Hi Andy,
May I ask if these IPs are positively geared ? Did you buy cash or via a loan ? Do you have to do much to manage them ?
Thanks,
Soy.
Hi Soy
Yes, all these properties are +ve cashflow. The gross returns on them is about the 21% mark. We have some that are up to 28% and down to 18% gross return.
Even allowing for all the expenses I expect that the net return should be around 12%. but time will tell.
The market has now moved with more people jumping on the band wagon and as such these %'s are now down and as such I have stopped buying as it's a lot of effort if the returns aren't super normal.
I have them all with the same property manager and so far so good.
The tenants are way more demanding than our tenants with properties specked much higher than we would ever dream of supplying here in Aust. For instance we have to provide Fridge, dishwasher, aircons / gas heating ducted, fans in all bedrooms near new carpet and immaculate presentation.
A friend recently had 3 tenants go bad in a very short time frame after just having spent $15k+ per property. The are now looking at spending another $2k+ per property to bring the properties back to standard. This is within 5 month. This doesn't include the lost rent nor the placement fee for a new tenant which can be up to a months rent.
Personally I have had one tenant from hell who has complained incessantly from the day they moved in. In this case this coincides with a less than perfect renovation with many of the small problems not attended to.
In addition the problem with the house is that it is 3 stories with the bottom story partly in the ground. This generates a mildew smell through the house and the tenant has been on a witch hunt to understand where the smell originates and is picking every little thing and demanding a fix. It's been a long year but they are finally in the wind up.
With the cost of all the fixes I have made no money on this particular property.
We had to use funds from Australia. You can now get finance up to 50% but this is generally via the resellers of the properties and generally reflects the margin that they have bumped the price of the property up by.
Cheers