Which one would you go for?

Discussion in 'Property Investment - Other' started by Red Star, 29th Oct, 2007.

  1. Red Star

    Red Star Member

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    Hi,
    I have been using the forum for around 4 months now and I have been trying to secure my first IP. I have so far missed out on a hosue at auction, missed out on 2 at separate dutch auctions (first we came second out of 2; second time we came second out of 8), and another house we couldnt secure becuase we couldnt agree terms/ price with the vendor. Anyway, I feel I ahve learned a lot and really want to buy. Anyway, now I have 2 places I think woudl make good IPs but I am unsure which way to go.

    House 1 - in Taringa (6km west of Brisbane, close to bus to uni as well as walk to train station). 5 bed, 2 bath, 2 car space older property. Could do with a bit of work but not much. Situated on a quiet street. Estimated rent could be around $550-$600 per week (renting to students). Says it will be auctioned but I am looking at offering prior to this. I think I would offer $550 max.So 5.2 - 5.7% return.

    House 2 - in Fairfield ( 6km south of Brisbane, close to rail as well as a walk (across a bridge) to uni). 5 bed, 3 bath, 2 garage 2 year old hosue, very modern and clean. Would need no work. Situated on a main road. Estimated rent could be $$700 -750 per week (to students). Says price to be negotiated. I think I would offer $650 max. So 5.7% - 6% return.

    House 2, I would get some depreciation. But house 2 there is nothing to do so I woldnt be able to add any value. Im not sure there would be a huge value to add to hosue 1 but for example it needs a paint and a clean up and I know that would make a big difference.

    I knwo the buying prices are different but I would be able to get a low interest loan (from parents) to cover the amount we would need to get house 2.

    So basically I was wondering what people's opinions are - do you go for the newer house so there is less work initially or the hosue where there may be some value to add?

    Just for a but more info according to API in OCtober Fairfied's median house price was $472,000 with median growth of 16% while Taringa median was 610,000 with growth of 14%. So groth is similar as is the land size of both.

    Any advice/ help will be gratefully received. Thanks:confused:
     
  2. Belu

    Belu Member

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    i think i would go house 2. if students are the aim then walking is best (as they can come home easy for lunch or breaks) and is close to rail for other access (meaning no need to have a car).

    Also return is better and depn will help. Whilst you could do work to 1 it would add costs and decrease return, whereas 2 is ready to go, will have fewer issues (hopefully) due to being new and seems to be in a better location.
     
  3. Red Star

    Red Star Member

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    Thanks for your feedbak Belu - I really appreciate it.
    Shona
     
  4. Twitch

    Twitch Member

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    Is house 1 walking distance to a uni?
     
  5. Red Star

    Red Star Member

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    It would be a fair walk - maybe 30-40 mins - so probably not what you would advertise as a walking distance. House 2 is only about 15 mins to the uni (walking). Same uni by the way, in case you are not sure about the areas. Thanks!
     
  6. hschmid

    hschmid Member

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    I think house 2.
    Depr helps.
     
  7. Twitch

    Twitch Member

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    DD with student houses is very important. If your DD says house#2 is OK then why not.

    My view is house#1 is too far away, house#2 is marginal and the main road makes it more so.
     
  8. Twitch

    Twitch Member

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    DD includes
    -what is the going rate for rent per room
    -do you plan on self managing it
    -if not which agency(s) if any will PM a multi-let house and what are the costs
    -what are the local council regs on share houses
    -how much is landlord insurance for such a house
    -what services will you provide and how much are they (eg internet, cleaning)
    -what do you need to do to the house to bring it up to spec to rent by the room; eg, furniture, locks on rooms, lan cabling, white goods
    -what are you going to tell the bank? You need to be careful, banks are touchy about share houses
    -whats the demand & supply of share houses in the area
    - can you buy a, say, 3x2 with 2 living rooms and convert it to a 5x2 with 1 living room?

    Good luck.:)
     
  9. brays

    brays Member

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    Hi Shona

    I would go for house no 2. I lived in Fairfield while at uni and its a great spot -walking distance to the uni, the city (if you can't afford a cab home), train stations and Coles. The house we lived in was on the cnr of Fairfield Rd - we didn't see it was being a problem at the time, but that was 8 yrs ago so traffic may be worse now.

    Brays
     
  10. kaf

    kaf Member

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