Join Australia's most dynamic and respected property investment community

Is this a good IP- advice for novice

Discussion in 'General Property Chat' started by TJR, 24th Jul, 2015.

  1. TJR

    TJR Member

    Joined:
    2nd Jul, 2015
    Posts:
    12
    Location:
    Victoria
    Hi there, I am looking at 2x 2 BR units, priced at $310k in a regional city. They are currently tenanted by two long term tenants, who will be staying. Total rent is $370 p/w, with potential to increase a little. Both units are tired but I would expect some capital gain, and potential to increase value through a facelift. Given that i would be paying separate rates does this sound like a reasonable proposition?
    Cheers, Tim
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,145
    Location:
    Canberra and Sydney
    Hiya Tim

    There's not enough info to go off.

    It depends on the location - some areas primed for growth whilst other regionals areas don't move a whole lot.

    Cheers

    Jamie
     
    TJR and Leo2413 like this.
  3. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,107
    Location:
    Melbourne
    Very roughly from a cashflow position it seems ok but then again that is the main draw card of regional so realistically you could maybe do better.

    Jamie is spot on, what are the growth prospects as well? Anything happening in the ground to drive prices in the near future. The most dangerous statement is "expect some capital gain".
     
    TJR, larrylarry and Leo2413 like this.
  4. Greyghost

    Greyghost Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,262
    Location:
    Melbourne
    Hi Tim,
    You seem to understand the fundamentals of the numbers involved in this particular property, which is good.
    You need to incorporate it with the location it is in.
    Regardless of your choice of property, is that a sound area for investing in? Have you narrowed down your searches to this particular area starting from a macro level - state, suburb, particular part of suburb, certain streets in a suburb etc.
    This is one side of the coin, the property itself is the other. Together both fitting your strategy.
     
  5. TJR

    TJR Member

    Joined:
    2nd Jul, 2015
    Posts:
    12
    Location:
    Victoria
    Thanks, it is in Warrnambool, where capital growth goes in spurts. There is a lot of new housing but not much for people wanting cheaper 2 br units. We have been looking primarily at houses, but to achieve this return is unsual in the houses around here.
     
  6. TJR

    TJR Member

    Joined:
    2nd Jul, 2015
    Posts:
    12
    Location:
    Victoria
    Thanks. It is in Warrnambool, the capital gain is generally fairly lame, but with the occasional spurt. The attraction is solid units, existing good tenants, and it is a buy and hold approach for us, with the aim for the tenants to pay off the loan over time, plus whatever capital gain occurs. Pretty conservative approach, as we need to be currently.
     
  7. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    If you would be paying separate rates, is there an option to buy just 1 unit?
     
  8. TJR

    TJR Member

    Joined:
    2nd Jul, 2015
    Posts:
    12
    Location:
    Victoria
    No, they are duplex, both together
     
  9. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    Separate rates suggests they are on separate titles, does it not?
    What rates are you referring to?
     
  10. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,123
    Location:
    FNQ
    Sounds like a single title so one rates notice for both most likely.
     
  11. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    But OP is saying separate rates, so that seems odd.
     
  12. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,123
    Location:
    FNQ
    Yeah, I think one notice would be more likely.
     
  13. TJR

    TJR Member

    Joined:
    2nd Jul, 2015
    Posts:
    12
    Location:
    Victoria
    The section 32 said 2 x rates. So, not sure if on 2 titles.
    Regardless, we have just had an offer accepted on a 4 br house with better potential for capital growth and potential to add worth. $285 k with rental approx $330 p/w. Not quite positively geared but we are happy enough with it.
    Thanks for the advice, much appreciated.
     
  14. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,123
    Location:
    FNQ
    Sounds good
     
    TJR likes this.