Would you buy this?

[marky_mark]

I may have the opportunity of buying a 1 bed unit for about $140,000 with the weekly rent set at $180 per week and a tenant already in place.

With a ten percent deposit and stamp duty etc. it's going to cost me around $20,000 in upfront costs. The mortgage would then be about $150 per week at 6% interest only and the extra $30 from the tenant could go to pay the body corp.

Another property which was slightly renovated just sold in the same block for about $160,000.

This would be my first investment and it sounds like it won't cost me anything to hold onto it but I'm just unsure if this is going to have good capital growth as there are loads of units in the area and also this unit doesn't have a car space.

What do you think? Should I buy it or just look for something with more potential for growth? Any thoughts would be greatly appreciated. Thanks.

 

[Aaron Sice]

mate - if it's undervalued and CF+ why would you NOT get it.....?

for a first investment it sounds like a cracker....!

 

[HandyAndy888]

mate - if it's undervalued and CF+ why would you NOT get it.....?

for a first investment it sounds like a cracker....!

It doesn't sound like cf+ to me...is it?

Although, my advice for first timers is to do it...JUST DO IT ALREADY!!!!

 

[Jamie M]

Hey Mark,

$140k for a 1 bedroom unit that rents for around $180 p.w - sounds very Queanbeyanish to me (which is good, I like Queanbeyan, brought my first IP there, has had good growth and IMO will only keep growing).

Don't forget to account for (and these are all rough costs):
rates ($1000)
BC ($1200)
PM fees ($900)
Insurance ($300)
maintenance ($500)

These costs might tip it into negatively geared territory by about $60 p.w at 6% IO (that's if my spreadsheet isn't lying too me - and that's before deductions).

It would be a good first investment - especially if tarting it up a bit will bring it up to the $160k like the renovated unit you mentioned (if it is in Queanbeyan, I know someone who sells flatpack kitchens at a decent price).

Cheers,

Jamie

 

[Nathan]

Id be happier paying $95k

 

[marky_mark]

Thanks for all the comments.

Jamie, you're right about Queanbeyan. A friend of mine has a few investments and he said I should stay away from Queanbeyan as there as so many units that I will always have competition when renting them out, therefore it will be harder to increase the rents.

To go from cf neutral to paying $60 pw seems quite a big jump. I'd considered the body corp but hadn't really thought about the other things like maintenance and insurance.

I like the fact that everyone here agrees it's a good property so I will pursue it further. Thanks. BTW, I'm not really much of a handyman so wouldn't know what to do with the kitchen. Maybe I should clock up some hours on DIY through uTube

 

[Rob Williams]

BTW, I'm not really much of a handyman so wouldn't know what to do with the kitchen. Maybe I should clock up some hours on DIY through uTube

Or pay someone to do the work. Then you can go and enjoy some YouTube entertainment while someone else does the real work

 

[Rixter]

What do you think? Should I buy it or just look for something with more potential for growth? Any thoughts would be greatly appreciated.

Marky Mark,

1/ What is your chosen investment strategy?
2/ What are you wanting the said property to achieve for you in relation to your answer to Question 1?
3/ Do you think the said property will provide you with what your answer is to Question 2? If ticks the boxes, then its a no brainer.

The property itself is merely the conduit or vehicle as to how you will be driving it (your strategy). A lot of people dont realise it tho.

The majority of people (mostly newbies but not so new as well) are too property (vehicle) focussed and dont even entertain the question of is it the right vehicle to use (via their strategy) to get them to where they want to go.

Hope this provides some food for thought.

 

[marky_mark]

1/ What is your chosen investment strategy?

My aim is to buy and hold. Have passive income in the future so that I can choose if I want to work or not.

2/ What are you wanting the said property to achieve for you in relation to your answer to Question 1?

I guess I was looking at the fact this property would cost me very little to hold onto and therefore I should always make money from it through time and even if it didn't perform wonderfully with growth it would still become cf+.

3/ Do you think the said property will provide you with what your answer is to Question 2?

It's pretty much the bottom of the market in the area and therefore I believe it has to go up in value.

I also look at this as a bit of a learning lesson as it will be my first investment and as the numbers are quite low I can probably afford to make some mistakes without getting into a lot of trouble. It should help work out the costs involved with owning an investment and things which may pop up that I hadn't even considered.

You know, I only found this site about 38 hours ago but already I'm loving all the help from you great people.

 

[Jamie M]

Maybe I should clock up some hours on DIY through uTube

Haha, that's how I learnt how to tile!

Cheers,

Jamie

 

[Gools]

Out of interest, how much are similar 2 bedroom units going for in the area? I find it easier to bump the rent up in these as the increase is usually split over two people/couples.

Gools

 

[marky_mark]

Out of interest, how much are similar 2 bedroom units going for in the area? I find it easier to bump the rent up in these as the increase is usually split over two people/couples.

Two bedroom units are starting at about $220 and go up to around $270ish. I'm still waiting to hear back from the bank on our loan at the moment so not sure if I can get that much. They have approved me for a 90% loan up to $320,000 but I'm trying to get a 95% loan so that I don't have to put in as much capital, which will then free me up to buy the second property later this year