Just Did a Deal for IP4 as well

[angela]

Very happy with my latest deal. Purchase Price is $330000, my PM says should rent for at least $400wk, going on the photos only. 3 bedroom 1 bathroom highset 500m from Qld Uni Ipswich campus and site for brand new high school to be completed in 2010.
I enquired about it 3 weeks ago, but it is a marriage split and the husband wanted to buy out the wifes share, after a former contract fell over on finance.
Agent rang me Friday arvo and said husband made wife insulting offer and it was back on the market. Met her 20 minutes later to inspect and decided it was a good deal. Signed a contract for $330000 which was accepted and signed off by owner today. I was the first one to enquire after the previous contract crashed and was first on the list of prospective buyers.
This is the first time I havent felt any buyers remorse, and haven't had any palpitations,lol.

link to house:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105153495&f=20&p=10&t=res&ty=&fmt=&header=&cc=&c=84680889&s=qld&snf=rbs&tm=1226918763

 

[Edmond Dantes]

Congratulations, house looks nice and big!

is it the first time you buy it with swimming pool? I've followed your previous threads and all of your IPs seem to be around the ipswich area, right?

I looked at Brassal for a while but ended up buying in Goodna ;-)

cheers
-Andres

 

[Belu]

congrats.

nice house - with the pool is there a possibility to turn it into student accomodation? i.e getting another couple of bedrooms in there and renting it on a per room basis?

Cheers

Ben

 

[angela]

aegcp Congratulations, house looks nice and big!

is it the first time you buy it with swimming pool? I've followed your previous threads and all of your IPs seem to be around the ipswich area, right?

I looked at Brassal for a while but ended up buying in Goodna ;-)

Yep this is the first one with a pool. I was specifically looking for a house with a pool, as 40deg + isn't uncommon in Ipswich in Summer, and after speaking to my PM, found that houses with pools are in high demand this time of year, but there are very few for rent, with people who want to stay put for a long time, once they secure one, and people are willing to pay a premium. I just wanted to make sure when I bought, the pool was sound and not likely to cause too many dramas. This one is in perfect condition, has a newish sand pump and is all set up on timers, which makes maintenance easy for tenants. Oh it is also solar heated!

Belu congrats.

nice house - with the pool is there a possibility to turn it into student accomodation? i.e getting another couple of bedrooms in there and renting it on a per room basis?

Cheers

Ben

Student accommodation is a definite possibility, walking distance to UNI, and there is a huge room underneath which could be a fourth bedroom. Although, my target is RAAF families, as the Amberley air base isn't too far away, and there are DHA houses in neighbouring Flinders View/Yamanto suburbs. I checked out rental allowances on the DHA website, and they are quite generous for private rentals, which would make it quite a cheap rental for a RAAF family.

People have been telling me I'm mad for buying a rental with a pool (these people have no IPs of their own funnily enough), but me and my PM agree that this will fill a niche in which there is plenty of demand. Also, my PM is great, she is very careful with tenant selection, and will get a local pool company to give the tenants a lesson on pool maintenance when they move in. With 12 weekly inspections, not too much should go wrong.

I will only take 12 month leases on this one, so that it is always up for renewal in the peak of Summer.

Still no butterflies. I'm wondering if this is because I am more experienced/confident now, or if I know that this one is a winner?

 

[evand]

If i had a dollar every time i've been told that one by an agent i wouldn't have to invest.

Usually it goes "a contract fell over at $xx.00. Its used to set a price precedent in the potential buyers mind and also give the impression of demand (you might miss out).

Its a common line in the industry. Also, why do you think you were the first on the list in a line of buyers?

after a former contract fell over on finance.

 

[angela]

If i had a dollar every time i've been told that one by an agent i wouldn't have to invest.

Usually it goes "a contract fell over at $xx.00. Its used to set a price precedent in the potential buyers mind and also give the impression of demand (you might miss out).
Its a common line in the industry. Also, why do you think you were the first on the list in a line of buyers?

When I rang about it three weeks ago, the agent told me that the situation was a bit messy, the house had had a contract on it, vendors finance had just fallen over that day, and now the house was off the market while the husband and wife tried to sort out a buy out between themselves. The husband wanted to keep the house. So I forgot about it, as it was no longer for sale. It wasn't in the agents best interests to lie about the house being now longer for sale.
I was the first person to enquire about the house AFTER the previous contract had fallen over, hence I was the first one she called. And, the agent did tell me that the previous contract was for $330000, so I offered $325000, which was declined. I was happy to pay $330000.
This is my 7th purchase, and having a sales background, I think I'm pretty wise to the tricks that salespeople try to put over me

 

[evand]

Fair enough but i'm just saying i've heard that line so many times it ain't funny. You have no proof of any of it beside what the agent told you.
Regardless, good luck with it.

 

[angela]

hehe, I've learned to take what agents say with a pinch of salt.
I knew this was a good buy, so in reality it didn't matter if there was a former contract or not.

Nearly got caught out with one I looked at recently, where the agent told me the wrong information on property boundaries. I checked it out on the council website and told her she was wrong. She argued with me, and I called her back a few days later, when she confirmed that the vendors had given her the wrong info. Would have snapped that one up if the info I was given was correct

 

[lizzie]

Nearly got caught out with one I looked at recently, where the agent told me the wrong information on property boundaries. I checked it out on the council website and told her she was wrong. She argued with me, and I called her back a few days later, when she confirmed that the vendors had given her the wrong info. Would have snapped that one up if the info I was given was correct

which is why i always put in the clause "subject to site survey to confirm boundaries are as advised in the contract". or something like that.

p.s. good buy

 

[vbplease]

Great buy Angela, looks like you'd have no worries finding excellent tenants for the house.

Do you plan on leaving the pool maintenance to the tenant or will you hire a cleaner?

 

[VYBerlinaV8]

Congratulations! If it's a good buy, who really cares what agent says?

 

[want2bewealthy]

Congratulations!

 

[evand]

Can someone please explain why its a great buy from a purely investing point of view?

I don't think we'll see any growth in Ippy for a couple hundred years (most likely falls in the next year or 2) and its negatively geared.

Apologies for not offering congratulations, i'm looking at it purely from an investing aspect. I try not to allow emotions in my investing decisions.

 

[Aaron Sice]

Yep this is the first one with a pool. I was specifically looking for a house with a pool, as 40deg + isn't uncommon in Ipswich in Summer, and after speaking to my PM, found that houses with pools are in high demand this time of year, but there are very few for rent, with people who want to stay put for a long time, once they secure one, and people are willing to pay a premium. I just wanted to make sure when I bought, the pool was sound and not likely to cause too many dramas. This one is in perfect condition, has a newish sand pump and is all set up on timers, which makes maintenance easy for tenants. Oh it is also solar heated!



Student accommodation is a definite possibility, walking distance to UNI, and there is a huge room underneath which could be a fourth bedroom. Although, my target is RAAF families, as the Amberley air base isn't too far away, and there are DHA houses in neighbouring Flinders View/Yamanto suburbs. I checked out rental allowances on the DHA website, and they are quite generous for private rentals, which would make it quite a cheap rental for a RAAF family.

People have been telling me I'm mad for buying a rental with a pool (these people have no IPs of their own funnily enough), but me and my PM agree that this will fill a niche in which there is plenty of demand. Also, my PM is great, she is very careful with tenant selection, and will get a local pool company to give the tenants a lesson on pool maintenance when they move in. With 12 weekly inspections, not too much should go wrong.

I will only take 12 month leases on this one, so that it is always up for renewal in the peak of Summer.

Still no butterflies. I'm wondering if this is because I am more experienced/confident now, or if I know that this one is a winner?

when there are no flutters, you have made a wise choice. $330k @ 400pw rent is a great yield - pools also make for fantastic depreciation.

find a niche. exploit it. that's my business plan, has served me very well. why would you not apply it to real estate.

remember, joe schmoe AVOIDS risk. if the tenant is paying a premium for the pool, then you've MANAGED your risk.

i must admit - i'm a little jealous. what are the CG figures for Ipswich? what's the boat for, next to the pool....? looks like you've got new kitch and bathrooms as well - great depreciation across that entire property. i would get a depreciation expert and a QS to estimate the cost of EVERYTHING in that place.

 

[boods99]

Student accommodation is a definite possibility, walking distance to UNI, and there is a huge room underneath which could be a fourth bedroom. Although, my target is RAAF families, as the Amberley air base isn't too far away, and there are DHA houses in neighbouring Flinders View/Yamanto suburbs. I checked out rental allowances on the DHA website, and they are quite generous for private rentals, which would make it quite a cheap rental for a RAAF family.

Congrats on the purchase, Angela!
The only issue is if you want to rent it as a DHA property, they will not take on a house with a pool. Not sure if that was your intention, but thought I would flag the issue!
Sounds like it will rent out easily regardless.
Boods

 

[angela]

Can someone please explain why its a great buy from a purely investing point of view?

I don't think we'll see any growth in Ippy for a couple hundred years (most likely falls in the next year or 2) and its negatively geared.

Apologies for not offering congratulations, i'm looking at it purely from an investing aspect. I try not to allow emotions in my investing decisions.

I think it's a great buy as at $400 week rent, Our current variable rate is 6.99% and after tax, it will be positive. I'm more interested in yield at the moment, capital growth will follow, especially when the new high school is opened in 2010 and Ipswich cities rejuvenation has been finished.

Like I said it is a niche, huge demand, almost zero supply. And my emotions always come into it, I wouldn't expect anyone to rent a house from me that I wouldn't live in myself.

 

[angela]

Congrats on the purchase, Angela!
The only issue is if you want to rent it as a DHA property, they will not take on a house with a pool. Not sure if that was your intention, but thought I would flag the issue!
Sounds like it will rent out easily regardless.
Boods

I wouldn't rent through the DHA, I would offer it as a private rental. I checked out the DHA website, and there is a calculator which they can work out how much rental allowance they are entitled to via private rentals. Nifty.
Alot of RAAF personnell transfer up here over Christmas/New year, so the timing is great.

 

[James Allen]

I think it's a great buy as at $400 week rent, Our current variable rate is 6.99% and after tax, it will be positive. I'm more interested in yield at the moment, capital growth will follow, especially when the new high school is opened in 2010 and Ipswich cities rejuvenation has been finished.

Like I said it is a niche, huge demand, almost zero supply. And my emotions always come into it, I wouldn't expect anyone to rent a house from me that I wouldn't live in myself.

How much are you expecting to claim in depreciation? On my calcs you would need around $6000 p/a just to be neutral and that's if your doing IO loan and 7% management + rates, insurance and letting fee. And that doesn't include any maintenance. I'm not having a go just curious.

 

[evand]

Are you taking into account RE management fees + costs, council rates, insurance, maintenance, bank fees, etc. All this usually adds 2% pa of the value of the property. Not to mention rising interest rates.

How can you be buying for yield when its neg geared? And you should say growth might happen when the high school opens, not will. Nothing is definite, espcially cap growth in the short/med term. I can only see Ippy growing with a national price growth and that will be quite a long way off.

Doesn't add up for me, all the best with it.

I think it's a great buy as at $400 week rent, Our current variable rate is 6.99% and after tax, it will be positive. I'm more interested in yield at the moment, capital growth will follow, especially when the new high school is opened in 2010 and Ipswich cities rejuvenation has been finished.

Like I said it is a niche, huge demand, almost zero supply. And my emotions always come into it, I wouldn't expect anyone to rent a house from me that I wouldn't live in myself.

 

[angela]

How much are you expecting to claim in depreciation? On my calcs you would need around $6000 p/a just to be neutral and that's if your doing IO loan and 7% management + rates, insurance and letting fee. And that doesn't include any maintenance. I'm not having a go just curious.

ok, I jumped the gun a bit, 'it' won't be positive in itself, but with tax deductions from all four properties across mine & hubby's tax returns the 'portfolio' will be positive. That's how I've been working out my figures, our total weekly out of pocket costs.
However, IF interest rates go down to 5%, then 'it' will be neutral before tax.
Anyway, we have bought for the long term, and can afford to hold. Not sure how much depreciation can be claimed either, there has been a lot of renovation & extension done in the last two years, so whatever is depreciated will be a bonus.