For the positive cash flow buffs

Why have you written it in Cyrillic?

 

was answering q above its cut and pasted off the footer of the website, its not an exact translation of the word its a summary from several latin dictionary sites

 

This is probably going to sound weird.. but by looking at your picture you look like a very nice, genuine and honest person.

 

The ruse worked then. Everything is going according to plan. Mwa ha ha

 

If that is the depth of the reasoning, then you can tell too many people are buying real estate, if they have it for a holiday house or future residence, then that is not so silly.

They will care if the SHTF and they can't pay nor offload for anywhere near what they paid.

 

I think he rushed in and overpaid. It's an old 2 story house that is 210k higher than the median price of the suburb. Long term it should do okay with capital growth because it's 10km from the CBD and close to transport, shopping centres, and a university. In the short-medium term it's a hit to the hip pocket and will be for well into the foreseeable future. He's happy with it though so that's the main thing.

Personally I tend to look for properties in suburbs that are slightly below the suburbs median price. Easier to rent out and easier to get a more favourable valuation as lenders will always tend to be conservative.

 

Sounds like Mawson Lakes?

 

Nah it's Pasadena.

 

A word of caution; my 2nd IP was a run-down 2 x 1 villa unit with a SIL, in a complex of 12, close to all amenities and transport, and in a quiet court.

Bought it for 10% under asking price, paid $206k in Highett; not far from Southland, and 5 mins walk to train station. 25 mins to CBD

Sounds all good, right?

Then, did a very nice reno on it. Modernised with new kitchen, bathroom, floorboards polished, B.I.R's, new carpet, paint, door furniture, downlights, etc...$22k spent. It looked bloody awesome even if I do say so myself.

Comes time to rent the thing out - no increase in rents whatsoever.

So, massive neg cashflow, and was absolutely no fun to own as a result.

No rent increase for 2 years either.

A lot of these blokes come up with fabulous theories; but be careful of the reality.

 

HI @Bayview,

At the time did you do your due diligence to see if there was a higher price point in rents for units similar to yours that were renovated when compared to unrenovated?

 

Well; I thought so, but but obviously not well enough in hindsight.

At that time the rental market went flat.

I watched the suburb for a couple of months before buying, so by the time I started that, then my reno was completed 3 months after settlement - which which was approx 7 months from beginning of research to start of rental - the whole rental climate had changed.

I was expecting approx $250p/week rent after reno, and could only muster up $210p/w.

 

ahh ok...must have been so frustrating. Well there's not much you can do if the market changed in the midst of it all.

 

Yep. Just another disaster in amongst several.

 

hehe... Your so humorous, positive, upbeat and optimistic.. undeterred by having some hard times in the past. I can't wait to see how you'll be once things start to really flourish for you

 

Yep, plenty would have packed it in and given up. Good on you @Bayview

 

In all sincerity, if you could pack and bottle the optimism and resilience that @Bayview has and sell it.. I would be lining up to purchase by the carload and stock up for the rainy days.

 

I'm bloody 54 now; it'd better start happening soon.

 

With the 20/20 of hindsight Bayview , that 22 k inv for a 2 k year increase would of better been used as a 10% dep on another purchase in the same area.

Positive of the Reno, it would be in greater demand than unreno apt in the same range and therefore lower vacancy rate.

I try to keep my renos to units at no more than 5% end value. Kitchens and bathrooms 2% each. Good for depreciation value as well.

 

@Leo2413, I'm renaming you to GreatInfoFunnel.

Keep the quality content coming