Opinion wanted on this IP

Appealing to forum members for their view on this IP that I found: Investment property

I have been looking for a small IP for some time now, and have been looking at different areas Australia wide.

Hotspotting.com.au (Terry Ryder) have listed the Latrobe Valley as a future hotspot with big potential, and Traralgon is the economic centre of the area. All signs pointing to consistent growth, as Traralgon does not seem to follow the roller coaster city house prices, rather just continues to growth slowly and consistently (according to hotspotting.com.au). Lots of government infrastructure spending, govt departments moving in to the area, new power generation plants approved for construction (power for victoria) and so on.

So ive been looking in traralgon for a unit with its own yard and good rental yield - this one seems to fit the bill. The agent has told me the unit next door (in the group of 3) just rented for $290, which makes it positive cashflow at 6.5%, plus full depreciation benefits of a new build. Apparently the owner wants a quick sale and is prepared to negotiate on the price.

Im not sure if I can afford to jump at this opportunity right at this point but it looks compelling to me - any thoughts???
 
All signs pointing to consistent growth, as Traralgon does not seem to follow the roller coaster city house prices, rather just continues to growth slowly and consistently (according to hotspotting.com.au). Lots of government infrastructure spending, govt departments moving in to the area, new power generation plants approved for construction (power for victoria) and so on.
Yep, a regional with consistent (not outstanding) growth for units of:
2011 +0.6%
2010 +15.9%
2009 +10.5%
2008 -9.6%
2007 +14.9%

....the unit next door (in the group of 3) just rented for $290, which makes it positive cashflow at 6.5%, plus full depreciation benefits of a new build.
6.36% yield (not allowing for any vacancies) is NOT cash flow positive UNLESS you put in a large deposit.

Apparently the owner wants a quick sale and is prepared to negotiate on the price.
Sounds like a developer in trouble. They did not even have time (or money) to do any landscaping? :confused:

Im not sure if I can afford to jump at this opportunity right at this point but it looks compelling to me - any thoughts???
Compelling is not a word I would use. I am not saying that it is no good, just that you can get 6.5% yields from units closer to Metro areas .....and yes they can have "roller coaster" growth rates.;)
 
Thanks for the in depth response.

There is landscaping at the front only. I agree the look is not great, however Im trying not to be emotional here.

The reason im looking in this area also is Margaret Lomas has been recommending Traralgon on her Sky Business show recently.

The seller is not a developer but they have moved interstate and therefore want the quick sale, which would be in my favor.
 
I own plenty in Traralgon, no problems whatsoever. They have all done very well, both rental and CG aspect. Great town, ith a good calibre of tenant.
These units looks terribly ugly, though this could help, as their "uglyness" would be making them hard to sell. Maybe open to lowball offers????
Won't matter to tenants one iota though, they will still rent it, as it's in a good location. This I know.:)
 
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