Which is better?

[pawprints]

Given the info below, can someone advise me which would be the better buy out of the 3?? All in the same area. How much will I be out of pocket?

• My wage is $64100 gross p/a, bring home net $1700 a fortnight. I will only borrow 80%

• Assume rates per annum of $700 for all, water rates of $800 for all. My conveyancer $500. Assume I pay the asking price (which I won't of course!)

Property 1 - 2br unit, asking price $190K, brick, built late 70's, body corp fee $446 p/a, currently untenanted, possible rent at the moment $190p/w. (will need new carpet throughout)

Property 2 - 2br unit, brick, built 2006, asking price $225K (reduced from $250K have been on market for almost 2 years!)2 left for sale out of 11. High quality fit out. Body corp fee $440p/a, currently untenanted, possible rent at the moment $210. (All it needs is window coverings). Very close to main shops, excellent location.

Property 3 - 3br house, hardiplank, built 2006, asking price $220K. Currently tenanted with tenants who have been in there from the completion of building whose lease is up Sept 8th but are very keen to stay on. Paying $190 p/w. Neat and modern house. No body corp fees as it's a house. Great location.

The ability to raise the rents on propertys 2 and 3 in the short to long term are alot greater than property 1 due to the age and fittings of property 1.

 

[buzzlightyear]

Not knowing the properties I am making a few assumptions however, Property 1 is my initial preference.

This preference is because of the ability to add value (based on your comments about the respective properties). I don't think there would be a huge cash flow difference between the three just looking at their gross rental return and then taking into account depreciation/maintenance etc...

 

[Belu]

how much land is property 3 on? the rest are units but this is a house - whats the land content?

 

[pawprints]

Belu- Property 3 is on a subdivided block so has almost as much land as the 2 units.

 

[Belu]

do any/all of the 3 have good access to public transport? How far out from the city?

 

[IndexFund]

What area is this?

A 3 bedroom house cheaper than a unit? Eh ok.

 

[HiEquity]

If you're not a renovator (we're not - we just buy and hold), then Property 1 doesn't look too good as it won't have much depreciation and the rental upside isn't there according to you. Property 3 would be my pick - the yield is pretty similar to number 2, the depreciation should be similar (built same year) but it's a house - no body corp fees or hassles. It also seems there is more rental upside as that seems to be what the tenants are currently paying - market rent could be higher? Are you sure land value is the same? We are always prepared to pay a small premium to get a house instead of a unit anyway - we just like the control, especially useful over the longer term if that's your aim.

But if you are a renovator then number 1 seems to have the most potential...

 

[Witzl]

my personal pick would be no.3... but mainly because I like houses, and I dislike body corp.

Other people here would have more experienced opinions than mine though!

 

[WBG Redcliffe]

My pick is property 3 based on the limited info. 3br house should have a greater demand for tenants and no body corp. Long term should out perform the units (CG)

 

[Player]

Hi pawprints,

I would go for Property 3. Stand alone house so tennants more independent, low maintenance block as subdivided and no body corp. Three bedrooms widens rental appeal. Also yield will be grossed up by depreciation. It's only two years old and as you state great location.

 

[Rixter]

Given the info below, can someone advise me which would be the better buy out of the 3?? All in the same area. How much will I be out of pocket?

• My wage is $64100 gross p/a, bring home net $1700 a fortnight. I will only borrow 80%

• Assume rates per annum of $700 for all, water rates of $800 for all. My conveyancer $500. Assume I pay the asking price (which I won't of course!)

Property 1 - 2br unit, asking price $190K, brick, built late 70's, body corp fee $446 p/a, currently untenanted, possible rent at the moment $190p/w. (will need new carpet throughout)

Property 2 - 2br unit, brick, built 2006, asking price $225K (reduced from $250K have been on market for almost 2 years!)2 left for sale out of 11. High quality fit out. Body corp fee $440p/a, currently untenanted, possible rent at the moment $210. (All it needs is window coverings). Very close to main shops, excellent location.

Property 3 - 3br house, hardiplank, built 2006, asking price $220K. Currently tenanted with tenants who have been in there from the completion of building whose lease is up Sept 8th but are very keen to stay on. Paying $190 p/w. Neat and modern house. No body corp fees as it's a house. Great location.

The ability to raise the rents on propertys 2 and 3 in the short to long term are alot greater than property 1 due to the age and fittings of property 1.

Hi PP,

The property you go for all depends on 'your' Property Investment 'Strategy'.

Its your chosen 'strategy' that dictates what location & property type you purchase. This is commonly known as your purchasing criteria.

So many people dont realise it tho. This is why so many people become so confused and frustrated. They simply have no plan or strategy and are placing the cart before the horse.

If they have no idea of their plan or strategy as to why they are purchasing the property and what the property needs to do for them, then how on earth are they ever going to know where to look and what to look out for.

Start out with what you are looking for the property to do for you and the time frame you require it in because this is what ultimately dictates your 'strategy' which dictates 'purchasing criteria'.

Food for thought.

Hope this helps.

 

[pawprints]

My strategy is to buy and hold this IP in this area, growth will come, I am confident of that. Rent will raise slower for the time being but thats OK as I can cover it in the meantime.

I was leaning towards Prop 3 myself and I don't think there is much in them regarding out of pocket expense.

Prop 1 as someone suggested would be easier to add value, but this is my first IP and I don't want to outlay too much 'fixing up and adding value' right now.
I would prefer to choose a place the is newish and 'hassle' free at the moment.

 

[granev]

Prop 3

Rent increase in a couple of months makes rent comparable to the other two , and you already have a tenant in place who is reluctant to move

No body corp fees

Plenty of depreciation

3 bedrooms v 2 bedrooms

It only has to be as handy to transport etc as the other two to make it a no brainer IMHO

Good luck with your decision

 

[exstatic]

Hrm, are your more likely to be able to claim more depreciatioon with a house as opposed to an apartment?

 

[BayView]

No. 3

house with land, no body corp, good depreciation and has a tenant already who wants to stay.

 

[Rixter]

Hrm, are your more likely to be able to claim more depreciatioon with a house as opposed to an apartment?

Townhouses / Villas lend themselves to be more tax advantageous in relation to houses.

This brought about by a higher buildings to land ratio within the purchase price and therefore greater non cash depreciation deductions.

Hope this helps.

 

[pawprints]

Well I'm going to start with property 3 and put in an offer today!! Fingers crossed for my first IP!!