Buying for cash flow

So close to your retirement, you'd want to be very clear on the goal you're trying to achieve. Not a vague idea , but crystal clear on the numbers you want, then look at possible strategies to achieve that outcome.

When a person has a 30+ year timeframe to retire, they have alot more room and flexibility for errors and changing up goals etc. You don't have that luxury. So my advice to you would be to first get crystal clear on the goal you want to achieve, then assess and see if there are strategies that could achieve that end.

And keep risk front and centre at every step. If you decide a certain strategy could achieve your goal but the risks are too high, walk away.

My 1.5 cents.

 

You running out of money?

On a previous post, I thought you wrote “My 2.0 cents.”

 

Inflation.

 

In that case, I would have thought the value of your advice would be increasing in monetary terms .

 

Too many dummies recently have affected my intrinsic value. I need a holiday to regroup methinks. And a new mindset.

 

I would buy if I do live in the area and if I am a bit handy in replace the tap washers, light bulbs and etc if needed. Dont know about financial position but if can borrow, will borrow as much as possible and leave the cash in the offset account and pay no LMI ie borrow <= 80% of the purchased price. Assume you already own your home outright and looking for an IP

If one plans right, one would have no debt issues in a few years if purchased like this one
20 Beasy Court, Mildura, Vic 3500

You might need to talk to the right people because at the end of the day it all depend on your income and expenses

 

I wouldn't invest in that only ticks one box proximaty to Regis, but near nothing else not even efficient or convenient public transport.. Little depreciation could be claimed, CG would be low, the price is a little high for the location.and high maintenance, wrong stove, only one bathroom means you wont get top yield.. Public housing and crack heads across the road and even running around on the road sometimes naked, even had a child bashed and the body hid in the ceiling a few years ago . A few hundred metres to the north within walking distance to the medical precinct and major employer, and walking distance to CBD, wave pool/gym, and shops is good.

 

I couldnt think of a worse place to get high yeild . An Expensive river front life style demographics in an area with out the attributes that people need and will pay a premium for. High prices there don't mean high rents . BTW Gol Gol is 6k from Mildura.

 

We are all still waiting for a list of the dozens of regionals with hospitals , universities , gold mines , Govt department HQs etc ...

 

This would be much better than Beasy adding another bathroom may give you 7% yield if you target the right market, The size and location of the block give you options you will also get CG with a wave effect from the current high prices nearer CBD. I would say that is better than shares. I would buy it myself , but I dont need more income to pay tax on. or hassles with development, I am going more up scale.

 

Mango man what do you think of Gol Gol ? Do your DD and invest there if the numbers stack up.

 

The Murray is only @100 meters wide at its widest point . Drive to the edge of Mildura, which is also the border of Victoria . Which is also where the Murray divides VIC and NSW , coincidentally . See whether you can reach the other side and be in NSW and the outskirts of Gol Gol in a couple of hundred metres or not , or whether the bridge is actually 6km long for a 100 meter (ish) crossing . Then let us know what you found out.

By the way . I don’t sell anything there . Nor is Gol Gol expensive. Land is actually very cheap there . Like , really cheap . 110 -120k for 700 square meter lots or better . I suggested it for consideration to the OP as it is right next door to Mildura (where the OP lives) but is in NSW and therefore allows true Dual occ with a detached granny flat under the NSW AHSEPP , while still benefiting from it's proximity to Mildura . That is all.
.

 

@Mangoman - i have owned a house in Mildura for the past 10 years. Here are some very accurate figures for a house worth 250k (for this you will get a decent 3 x 1 house, probably on the westside (nicer side) about 15-20 years old).
Expenses:
Rates $1800
Water $730
PM Fees on $300/week rent - $1800
Insurance - $600
Repairs and Maintenance allow $500 pa
Total - $5,430 per annum expenses
Rent - $15,600
If you borrow 112,500 (stamp duty and legals will be $12,500 approx) @ 4% and pay interest only that's another $4,500 per year. So total expenses of $9,900, leaving you positively geared at about $5,500-6000 per annum give or take. On your 150k cash investment, that's a 4% net return. Expect capital growth of around 3% pa in Mildura (historical average).
Your $150,000 will be tied up though and you can't just grab $20k out if you need it.
If you invest in an LIC or and ETF (lets say ARGO for example), you will receive a fully franked dividend of 4% per annum (that's net dividend) and approximately 3% growth per annum. So almost exactly the same as buying a house in Mildura, however you can sell off part of your shares in the LIC/ETF at any stage with very, very low buying and selling costs.
For someone 2-3 years out of retirement, i would recommend the LIC/ETF option all day!

 

Great summary and response, it's handy to see the real holding expenses listed

 

Sounds right. Rule of thumb is 30% of rent is expenses excluding interest. Cheap properties are actually worse because rates are often similar regardless of price.

 

For a cheapie, maintenance, say HWS replacement, could be 4+ weeks gross rent

For a noice place, it could be a week’s gross rent.

 

I wasn't estimating the distance from the geographical centre of Mildura ( where you'd be unlikely to be able to purchase a home anyway as it's the town residential centre ) to the geographical centre of Gol Gol, a location precisely NOT where the new subdivisions /vacant land in town, exist.

My comments were within the context of the topic. I was saying drive a couple of hundred metres ( give or take) across the water and voila, you'd be in NSW and able to buy something that would allow a Dual Occ under NSW's AHSEPP! Old mate was being pedantic for the sake of trolling.... as is old mates standard practice Completely missed the point about getting over the NSW border to get into granny flat territory, and trolled about whether the driving distances involved were accurate. The distances are not particularly relevant - a fact seemingly lost on old mate. Whether it's 100metres, 200 metres, 6 km or 12 KM, the two locations bump up against each other on the VIC/NSW border. On one side you can do granny flats. On the other side you cannot. The OP lives in Mildura and said they wanted to buy in Mildura to get great yields. I pointed out they could pop over the border and get better yields without really having to leave the greater Mildura area - give or take.... Gol Gol residents would tell you that Mildura is their city centre and if the border didnt exist Gol Gol would be a suburb of Mildura . That was the point. But a discussion about the potential cash flow advantages of being on one side of the border versus the other wasnt ever really on old mates mind.... only ever interested in the easy troll.

 

Cash flow but a one horse town??

https://m.realestate.com.au/property-unitblock-vic-natimuk-126199450

 

Has anyone on here bought a block of units like this in the past? It seems super tempting especially as someone who is reaching their borrowing capacity so would like a high cash flow property.