Thoughts on this property

[No0b]

Gday guys, been reading the forum for a little bit now, was first introduced to me at another forum by MikeW, not sure if he's still around.

I'm new to property investing, and still getting a feel for it.

What are peoples thoughts on this property in Shepparton.

http://www.realestate.com.au/property-unit-vic-shepparton-108975081

Am I right in assuming its for both units at that price or each?

I can only see one unit, unless its a duplex?

Gross rental yield seems ok.

 

[ok180]

Yes thar price is for both units. They would be on one title.

What a depressing looking place to live though :O

 

[westminster]

Looks like it has an entrance on the left and one on the right. Would have a common wall down the middle I think.

Yield looks pretty darn good. Plain style but could be worth it.

Large disclaimer: I know nothing about the area, whether it is legal to have 2 sets of people living in it, if they are on seperate titles, etc etc

 

[andrew81k]

Based on the advertised rent the return is pretty good. Although once you factor in the maintenance cost (which I suspect will be higher given the age of the property) the return will drop off a little. Also don't forget to factor in all the rates. I've had a look at similar properties in other areas and the council rates for such a property (regardles of it being on the one title) was a killer. I'm not saying that that is the deal here, but just double check before proceeding.

Is this a typical property which is in tenant demand for Shepparton?

 

[No0b]

Thanks for all the replies, and for raising some valid points.
At this stage I am just purely looking at properties that could be a good buy, and seeing if I am looking at the right properties or not.

Once you start adding repairs and maintenance and other costs, the cash flow may reduce by alot, but at a 9% gross yield it looks ok.

I haven't looked at vacancy rates or what is in demand with regards to rental properties yet.

 

[DaveM]

With these kinds of properties you really need to look at net yields. 9% seems ok but its 9% at low rents, so any expenses or repairs will destroy net yields. As mentioned above check rates, I have seen single title duplexes with rates and water of almost $4000 pa in regional areas. In these duplex, water usasge usually isnt seperately metered so you need to pay it.

 

[Jake Milne]

Hi Noob,

I'd pass on this one... It doesn't suit any particular strategy. If you're looking to be a CF+ investor you need 3 things:

1. Gross Yield +7.6%

2. Ability to add value (minor reno's such as aircon, security doors, deadlocks, heat lights in bathroom, paint and carpet, etc)

3. Ability to buy below market value.

This only ticks one of the three boxes so whilst it'll return a little bit of money it won't really give you the performance needed to grow your portfolio.

 

[vaughan]

Hi Noob,

I'd pass on this one... It doesn't suit any particular strategy. If you're looking to be a CF+ investor you need 3 things:

1. Gross Yield +7.6%

2. Ability to add value (minor reno's such as aircon, security doors, deadlocks, heat lights in bathroom, paint and carpet, etc)

3. Ability to buy below market value.

This only ticks one of the three boxes so whilst it'll return a little bit of money it won't really give you the performance needed to grow your portfolio.

A really nice summary of strategy Jake.

 

[vaughan]

Not to say I cannot improve on it of course.

(I'm a business analysis and db developer and tend to "generalise" things so they apply to a wider range of situations. It's a strength, not a fault. Really.)

1) The target gross yield should not be a fixed value but instead cover the costs, plus provide a reasonable return.

3) Ability to buy at the price that makes the numbers work. Whether this is above or below market value is irrelevant.

By that I mean, if you find a property where the numbers work at the asking price and the asking price is reasonable then buy it before somebody else does, don't risk losing it haggling.

OK back to work....

 

[Jake Milne]

Well said vaughan, completely agree.