Property investing is becoming addictive...#2

Hi guys,

Thanks again for all the outstanding content on the site - even though I probably haven't contributed as much as I would've liked, I've spent countless hours reading and researching based on the contributions of the members here (so thank you).

Just thought I'd pop my head in and share a deal I've just gone unconditional on. As you're aware, I'm a young investor who purchased his first property mid 2013: http://somersoft.com/forums/showthread.php?p=1048574#post1048574. This deal is number 2:

The Property:

* 2 bedroom, double story brick veneer townhouse in the Logan Central district (Waterford West, QLD), 1 bathroom, and 1 car port parking within a complex of 10
* Sold for $210,000 in July 2009
* Built in 1990
* Floor size of 71 m2.

The Numbers:

* Purchase price: $165,000
* Currently untenanted but tenant lined up at $280pw post settlement (day one yield of 8.82%). There are also two in the same block tenanted for $280pw.
* 97% LVR inc LMI capitalised - total loan: $161,106.52 from Bankwest at 4.88% = $655.17 per month repayments or $151.19 pw. Interest only loan with 100% offset account
* Approx other expenses: Council/Water/Enviro rates (approx $2960pa = $56.92pw), strata fees (approx $1332pa = $25.62pw), Landlord insurance (approx $310pa = $5.96pw, property management (approx $1200.00pa = $23.08pw). Depreciation report to be sorted asap.


Total cash flow pre-tax:

Income: $280.00pw
Expenses at approx levels: $262.77pw
= + $17.23 per week

The property needs some minor cosmetic work prior to the tenant moving in: putting silicone on small leak under kitchen sink, remove OR strengthen IKEA cabinet in kitchen, replace cracked shower screen, replace fly-screen on back door due to old pet holes, and carpet on ground floor needs to be steam cleaned or replaced. Structurally, B&P came back very good from fire safety and structural perspective.

RP Data reports the property is worth approx $190,000 - and there is another property in the same block on sale for $195,000 through Re/Max Community. I think it positions me well for #3 and #4 later in the year, and keeps the cash-flow within the portfolio strong. I know seeing young investors like Nathan posts his deals inspired me to push harder, so I hope I can one day help others from my own experiences.

Pictures to follow during the week when I get my camera back from my gf :mad:

Happy investing,
Nixba
 
Well done! You have bought well and have created instant equity of $25,000 - $30,000 which you can use for your next purchase. Keep buying such properties. Best wishes.
 
Good stuff.

Are you expecting much CG in the future, or was this purchase for some quick equity and slightly positive cashflow?

Thanks for the kind words guys.

This purchase was a long term buy and hold. The property strategy was to buy under market value and the numbers needed to work from day one (I.e the property needed to stand on it's own without affecting lifestyle). I'm expecting to recycle equity quickly and move on to subsequent purchases. I expect there to be steady growth in SE QLD next 12-18 months.

Regards,
Nixba
 
Well done! It's awesome work for a young player. You are doing sound due diligence and I hope it pays off for you.

Onto number #3!!
 
Hi Nixba

Sounds like a good buy .

Any idea on whether it has gone up much in the last year , or is it your perception that you've bought at the bottom of the market ?

What was the initial asking price and any idea how long it was on the market ?

Cliff
 
Those are the lowest strata fees I've ever seen. Are you know thats not a per quarter figure rather than per year?
 
Hi Nixba

Sounds like a good buy .

Any idea on whether it has gone up much in the last year , or is it your perception that you've bought at the bottom of the market ?

What was the initial asking price and any idea how long it was on the market ?

Cliff

Thanks for the kind words. We had exchanged contracts before it 'hit' the market per-say. Contracts had been signed by both parties and we were in the cool off period by the time the ad went up on RE.com.au. It was a fire sale due to a divorce.

I feel like I've bought at the bottom of the market and that the area will experience some steady growth over the next 12-18 months. The growth won't be as sharp as what I have experienced on my St Marys unit. The cash flow on this buy is also strong, and I've got time on my side so I was really looking for that 'immediate' equity gain to recycle and move onto other purchases. Once I move on, the asset is self-sufficient and covers itself including all expenses.

Those are the lowest strata fees I've ever seen. Are you know thats not a per quarter figure rather than per year?

The strata fees are approx $330 per Qtr, working out to be approx $26pw. This was also part of my buying criteria to maximise cash flow.

Thanks again,
Nixba
 
Hi Nixba,

Good work !! Sounds like you are buying well and capitalising on someone's pain, if they bought it in 2009 for 210K and then sold it in 2014 for 165K. Ouch.

Was the place wrecked by a Tenant, or did the market in that area drop that much over 5 years ??

In any case, sounds like you are on your way.....keep concentrating on the good details numbers, that is the key to what you are doing, and you seem to have a good handle on it.

Good luck with your future purchases.
 
Hi Nixba,

Good work !! Sounds like you are buying well and capitalising on someone's pain, if they bought it in 2009 for 210K and then sold it in 2014 for 165K. Ouch.

Was the place wrecked by a Tenant, or did the market in that area drop that much over 5 years ??

In any case, sounds like you are on your way.....keep concentrating on the good details numbers, that is the key to what you are doing, and you seem to have a good handle on it.

Thanks for the kind words Dazz. The QLD market has struggled the past few years - I think the floods in 2011 had a huge impact. I've spoken with the agent on the property selling in the same complex, and he has mentioned he has an offer at $185,000 cash unconditional. Here is the link to that property: http://www.realestate.com.au/property-townhouse-qld-waterford+west-114937763

Here is a video of the property that I have purchased:
http://www.youtube.com/watch?v=2cBcQHR_3hg

As mentioned earlier, there is about $2,000 that needs to be spent on the following (mainly cosmetics): steam clean carpets on bottom level, re-grout and re-silicon shower area, silicon splash back and wet area of kitchen, tidy up garden, and fix kitchen bench-top. The upper level has already been renovated with new paint, new carpet, and new bathroom.

The termite damage treatment and repainting of the front post is being covered under body corporate.

Regards,
Nixba
 
Another solid peice of business...haha i may have to change my own investing strategy to match this!

Good buy. :)
 
RP Data reports the property is worth approx $190,000 - and there is another property in the same block on sale for $195,000 through Re/Max Community. I think it positions me well for #3 and #4 later in the year, and keeps the cash-flow within the portfolio strong. I know seeing young investors like Nathan posts his deals inspired me to push harder, so I hope I can one day help others from my own experiences.

What did the property in the same block end up selling for?

Fingers crossed good price, reval and searching for #3 :)
 
Hi Nixba,

You are doing a great job, well done :)
Are you using a buyers agent for these purchases? Not a bad thing at all if you are, just curious as it sounds up the alley of the birchy or RPG strategy.
Whatever it is it sounds like its paying off for ya mate good stuff
 
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