I am assessing a wrap of a country property.
My purchase price is $40,000 wrapee purchase price is $50,000
My interest rate is 6.5% wrapee interest rate is 8.5%.
(I am assuming if wraps for $120,000 properties make $30,000 then wraps for $40,000 properties should make $10,000)
My Initial deposit = 30% (country town) = $12,000
Their deposit = FHOG = $7,000
Assume costs of $5,000 for paper work
My initial cash outlay = $12,000 -$7,000 +$5,000 = $10,000
Usual rents = $100. Their weekly payment = $90 + council + water etc
My weekly interest payment = $48 (6.5% IO on $38,000)
Their council + water etc = $40 per week.
If they buy after 1 day I make $5,000
If they buy after 5 years I make $10,000
Compared to renting out.
I need to put up $10,000 instead of $12,000
Cashflow I get $2200 per year instead of ($1000 and zero if hot water service goes).
From bank position I am getting $90 per week instead of $100 per week (worse off)
Unless I pay Council + water etc then I get $130 per week (bank will assess this as better)
After say 5 years I get $10,000 if wrapee purchases. Need to only get 1.05% pa growth to match.
Can anyone comment on this?
Also what happens if interest rates go up. I am assuming I can not fix interest rates for 5 years as the property may get purchased after 1 year?
Stirling
My purchase price is $40,000 wrapee purchase price is $50,000
My interest rate is 6.5% wrapee interest rate is 8.5%.
(I am assuming if wraps for $120,000 properties make $30,000 then wraps for $40,000 properties should make $10,000)
My Initial deposit = 30% (country town) = $12,000
Their deposit = FHOG = $7,000
Assume costs of $5,000 for paper work
My initial cash outlay = $12,000 -$7,000 +$5,000 = $10,000
Usual rents = $100. Their weekly payment = $90 + council + water etc
My weekly interest payment = $48 (6.5% IO on $38,000)
Their council + water etc = $40 per week.
If they buy after 1 day I make $5,000
If they buy after 5 years I make $10,000
Compared to renting out.
I need to put up $10,000 instead of $12,000
Cashflow I get $2200 per year instead of ($1000 and zero if hot water service goes).
From bank position I am getting $90 per week instead of $100 per week (worse off)
Unless I pay Council + water etc then I get $130 per week (bank will assess this as better)
After say 5 years I get $10,000 if wrapee purchases. Need to only get 1.05% pa growth to match.
Can anyone comment on this?
Also what happens if interest rates go up. I am assuming I can not fix interest rates for 5 years as the property may get purchased after 1 year?
Stirling