Purchase of a Unit

[Brett IP]

Hi SS'ers

Have come across a 2 bedroom 1 bath 1 garage unit for sale with the following specs.

For Sale Price $235,000

Rent - $280 per week, great existing tenants

Body Corp - $27/wk (includes insurance & external maintenance)
Rates - $26/wk
LL Insurance $7/wk
100% Loan - $299/wk ($219k @ 7.09% fixed - includes all purchase costs)

This means costs are $359 - Rent of $280 = $79 loss per week = $54 after tax

I believe I can get this unit for $210k, they are apparently desperate and the agent really wanted me to offer $215k. So, at $210,000, returning $280 per week and being in a location which should never have trouble finding tenants, would you call this a good buy?

I have not factored in the benefit of depreciation which may reduce it to breaking even, these units also go up in rent $10 every 6 months. Capital Growth for this area is quite good.

 

[Propertunity]

So, at $210,000, returning $280 per week and being in a location which should never have trouble finding tenants, would you call this a good buy?

Not enough information to tell - sorry.

The numbers look OK, but what is the long term vacancy rate? CG rate?

...and then - future prospects, uniqueness, style, competition for tenants from other newly constructed units, future council plans for the area, tenant demographic, etc etc.

 

[Brett IP]

Geez that was quick, and fair call

From what I know of these units, they basically fill up immediately if a tenant moves on, because of the convenient location (shops, medical & train station). Recent ones filled up within the week. Ive had 3 different people Ive known that have lived there too. There are 26 units.

They were selling for $150k about 5 years ago, but future growth...who knows in QLD anymore. They have come down from approximately $245k a year ago.

Future prospects - the area is going ahead, the centre of the town is being revamped and the train station is getting an overhaul. Its nothing flash ofcoarse, but by the surrounding area going ahead, that is a recipe for increasing rents..possibly. There are no spare blocks in the immediate vicinity, so more units/houses would have to involve knocking down houses.