How much to offer base on this figures.

M

MelbInvester

Hi All,

This property (670SQM) is in a corner block of a court (Triangle Shape) and i love the location and checked the recent sales and they are between 550K to 710K around 550SQm to 600SQM size

But they trying to sell this since march look from below figures. So what is the best offer to secure this property?

Current rent is 390 PW. and tenets are happy to stay.

Location : South east 16.5 KM to Melbourne CBD

Date Price Property Type Type of Sale Sale Result
29-Mar-2014 $660,000 House Auction Vendor Bid HS
12-Nov-2004 $325,000 House Private Treaty Sold
12-May-1993 $112,000 House Private Treaty Sold

Final Sale Price History

Advertised Asking Price

8-May-2014 $669,000
2-May-2014 $669,000
22-Apr-2014 $679,000
30-Mar-2014 $699,000
29-Mar-2014 Not Applicable
4-Mar-2014 $630,000
13-Nov-2004 Not Applicable
Click to expand...
 
Last edited:
MelbInvester said:
Hi All,

This property (670SQM) is in a corner block of a court (Triangle Shape) and i love the location and checked the recent sales and they are between 550K to 710K around 550SQm to 600SQM size

But they trying to sell this since march look from below figures. So what is the best offer to secure this property?

Current rent is 390PM. and tenets are happy to stay.

Location : South east 16.5 KM to Melbourne CBD
Click to expand...

Hi,
Firstly is the rent $390pw ,what are your reasons for purchasing this particular property, based on the fiqures and little information on what your strategy is for buying this particular property not a good ROI for me
Macca446
 
HI,

Sorry this is per Week. This is for long term Investment for me to keep.
Build the new House one day.:)


So How much you offer base on these history? 650K?


MI
 
There's not enough information to give you an indication. Recent sales don't mean anything if they're not like for like. There are several factors to consider when appraising property, some of which are below.

What is the suburb?
Where is the location within that suburb?
Where is the parcel, on a corner of two quiet streets, or one/two busy ones?
What is constructed on the land?
How big is the property internally?
When was it constructed?
Are there any additional capital improvements?
Are there any easements?
Is there development potential?
Are there any significant defects?
What is the gross rental yield for the suburb?
What are the outgoings of the property?
What is your net yield?

Also...
What is it currently advertised for?
I'm assuming it's Private Sale, can you confirm?
Have you issued any 3rd party property appraisals such as RP Data?
What does the council rates notice value the property at?
Have you inspected any of the "comparable" properties?
What is the vendors reason for selling?
Why has it been on the market for so long? (unrealistic vendor? significant defect?)
 
HI Jake,

Thanks, As i said its in Melbourne South East Corridor withing 16 KM to CBD.

RP Data Report
Low $575,000
Midpoint $662,500
High $750,000

It is in a quite Court and nice suburb with nice neighborhood. Yes its private sale.

Again my intention is to build nice home and move to that in one day!!!

MI
 
390pw rent is quite low for a 650k house. Is it a sub-dividable block and you gonna sub divide in near future? Possible to increase rent?
 
Hi All,

Thanks, But i just want to know the best offer for this property base on above previous sales and asking price?

Code: 
30-Mar-2014 $699,000
29-Mar-2014 Not Applicable 
4-Mar-2014 $630,000

Code: 
29-Mar-2014 $660,000 House Auction Vendor Bid HS

Is this mean, they are looking for 630k or 660k?

Code: 
RP Data Report
Low $575,000
Midpoint $662,500
High $750,000

What is this mean?

History shows that this was double the value. and i know this location is perfect for living. Block is not Square and out off the pocket.
Can add one bathroom and bit of reno can make 450 rent too.

MI
 
It's hard to say without knowing anything about the land. RP Data can only tell you so much. All those questions raised by Jake are good ones and need to be answered but don't forget that valuation is more art than science.
 
MelbInvester said:
Hi All,

Thanks, But i just want to know the best offer for this property base on above previous sales and asking price?

Code: 
30-Mar-2014 $699,000
29-Mar-2014 Not Applicable 
4-Mar-2014 $630,000

Code: 
29-Mar-2014 $660,000 House Auction Vendor Bid HS

Is this mean, they are looking for 630k or 660k?

Code: 
RP Data Report
Low $575,000
Midpoint $662,500
High $750,000

What is this mean?

History shows that this was double the value. and i know this location is perfect for living. Block is not Square and out off the pocket.
Can add one bathroom and bit of reno can make 450 rent too.

MI
Click to expand...
History does not always repeat itself and as a investment the numbers are very bad and at today low interest rates you should be able to buy at least neutral holding costs,when rates go up you will be very heavily negative geared,I would not even look at it having this poor return and cannot subdivide,why do you want to buy this just because of past history prices ,you will be out of pocket quite a bit even now .
 
HI All,

Thanks, OK put it this way if this property is in Richmond.
How much you offer this?

House : 1960 Build 3 bed Brick
Block: 650 SQm
Rent: 390 PW

Again base on that sales information.
MI
 
Hi all,

I thought the location is the KEY and Melbourne average rent yield is 3-3.5%
So don't know why this is not a good Investment.

I'm still trying to learn so be patient.

MI
 
MelbInvester said:
Hi all,

I thought the location is the KEY and Melbourne average rent yield is 3-3.5%
So don't know why this is not a good Investment.

I'm still trying to learn so be patient.

MI
Click to expand...

I don't know what the average is but if I'm looking at those numbers they do not excite me.

You would be heavily out of pocket every month which might be ok if you have plans to move into it in xx years but you are paying for that privilege. From a purely investment point of view it's not a good deal.

If I was going to spend $700k in Richmond I'd want an upside - like the 650 sqm could be subdivided into 2 or 3 and I'd build on those and sell them off.
 
As westminster said

That's a huge net negative cashflow

Are you expecting Better then average capital growth?

If so then yes it would make sense, if not then there is your answer!

Historically these blue chips do better on the long run then non blue chips, however they are very cyclical and can be price elastic
 
HOUSE UNIT
Median price $686,000 $550,000
Quarterly growth 5.39 % 3.97 %
12-month growth 12.11 % 15.21 %
3-year growth 1.18 % 8.70 %
5-year growth 34.06 % 44.74 %
Average Annual Growth 7.13 % 6.50 %
Weekly median advertised rent $400 $350
Number of sales 103 28
Gross rental yield 3.03 % 3.31 %
Days on market 47.51 108.63
 
On my purchases ive worked backwards from yield. I found out what they rent for, divide it by x% target which equals a price which I then offered.

Is 3% normal for that area? If youre out of pocket say 25k per year do you see it getting more than 25k a year in capital growth to break even?
 
Code: 
On my purchases ive worked backwards from yield. I found out what they rent for, divide it by x% target which equals a price which I then offered.

Pls show me with an example.
 
I believe it looks like this- on a house that rents for $300 per wk.
$300 x 52wk in year- $15,600 per annum

If is chasing a 7% yield- $15,600 / .07 = $222,850 offer price.

Hence determine minimum yield and work back from there.

Could be wrong just my interpretation.
 
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