Nathan Birch - 11.5% yield unit in FN QLD for $90,500 positive cashflow in cairns

[Nathan]

As a part of response to last weeks insults towards my investing and the size of my portfolio I am sharing 6 properties I have accumulated in the last 2-3 months for all to see, so everyone can see even further transperancy into my public open book of investing.

I just purchased this unit in the soft Cairns climate for $90,500 which settled yesterday.

Its 3/12 Sandown Close, Woree.

Purchase Price $90,500
Real Value $120k+ (one in same block next door, identical asking $149,000.
Rent - Vacant
Real rent $190-200pw.

Needs under $1500 on minor maintainence issues such as new tap handles, fix a couple tiles etc.

I have my pictures, I forgot to download them before the ad came off the net.

I will post some in time to come.

 

[BigCol]

.........................................

 

[Pa1nter]

Very good buy Nathan,
Even though cairns market has dropped,when one buys at under market value,
One cant lose.

 

[Nathan]

Thanks pa1nter.

True words, even better when cashflow is strong also.

 

[BigCol]

Did you already rent out this unit as I can't find it for rent?

 

[Nathan]

Nah I have a tenant lined up though.... I just need the repairs finalised. Prob end of next week

 

[Ed Barton]

As a part of response to last weeks insults towards my investing and the size of my portfolio I am sharing 6 properties I have accumulated in the last 2-3 months for all to see, so everyone can see even further transperancy into my public open book of investing.

I just purchased this unit in the soft Cairns climate for $90,500 which settled yesterday.

Its 3/12 Sandown Close, Woree.

Purchase Price $90,500
Real Value $120k+ (one in same block next door, identical asking $149,000.
Rent - Vacant
Real rent $190-200pw.

Needs under $1500 on minor maintainence issues such as new tap handles, fix a couple tiles etc.

I have my pictures, I forgot to download them before the ad came off the net.

I will post some in time to come.

thats one, now bring on the other five?

i have a couple of those in cairns.

 

[Nathan]

thats one, now bring on the other five?

i have a couple of those in cairns.

Yep, check the other threads I started.

I will not be posting the other 3 till early next week till they settle.

Will keep posted.

I can post 4 deals from nov-dec I bought last year also...

Where abouts are yours in cairns?

I think these are ok little buy/holds medium term. Still like my cheap sydney metro deals though these are good little holders.

 

[sashatheman]

Hey Nathan.
It looks good. Is it two bedroom?

 

[GreyGhost]

http://www.realestate.com.au/property-apartment-qld-woree-118764479

Number 4 sold last week for $100K.

10K gain in 4 years = 2.76% CG pa

for FNQ it is okay, not negative at least!!
But not quite the $149K that was quoted for next door when he purchased.....

As a part of response to last weeks insults towards my investing and the size of my portfolio I am sharing 6 properties I have accumulated in the last 2-3 months for all to see, so everyone can see even further transperancy into my public open book of investing.

I just purchased this unit in the soft Cairns climate for $90,500 which settled yesterday.

Its 3/12 Sandown Close, Woree.

Purchase Price $90,500
Real Value $120k+ (one in same block next door, identical asking $149,000.
Rent - Vacant
Real rent $190-200pw.

Needs under $1500 on minor maintainence issues such as new tap handles, fix a couple tiles etc.

I have my pictures, I forgot to download them before the ad came off the net.

I will post some in time to come.

 

[pinkboy]

http://www.realestate.com.au/property-apartment-qld-woree-118764479

BC $85/wk !

pinkboy

 

[j_p]

BC $85/wk !

pinkboy

Just saw that!

Anyway good stuff Nathan, I haven't seen these "insults" people have been writing.

 

[Kinnon Bell]

BC $85/wk !

pinkboy

Cheap! And I'm only semi-joking unfortunately. Hence why any of these types of properties need a high gross rental yield.

 

[GreyGhost]

I have been intrigued as to Nathan's journey.
Not passing judgement on him as he has done very well and followed his dreams and fulfilled his ambitions.

I found it interesting to look at properties he bought in 2011 and prior and compare them to current sales. Not to prove him wrong but just to get further insight.

 

[Peter_Tersteeg]

BC $85/wk !

pinkboy

You take that out, then consider property management, council & water rates, maintenance, etc. It's not positive cash flow.

I don't know the Cairns market myself, but $10k of CG in 4 years is less than inflation. I bet it cost more than $10k to sell the property.

This deal lost money. Probably quite a bit as a percentage of the property value.

 

[windyzz]

You take that out, then consider property management, council & water rates, maintenance, etc. It's not positive cash flow.

I don't know the Cairns market myself, but $10k of CG in 4 years is less than inflation. I bet it cost more than $10k to sell the property.

This deal lost money. Probably quite a bit as a percentage of the property value.

Agree... The reason why its cheap and can be negotiated down that much .... it just simply mean the demand is very low, compare to supply.

in the next 10 years or so, when you want to sell it another buyer will also negotiate hard with you.

You'll never see the demand as you're seeing in Sydney market right now LOL!... Jks...Sydney is just stupid market.

 

[oracle]

http://www.realestate.com.au/property-apartment-qld-woree-118764479

Number 4 sold last week for $100K.

10K gain in 4 years = 2.76% CG pa

for FNQ it is okay, not negative at least!!
But not quite the $149K that was quoted for next door when he purchased.....

Assuming you borrow 100% and ignoring stampduty + other purchase costs. You would be paying

Interest @ 4.5% = $4,500
Body Corp = $4,400
Rates + Insurance = $1000 (conservative)
Property Management, Maintenance, Vacancy = $1000

Total outgoing = $10,900

Income @ $180 pw = $9360

Even if you get depreciation allowances best case is neutral.

If you reduce body corp by 50%, you pocket $42 pw. But if interest rates rise to 6% you are back to neutral.

Even though the rental return is 9.36% on purchase price. I just fail to see how this can be successfully applied to retire unless you bought 50+ properties. But then again you are just buying full time job managing 50 such properties.

Cheers,
Oracle.

 

[Big Will]

http://www.realestate.com.au/property-apartment-qld-woree-118764479

Number 4 sold last week for $100K.

10K gain in 4 years = 2.76% CG pa

for FNQ it is okay, not negative at least!!
But not quite the $149K that was quoted for next door when he purchased.....

With the 4.4k going to owners corp each year and only gaining (17.6k for 4 years) and only gaining 9.5k, you are actually behind 7k which you would need to take off the rental gains.

With rent of $36,000 ($180 pw for 4 years w/ 2 weeks letting) you really are 29k positive less loan.

80% LVR with 5% p.a would mean $3.6k p.a in rent ($14,400 for 4 years). So now we are down to $14,600

Lets assume management fees are 1k per year (4k), lets assume 1k for the repairs mentioned (and not others), along with 1k p.a. for council rates (4k) so assumed other bills are 9k

So you have gained $5,600 over 4 years ($1,400 p.a or $26.92 a week), not including any taxes/duties or other fees/expenses.

I personally wouldn't have gone for it before and especially now in hindsight.

 

[geoffw]

From memory, insurance in cyclone prone areas can be vey high, adding further to the expenses already listed.

 

[hugh72]

For these kind of deals to stack up you need to purchase the whole block and obtain insurance quotes from a good broker in advance.
In fairness to Nathan cyclone Yasi struck in 2011 from memory and insurance premiums only really spiked for units to ridiculous levels in the following few years. Unit prices were smashed in Cairns a result and have not really recovered compared to houses IMO.
The market has since priced units in Cairns accordingly.