260 K for IP

I would definitely consider Perth but it's going to need to be a widespread hunt for the best asset in the best area that money can buy. That price point is often troublesome areas or complexes which might have high strata/BC fees which eat into your funds

 

You're not going to get into the bigger cities with that budget. Country towns you never know what could happen. Leaves Adelaide i guess?

 

$350p/w for $260k property is 7% yield.
That's going to be tough off the bat without renovations.
Also which bank is your broker now putting the deal, a lot of banks only accept 6% max yield.

 

$260k buys a lot in Westminster

 

260k will get you into a house in Logan with a reasonable yield. Also Ipswich. Logan could be less if you have the time wait for a good deal to pop up.

https://www.realestate.com.au/sold/property-house-qld-woodridge-132488382

I could come up with a fair few examples under 260k, they might not be pretty but they are out there if you know where to look. This one just 24 minutes drive to Brisbane CBD according to Google. It's current land valuation (June 2019) was 225k! So many great deals available in Brisbane at the moment.

 

But is that house going to get $350p/w rent?

OP if you don't get $350p/w I suspect your maximum borrowing capacity might also drop.

 

If I spent 40k on a renovation it would

 

Rookie question but why would the banks have a cap on the yield?

 

because the money you can make there is the same as the money you make elsewhere , and sometimes you can make more there ...

Cliff

 

Let’s say I give my friend 100k cash then I sign him up as a tenant to give me (back) 2k per week for a year. On a 300pw property.

Or similar happens with rooming arrangements etc.

It’s basically to get rid of outliers, set a normal rent level and not allow people to game the system.

high yield in the current market is unlikely and therefore seen as risky. And you do have to buy into risky places (in banks eyes) to get it.

 

Yes, you can say that about 'stretching' or I prefer to call it pushing the boundaries.

One of my IPs already on P&I and another one will soon go to P&I, but I also locked in another IP IO for 5 years too. So, you can say a bit mix of both atm, it's a calculated risk.

 

Adelaide is also considered...I am scanning the whole country.

 

I cannot name the bank yet, sorry. And there was a mistake originally. Today I got confirmation that the yield should not exceed 6%, which is strange tbh, but I see it as an opportunity.

 

Thanks. I will certainly consider those two, but I guess I will have to make a call and select which state and/or area I should go to to inspect in person and make offers or even buy.

 

Just do something to save that poor timber floor and you've already made a huge difference.... stop using decking paint on your internal floors people!!!!!

 

I think its fence paint

 

Interesting. We like Traralgon, big town (25,000 -35, 000 pp). Lots of development happening. BUT, To buy a property for $260K that rents out for $350/wk is going to be a really hard ask. The only way you are going to get $350/week is if you have a brand new 3bedroom home, or a 4 bedroom home. Have a closer look. What you are going to achieve is hard. The other issue is that the rental demand in that $300-$400 a week range is weaker, there is more on the market at this price point for renters. So ? What can you buy for your $260K?
$209K- Not the best area. Already done, no reno required. 6.7% yeild. 7 Welch Court, Traralgon, Vic 3844
(Personally, I don't think it will get $270/week)
$179,000- Slightly better area. Not by much. Extremely DIRTY & you would need to go over the property and fix anything that is broken. Another deal just feel through on finance, of $180K. Rent $250 is achievable. 6.8% yeild. 1 Eagle Court, Traralgon, Vic 3844
$229,000- Nice area. A unit, 2Bed. Rents for $280/wk. Needs a bit of a makeover. 6.3% yeild. Option, as not a lot of units on the rental market, and houses in this price range are not in great areas. 1/6 Inverness Way, Traralgon, Vic 3844

Traralgon stats for my own financial reasoning.
Costs- Rates, around $1400-$1800 for properties between $200K-$300K. Water- $330x3= $990/yr, Insurance around $1200, agents fees around 7% of rent.

Not a bad thing. Watch where the demand is, the type of houses that suit that demand.
Feel free to share your deal later if you like, I'd love to know what you are thinking of buying & how you can get rent of $350/week for $260K.

 

https://www.realestate.com.au/sold/property-house-qld-kingston-131327110

After a small makeover this would have probably rented for $330 per week. 7-7.5% yield.

https://www.realestate.com.au/sold/property-house-qld-kingston-131325570

Same with this one, quick makeover it would probably get $320 a week. Easily 7% + yield.

 

Hi, thanks for your comments and sharing.

I am looking only at properties with tenants in place.
I bought the last IP in a good condition with that approach compared to how I bought previous IPs. By buying a property with tenants in place, I did not have to lose any money on advertising, leasing etc., no time was lost on finding tenant(s), I even got an agreement in place before I signed the Contract that the tenant agreed to a small rent increase (1 year lease was close to renewal).
I still need to receive a formal approval from the bank and that challenge make it very interesting. I am not sure if I will get financing yet, but I am optimistic.

 

I would certainly avoid big renovations when buying at the very low end of market.

Even a $30k reno on a $300,000 house is 10% of the value. For what purpose? An extra $50 a week in rental income?

Also unless you're planning to sell it immediately after the renovation, tenant wear and tear will mean the value of your $30k reno will be reduced significantly if not worthless after just a few years

Much better off putting that $30k as a deposit towards the next property

I prefer to buy properties basically clean, tidy and ready to rent from day one (might have to spend a few thousand on "teething" issues), and do the big reno when I decide to sell it many years down the track. In the meantime, just maintain them.

Tread carefully in Logan. Some property types/areas even I wouldn't touch after buying hundreds of properties there for clients and myself. Don't be lured simply by cheap prices!

I've got 2 houses in decent parts of Logan under contract at the moment that are under $260k. One of them already tenanted long term at $320pw. Will share addresses and details once they're settled.