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Define 'Cheapie'

Discussion in 'General Property Chat' started by C-mac, 5th Aug, 2015.

  1. C-mac

    C-mac Well-Known Member

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    Hi folks,

    I've noticed that many people on here (including myself!) mention buying 'cheapies'.

    Interested to hear what people's definitions of a cheapie actually is. There is no right or wrong answer (I.e. one person's cheap may be another's mid-range or even 'expensive').

    Would love to hear from newbies and property investment veterans alike on what their $$$ definition is, for a 'cheapie' (I.e. the actual purchase price).
     
  2. FireDragon

    FireDragon Well-Known Member

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    I think this is relative? If the median price of a suburb is $3M, then $1M is a 'cheapie', but if the median price is $500K, then $1M is expensive. If you really want an amount, I will say $400-500K as my cheapest IP is around $400K at the moment.
     
  3. willair

    willair Well-Known Member Premium Member

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    Just look at it in very simple terms what above the ground is sometimes not important ,only the land value and what and how high you can go up..
     
  4. Chilliblue

    Chilliblue Well-Known Member

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    I define it as a property whose value sits well below the suburbs median
     
  5. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Haha I've been buying 100k units at 7.8% yield id consider that as a cheapie :)
     
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  6. D.T.

    D.T. Adelaide Property Manager Business Member

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    Sub 200k houses imo
     
  7. Raydar

    Raydar Well-Known Member

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    So where are all these cheapies people are buying? Reagonal in guessing.
     
  8. Icarus

    Icarus Member

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    We picked up a 2br unit in Rockhampton (Qld) for just over $130k, returning 9% on paper. Thought that was a cheapie at the time.

    http://www.realestate.com.au/property-house-qld-koongal-120095105 - This similar one on paper is around 9% @$240pw - BC, rates etc eats into that figure, but still CF+ with depreciation.

    Not a terrible investment, have just found a better way of doing things and have changed strategies.
     
  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    Metro Adelaide :)
     
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  10. jaybean

    jaybean Well-Known Member

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    For me, "cheapie" is an absolute thing, not a relative one.

    It's not the difference between value and cost. It's not about getting a $2m house for $1m. It's not the relative difference between high yield or low yield.

    It's literally "does not cost much money", regardless of "value".

    So I'd define it as anything under $300k, regardless of whether it had good or bad yield. Regardless of whether the same house next door was only $200k and you got ripped off.
     
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  11. Depreciator

    Depreciator Moderator Staff Member

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    I bought a well positioned flat in Marrickville (Sydney) a few months ago for $370K. I would call that a cheapie.
     
  12. citystar

    citystar Well-Known Member

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    I consider under $250k a cheapie.
     
  13. Chilliblue

    Chilliblue Well-Known Member

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    Your purchase fits my description. Purchased lower than the suburbs median. Great buy by the way.
     
  14. Azazel

    Azazel Well-Known Member

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    Yeah, or under 1/3 of Sydney's median at the moment.
     
  15. The Y-man

    The Y-man Moderator Staff Member

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    I'd probably base on relative to worked income.

    So for someone earning $100k pa, a $200k property might be a cheapie, whereas to someone earning $50k pa it is not.

    The Y-man
     
  16. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I like this.

    I also classify a 'cheapie' in terms of buying a place at a 'decent' price (may even be above median price), but that has great potential to add massive value.

    Eg median price for Suburb X is 650k, and you buy a place for 730k, but it has the potential to create 450k in value.
     
  17. Bayview

    Bayview Well-Known Member

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    Cheapie is when the tenants drive into the driveway in a VS Commodore or worse, and park the other car which is the wrecked version of the same - or a Falcon - on the front lawn for the rust to eat.
     
  18. Leo2413

    Leo2413 Well-Known Member Premium Member

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    One of my past tenants had so many holes in the car that roots and grass was growing on the mat on the floor...im serious.
     
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  19. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Personally anything sub 200k when talking about cheapies in general.
     
  20. Azazel

    Azazel Well-Known Member

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    I guess if you can find a cheapie suburb like this, and you manage to buy a decent house and get a decent tenant who doesn't have an automobile graveyard you should be doing alright.