purchasing terraces in Paddington & units in Elizabeth bay

[wooody]

Hello,

Anyone any thoughts on Paddington terraces & Elizabeth Bay units, units currently in this area returning over 10% before expenses as many as 50 people queuing up to inspect/rental properties in this area, you could say they are falling over each other to get in the door, also alot of units bought with sign off of 66w form to waive any cooling off periods, only thing people need to check is that units should comply with current fire regulations

Investment time frame terraces 5-7yrs depending on next boom in property market, depend on cash flow will ride out next boom & wait for the 2nd uptick in the cycle

units same as above if i needed the cash for elsewhere would sell, or borrow more against equity

On other subject any experienced money people here, if i have a property worth 2 million how much could i borrow against that property to purchase another if this property has a mortgage against it of approximately 30% e.g. 70% equity, 30% mortgage

Many thanks

 

[stumunro]

Your saying a 1M terrace is renting for $2000 a week?

do you have examples?

 

[stumunro]

Hello,

Anyone any thoughts on Paddington terraces & Elizabeth Bay units, units currently in this area returning over 10% before expenses as many as 50 people queuing up to inspect/rental properties in this area, you could say they are falling over each other to get in the door, also alot of units bought with sign off of 66w form to waive any cooling off periods, only thing people need to check is that units should comply with current fire regulations

Investment time frame terraces 5-7yrs depending on next boom in property market, depend on cash flow will ride out next boom & wait for the 2nd uptick in the cycle

units same as above if i needed the cash for elsewhere would sell, or borrow more against equity

On other subject any experienced money people here, if i have a property worth 2 million how much could i borrow against that property to purchase another if this property has a mortgage against it of approximately 30% e.g. 70% equity, 30% mortgage

Many thanks

You can probably safely increase the mortgage to say 80 in this market. Quick figures = about 1M usable equity

 

[wooody]

hello, thanks for the response,

I am saying a 1 bed unit in Eliz bay, buying for between 280-400k & renting for approx 320-380 {+-} per wk, depending on actual location & size in the bay unit should try to be over 50sq mtrs, bonus extra cash on top of that if it comes with a garage or car space, car space can go for 45k upwards. lock up garage 60k+, traffic cops are always there booking people, some of these units come with 1 bed plus sunroom / office space, you need to be quick off the mark here to purchase due to high demand in this area, potts point is also good but has already had a good run, the area will only get better once they clean up the cross, i am not ramping the area but am actively looking to buy some more units, the terraces in paddo little bit let return but higher growth in property say 1m purchase = rent 800-900wk

I prefer the older style unit with high ceilings, no lifts, good fire rating, no swimming pool, no concierge

 

[Bandita]

hello, thanks for the response,

I am saying a 1 bed unit in Eliz bay, buying for between 280-400k & renting for approx 320-380 {+-} per wk, the terraces in paddo little bit let return but higher growth in property say 1m purchase = rent 800-900wk

Hi Woody,

That's not over 10% return - that's about 5% return - not including expenses!

Cheers,
Jen

 

[wooody]

explain the math jen if you have time

 

[stumunro]

woody the common mistake is to compare the rent per week straight against the asking price

i.e in your instance 500k property 500 perweek rent = 10%

What actually needs to happen is you calculate your return for rent on an annual basis divided by the price of the property so in this instance

500x52 = $26,000 rent for the year

$26,000 divided by $500,000

= 0.052

x 100 (to move the decible)

= 5.2% yield

I hope this helps

 

[depreciator]

Woody, there is also really rough (but quick) way to work if a property is going to be neutral i.e. break even.
If the purchase price is $400K, you want $800pw in rent.
If it's $1m, you want $2,000pw.
That won't apply to every single property as outgoings can sometimes be very high, but it's a useful and quick calc.
Scott
(I do like those old flats in Double Bay etc.)