High yield but bad CG?

[wll6568]

Would you guys consider buying a high yield (15%) IP but with a very poor local CG history? It's a block of units but could yield at least 12% - 18%.

 

[allsuccess]

From personal experience, it will depend on how much 12-18% is. I have an IP that is CF+ but poor CG. One big maintenance job means it could wipe off years of CF gains (which I'm experiencing now). I have other IPs which are CF- but has had very good CGs. Even if it's on paper, I'm in front.

 

[Scott No Mates]

It may have good cash flow but will you be able to find a lender who will be happy with the security?

 

[brisbanebud]

Also did you take all the other expenses like Council rates, Water (incl usage), Insurance & maintenance of common areas plus any repair costs into consideration. I am also looking for block of units to buy in Brisbane but after taking all the above into consideration, it looks hardly CF +ve.
I bought an LMR land in Mount Gravatt and thinking of developing six units on it.

 

[wll6568]

From personal experience, it will depend on how much 12-18% is. I have an IP that is CF+ but poor CG. One big maintenance job means it could wipe off years of CF gains (which I'm experiencing now). I have other IPs which are CF- but has had very good CGs. Even if it's on paper, I'm in front.

Well, it's $900K price tag, but rent could give around $150K a year. With poor CG I mean it would probably stay flat for many years, but at least not decline.

 

[TMNT]

without giving away the suburb, which area is it in, that will help in getting advice

 

[MTR]

Would you guys consider buying a high yield (15%) IP but with a very poor local CG history? It's a block of units but could yield at least 12% - 18%.

Is there a possibility of adding value??? In other words is it on one title, or can you strata???? This could make a huge difference and provide equity/gains?

Also, what is LVR on borrowed funds if you were to purchase?

Vacancy rates/demand???? history of this block of units? could go from +ve to -ve very quickly if it is hit and miss in this area.

 

[wll6568]

Is there a possibility of adding value??? In other words is it on one title, or can you strata???? This could make a huge difference and provide equity/gains?

Also, what is LVR on borrowed funds if you were to purchase?

Vacancy rates/demand???? history of this block of units? could go from +ve to -ve very quickly if it is hit and miss in this area.

One title... Would it be hard or expensive to split it into strata?

Vacancy rates is around 1%. Land size of 2000sqm. Walking distance to shops and train station in a small town.

 

[strongy1986]

One title... Would it be hard or expensive to split it into strata?

Vacancy rates is around 1%. Land size of 2000sqm. Walking distance to shops and train station in a small town.

Moree?

Just watch vacancy rates in small towns - not everything in towns like that appear on real estate.com

 

[EN710]

Would you guys consider buying a high yield (15%) IP but with a very poor local CG history? It's a block of units but could yield at least 12% - 18%.

Depends. If it's cheap enough, have potential to add value, and all the yields are not eaten by other fees, stable rental condition, probably yes.

 

[see_change]

One thing to consider . How much of your total portfolio will it be ?

If it was 100 % no . If it was a much smaller percentage , maybe , but if that was the case you probably wouldn't be asking the question .....

Cliff