Cash Cows

So you would buy a block that is big enough, get plans drawn up & a complying development certificate & and then start building?...its that simple?

 

You have to finish building too And get the right tenancy managers and rents, and the design needs to be right .... and you need to choose locations where vacancy rates are low.... We have delivered 40 + of these in Orange and Bathurst and the pictures you have seen are of the 1st of 20 we are delivering this year in Goulburn.... so we have the process fairly well sorted . We would be happy to build one for you

 

As funny as this sounds...true...gambling dens is the other one.

 

What do the building & land costs look like?...your keeping some of these you're building i guess?

 

Our build contracts are 450K for a Dual Occ. That's 276M2 , and it's turn key , meaning it includes all site costs, fences, driveways, turf, remote garage, independent metering , reverse ducted air to house and reverse split to granny flat , water tanks , letterbox, clotheslines etc...) + whatever the land costs - we generally do a deal with local land vendors for discounts because of the volume we bring, so generally speaking we can get you the land at 5-10K below what you'd pay if you bought it from them....

As an example, the land you see in the photo's I posted earlier was 210K. It's in Josephs Gate Estate. Land in that estate is selling at 215-230K typically. Build was 450K...so their total price was 660K. Other lots have been 202K , 205K etc.... so all our deals have been in the 652-660K range.

By way of comparison, jump online and take a look at what a new 4 bedder costs in Goulburn. You will find that new 4 bedders without flooring, turf, driveways or fencing, and of course without a granny flat, are being sold through local builders at high 500's - low 600's..... so you'd be well into the mid - high 600's by the time you allow for floors, turf, driveways and fencing , and you would still be missing a granny flat , meaning you'd have a 4 bedder with 1 rental income rather than a Dual Occ with 2 rental incomes.... and you'd have paid more. So we think ( well, we know if I'm being frank ) that we represent excellent value - well below the price per M2 of anyone else ... and as you can see, the builders we work with deliver a damn good product

My company is buying one of these, yes...and I hold one in Orange in my SMSF already.... but I have a pretty significant portfolio already of 15 properties valued at well over $10 Million, and I have the same issues with APRA and borrowing money that most everyone else at that sort of level has... so I don't think I'll be able to buy any more of these for the moment . We shall see. Might get my wife into one though ....

 

thanks for all that information..so what does the cashflow look like if one of these are purchased with all cash?...we're only investing for income now

 

Over 15K net cf+

 

only $300 PW.. net?...you mean x2?

 

If you borrowed the entire 650-660K for the purchase , you’d net 15K across both.

if you were borrowing less , or not borrowing at all , the net would be higher - combined rental is 800 per week

 

Thanks for being so transparent @euro73. So many developers want to hold their cards close to their chest. It's good people can still learn from this forum.

 

Sorry you missed me saying i'd be paying cash, no borrowing at all

 

I've been transparent in every post I've ever written, for years. I always provide specific numbers/specific details . Sadly, very few others on here ever are .... forum members should always demand to know the bona fides of people claiming they are this or that, have achieved this or that, etc.... on forums such as these, many many many members present themselves as far more accomplished than they are. Always probe. Always demand transparency - especially from business members .
If people wont offer it, make of that what you will, but it's my view that people who aren't transparent voluntarily, and then when asked, are more than likely taking the pi**

 

$800 per week . So @ $41.6K per annum. Minus @ 6K expenses for property management, insurances, rates etc.... There is @ 16K -17K of depreciation , trailing off to @ 10K by the 10th year

Quick and dirty; you'd generate @ 41.6K gross. @ 19.6K of that would be taxable at whatever marginal tax rate is applicable to your circumstances

3 of these would cost @ 2 Million , gross over 120K per annum, and @ 60K of that would be taxable at whatever MTR is applicable. Importantly, 3 of these would keep an investor under the NSW land tax threshold ....

A lot of our clients will buy 3 of these, with the plan being to either use IO for the first 5 years so they can extract 45K annually and use that to pay down their PPOR much faster, save vast amounts of interest in doing so and also significantly improve borrowing capacity for a later date etc..... OR some just set them to P&I from Day 1 so they pay themselves off over @15-20 years , leaving them with an income of @ 180K gross ( assuming 50% rental appreciation over that 15-20 years) which will ultimately see them debt free with a net income easily exceeding 100K ... and that is achieved even if there is zero growth- which is unlikely

I put that up against the outcomes achieved by 97% of investors over the past 30 years...and it seriously outperforms the income outcomes all that growth has produced. I have said time and again for years..growth alone just doesn't produce adequate retirement incomes for the majority of investors. Sad, but true all the same. Chasing growth at the expense of sound cash flow and debt reduction management is fools gold for those who are seeking a 6 figure income in retirement , in most cases. We have 30 years of data proving it.

 

Hi Alex, may I ask you how many Square metres the 2 bed 2 bath was.

 

I'm often asked whether there is demand for our Dual occ product. Certain forum members have argued for years that regional populations/renters wont embrace or support granny flats.... that they are dog boxes, that everyone wants a house with a yard, yada yada yada.... I have always maintained they have completely misread the demographics of regionals, and that our experience has proven over and again that there is a strong appetite...

Here, we see further evidence of how well received our Dual Occ product is.Go where vacancy rates are low , and people will fall over themselves to get into these . Houses are getting $500 per week. Granny Flats are getting $290-300 per week. Our first 8 were tenanted within days.

Granny flats go like hotcakes in hungry Goulburn rental market

#dualoccmadeeasy

#cashcowskilldebt