stage,but its always worth investigating. Michael
 
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Geoff W

Reply: 1.1
From: Mike .


Re: Would you jump on this?
From: Geoff W
Date: 13 Jan 2001
Time: 21:54:57

jacques,

My wife showed me an ad like this in our Canberra paper just 20 minutes ago- the first I've seen something like that (though this sounded more like someone who wanted to buy- a good wrap candidate).

This one quoted a rent which sounded just much too low. They wanted in an area which ranges downward from $500,000 paying $300 pw. There is a "bad" area in the suburbs required- but I don't think that would really fit the bill. It sounded like they're asking too much for too little.

But not being in a position to do anything about it, I can't find out any more

Geoff
 
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Jacques

Reply: 1.1.1
From: Mike .


Re: Would you jump on this?
From: Jacques
Date: 14 Jan 2001
Time: 10:47:17

Thanks Geoff and Michael!

You both refer to such as property as a "wrap" opportunity or candidate. As I am a newbie (and I guess I should have checked the archive!), how does the wrap work, and why would this property be a wrap candidate?

Merci buckets for helping me with my ignorance!

Cheers Jacques
 
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yuchun

Reply: 1.1.1.1
From: Mike .


Re: Would you jump on this?
From: yuchun
Date: 16 Jan 2001
Time: 21:58:46

Sounds like the owner just wants to cash in his property for some reason. My suggestion is to find out why the owner wants to sell the property. Maybe just like Michael suggested he is bankrupted. Or maybe he want to cash in the property for business...

If the area does not have the potential for capital growth then wrap it; if the capital growth of the area is reasonably good then do long term buy and hold (always make sure that it's cashflow positive).

Reason being - when you wrap a property in a non capital growth area you are basically locking the value of the property in, it's like buying a put option when the market falls you are always guaranteed a profit. On the other hand if you wrap a capital growth property, you are limiting the capital gain to that agreed value.

This is only my personal opinion.

yuchun
 
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