Can old IP cover its costs by rent?

Discussion in 'Investment Strategy' started by Samj, 15th Jul, 2021.

Join Australia's most dynamic and respected property investment community
  1. Samj

    Samj Well-Known Member

    Joined:
    14th Mar, 2016
    Posts:
    236
    Location:
    QLD
    I am trying to buy and IP for $320,000 mark in Logan council area. Usually I can get $320/wk rent at the moment. These properties are over 40 years old. If I buy a fairly good house that won't have major repairs. Can the rental cover most of the usual expenses (interest , minor repairs and etc)?

    New to this domain and would like to know practically how much negative they can be. If you have had similar properties could you please let me know? Thank you.
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    I dont think you can buy for 320k, especially if wont have major repairs.

    But yes, as a general rule of thumb, if property is $320k and rents 320 (1% rule) , then it'll likely be neutralish. Remember rents creep up over time as well.
     
    Samj likes this.
  3. HaigJames

    HaigJames Member

    Joined:
    5th Jan, 2020
    Posts:
    21
    Location:
    Perth
    I have a similar price probably in Logan I’ve spent $3500 on it this year already. You before that was about the same. Maintenance can go up and down but I would normally allow these types of numbers for an older style property
     
  4. boganfromlogan

    boganfromlogan Well-Known Member

    Joined:
    10th Jan, 2017
    Posts:
    3,332
    Location:
    Brisbane
    I think it is possible.

    The only thing will be to find that property for 320k given the recent increase in prices.

    There will be expenses on older properties and trades are becoming very expensive.

    It certainly is possible at 400k or 450k
     
    Samj likes this.
  5. skater

    skater Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    10,222
    Location:
    Sydney? Gold Coast?
    It should work out fairly neutral, however there are a few variable costs to consider.

    Firstly the interest rate on the mortgage. This is your biggest expense.

    Secondly, how much of the $320k are you borrowing? The size of the deposit can make a big difference.

    The best thing to do is a small spreadsheet listing all the costs. I've got heaps of properties and on average I spend around $1k per year on maintenance per property. Sometimes a little more, but it all depends on what needs maintaining. Sometimes one property costs next to nothing, while another has a few large expenses.
     
    Samj and Travelbug like this.
  6. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    IO and no land tax, maybe if you're lucky.

    With P&I, no chance. Whilst the P component is not a 'cost', it's still an obligation.
     
    Samj likes this.
  7. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,856
    Location:
    Perth
    In WA
    Income$17000

    Interest $300k say $7500
    Rates $1500
    Water rates $1250
    Insurance $500
    EBM $400
    RCD checks $125
    PM fees $2000
    Maintenance minimum $500
     
  8. Samj

    Samj Well-Known Member

    Joined:
    14th Mar, 2016
    Posts:
    236
    Location:
    QLD
    IO, looks like it covers most of it unless your unlucky...
     
  9. Samj

    Samj Well-Known Member

    Joined:
    14th Mar, 2016
    Posts:
    236
    Location:
    QLD
    Thanks, looks like it covers most of the general expenses. Of course some fairly big expenses also can come time to time. I am just wondering if it covers general expenses/maintenances ...
     
  10. Samj

    Samj Well-Known Member

    Joined:
    14th Mar, 2016
    Posts:
    236
    Location:
    QLD
    Thanks for your reply!

    Still there are a few more left in that range. This property is under contract for that price range https://www.realestate.com.au/property-house-qld-kingston-136564774

    Rental can be between $320-340.
     
    boganfromlogan likes this.

Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia