Where to gather info for first investment properties?

[Phantom_X]

Hi all,

My wife and I are looking to buy our first investment properties (pre approval for two properties at approx $500k each). Currently looking at Brisbane and perhaps Sydney.

While I have done a lot of reading on this forum and have certainly learnt a lot, I'm now trying to understand the best way to gather info on a specific property in order to work out if the numbers will work for us. Our main aim is capital growth, but want to know how best to work out whether it will be positively or negatively geared etc.

How does one go about finding all the required numbers? It's easy enough to look up similar properties on Realestate.com.au to determine rent, or I suppose call agents in the area. What about other charges such as strata, council rates, water, land tax etc? Are there any websites, spreadsheets or similar where you can obtain this info relatively easily?

I had a look through the spreadsheets thread but wasn't sure what to use. I guess ultimately it would be great for me to be able to formulate a check list of initial and ongoing costs so I can do the numbers on a property to do due diligence prior to going any further with it.

I know this is a fairly broad question, but would be interested in hearing how other people "do the numbers", so to speak.

Thanks for any advice.

Neal

 

[Propertunity]

.....but want to know how best to work out whether it will be positively or negatively geared etc.

The calcs are pretty easy once you have all the numbers you need.

Are there any websites, spreadsheets or similar where you can obtain this info relatively easily?

No websites, no. The spreadsheets are easy - rental income in, less expenses out (including depreciation) = whether you are positive or neg. geared.

How does one go about finding all the required numbers? It's easy enough to look up similar properties on Realestate.com.au to determine rent, or I suppose call agents in the area. What about other charges such as strata, council rates, water, land tax etc?

Strata is going to vary on a unit by unit basis. You can have strata of $400 per qtr right next door to another block where the strata is $1,100 per qtr.

Council rates & water are just a phone call to the local council or the strata figures are often available from the selling agent - just confirm them when you are doing a strata search.

Depreciation will depend on the age of the building and any renovations that may have been done.

Land Tax will be dependent on how much land you own and in what states. You are probably not going to be paying land tax for your first few properties but check the state Office of State Revenue websites - they have calculators.

All the best.

 

[Peter_Tersteeg]

As a very rough guideline, neutral gearing starts at about 2%-3% above the rates you pay, so you need about 7%-8% rental yield.

 

[vaughan]

Hi all,

My wife and I are looking to buy our first investment properties (pre approval for two properties at approx $500k each). Currently looking at Brisbane and perhaps Sydney.

While I have done a lot of reading on this forum and have certainly learnt a lot, I'm now trying to understand the best way to gather info on a specific property in order to work out if the numbers will work for us. Our main aim is capital growth, but want to know how best to work out whether it will be positively or negatively geared etc.

How does one go about finding all the required numbers? It's easy enough to look up similar properties on Realestate.com.au to determine rent, or I suppose call agents in the area. What about other charges such as strata, council rates, water, land tax etc? Are there any websites, spreadsheets or similar where you can obtain this info relatively easily?

I had a look through the spreadsheets thread but wasn't sure what to use. I guess ultimately it would be great for me to be able to formulate a check list of initial and ongoing costs so I can do the numbers on a property to do due diligence prior to going any further with it.

I know this is a fairly broad question, but would be interested in hearing how other people "do the numbers", so to speak.

Thanks for any advice.

Neal

The big ones are:

income:
rent (allow for vacancy, if 5% vacancy then rent*0.95)

expenses:
buying costs (stamp duty, legal fees: allow 5% to 7% of buy price)
loan interest (always calculate off 100% of buy price plus buy costs)
property management fees (typically 5.5% to 8.8% in Sydney metro)
strata fees (can be VERY significant)
council rates
water rates
building insurance
landlord insurance

others:
depreciation
vacancy
repairs and maintenance
land tax


At the very minimum, calculate the rent minus the vacancy, loan interest for full buy cost including legals, property management fees, and strata (strata can be a huge cost). Council and water rates are relatively similar between properties.

Vacancy rate is important to consider. Early in mu search for an IP I considered a furnished apartment in Parramatta that had a HUGE yield. After the 15% vacancy rate was calculated in, it was pretty ordinary. Further subtract the high strata fees and it was a poor investment.

Note BTW the long list of expenses but the very short list of income.