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From: Mike .
A second opinion please
From: NigelW
Date: 26 Feb 2001
Time: 11:04:46
Hi all. I'd welcome people's views about the following:
block of 5 flats in a middle ring suburb of Brisbane, close to train, shops, schools and sports facilities. Cap gain in area is reasonably low but some new/re-development in the area (not exactly gentrification but the coffee club can't be far behind...)
Now for the important stuff - the figures
List price $360K my offer $300K Agent's comment on vendor's position he's at $315K and I'm sure if you offer $310K I can get it through) Rent $650 per week rates 4800 insurance etc allow $1000.
Unimproved value only $121K. Land size is enough for another 2 units at the back (but who knows whether BCC would ultimately approve it?)
On that basis gearing to 95% including mtge insurance let's say $295K borrowing.
Fixed I/O for 3 years at 6.95% means $,20503 repayments. Gross rent allowing 2 a generous 10 weeks total vacancy across the 5 flats would be $32500.
Thus the net would be about $6K (less any repairs). Depreciation wouldn't be great given the age and unfurnished BUT should be able to jag about $3K per flat in the first year and around $300/pa thereafter. Thus there could be about $7000 in tax savings for me in the first year as well (on top rate).
Would I be mad not to go to $310K on this? That would be buying at a 13.9% discount from list price but who knows re real market value (i guess I'm the one determining that)
A wise 2nd opinion would be very much appreciated. I think I'm suffering a bit of what TW described as investment-itis. Can I not see the wood for the trees or is this a good deal?
btw Geoff1's rule of 500 would result in about $322K.
Cheers and thanks in advance, N.
A second opinion please
From: NigelW
Date: 26 Feb 2001
Time: 11:04:46
Hi all. I'd welcome people's views about the following:
block of 5 flats in a middle ring suburb of Brisbane, close to train, shops, schools and sports facilities. Cap gain in area is reasonably low but some new/re-development in the area (not exactly gentrification but the coffee club can't be far behind...)
Now for the important stuff - the figures
List price $360K my offer $300K Agent's comment on vendor's position he's at $315K and I'm sure if you offer $310K I can get it through) Rent $650 per week rates 4800 insurance etc allow $1000.
Unimproved value only $121K. Land size is enough for another 2 units at the back (but who knows whether BCC would ultimately approve it?)
On that basis gearing to 95% including mtge insurance let's say $295K borrowing.
Fixed I/O for 3 years at 6.95% means $,20503 repayments. Gross rent allowing 2 a generous 10 weeks total vacancy across the 5 flats would be $32500.
Thus the net would be about $6K (less any repairs). Depreciation wouldn't be great given the age and unfurnished BUT should be able to jag about $3K per flat in the first year and around $300/pa thereafter. Thus there could be about $7000 in tax savings for me in the first year as well (on top rate).
Would I be mad not to go to $310K on this? That would be buying at a 13.9% discount from list price but who knows re real market value (i guess I'm the one determining that)
A wise 2nd opinion would be very much appreciated. I think I'm suffering a bit of what TW described as investment-itis. Can I not see the wood for the trees or is this a good deal?
btw Geoff1's rule of 500 would result in about $322K.
Cheers and thanks in advance, N.
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