Ok so you can pickup some rock-bottom bargains at the moment in the depressed Cairns market such as 2 bed units in Central/North Cairns for around $120,000, renting for around 180-200/wk.
Body corp + rates total about $4000/yr ($75/wk).
The loan would end up close to 130k after stamp duty and any minor repairs/reno work. On an IO loan, that means about $760/mth to service it.
So the numbers roughly look like:
- $185 rent per wk minus $75 in rates = $110 actual income / wk.
- $110/wk = $476/mth to pay towards the mortgage.
- Monthly shortfall towards mortgage = $760 - $476 = $284/mth shortfall
= $65/wk shortfall ($3380/yr).
So its costing you $3380/yr to hang onto one of these "bargains" in Cairns when it is tentanted and no ongoing maintenance is required!
Then if you go ahead, how many years will it take until one of these little hovels sees enough growth to even be worth say $200,000? Even then, it grows by $80k and then you can draw maybe half of that out as "accessible equity" to then what, repeat the process and buy another tiny cheap little shack and wait another 10 years for it to grow by $70k???
I was originally very keen when I first saw the rock bottom prices such as $120k etc, but it really doesn't seem like a good proposition after you crunch the numbers.. I am thinking much better to stick with larger properties in much stronger economic growth corridors and population centres e.g. Sydney, Newcastle, Central Coast etc.
Is $65/wk considered reasonably decent in terms of outlay to hang onto an investment property in the early stages while it turns positive over time, or would you consider that an unattractive deal?
What do others think?
Body corp + rates total about $4000/yr ($75/wk).
The loan would end up close to 130k after stamp duty and any minor repairs/reno work. On an IO loan, that means about $760/mth to service it.
So the numbers roughly look like:
- $185 rent per wk minus $75 in rates = $110 actual income / wk.
- $110/wk = $476/mth to pay towards the mortgage.
- Monthly shortfall towards mortgage = $760 - $476 = $284/mth shortfall
= $65/wk shortfall ($3380/yr).
So its costing you $3380/yr to hang onto one of these "bargains" in Cairns when it is tentanted and no ongoing maintenance is required!
Then if you go ahead, how many years will it take until one of these little hovels sees enough growth to even be worth say $200,000? Even then, it grows by $80k and then you can draw maybe half of that out as "accessible equity" to then what, repeat the process and buy another tiny cheap little shack and wait another 10 years for it to grow by $70k???
I was originally very keen when I first saw the rock bottom prices such as $120k etc, but it really doesn't seem like a good proposition after you crunch the numbers.. I am thinking much better to stick with larger properties in much stronger economic growth corridors and population centres e.g. Sydney, Newcastle, Central Coast etc.
Is $65/wk considered reasonably decent in terms of outlay to hang onto an investment property in the early stages while it turns positive over time, or would you consider that an unattractive deal?
What do others think?