Opinions on my recent Investment Property purchase?

Discussion in 'Property Analysis' started by Timmah, 5th Sep, 2017.

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  1. Timmah

    Timmah Well-Known Member

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    Hi guys and gals, I've just bought my first investment property. A 1 bedroom unit in Surfers Paradise in a big complex with all the bells and whistles.

    I am trying to work out wether this property is positive or negatively geared so any help would be much appreciated! This is what my figures look like -

    Income - $460 per week rent x 52 = $23,920

    Outgoings annually -

    Strata - 5200
    Sinking fund - 1500
    Rates - 3200
    Mortgage payments - 16,588 (7280 in interest)
    Property management fee - 1674
    Accountant fee - 200

    Given these figures I am down $5266 but after tax I should get a decent refund which would make me positive geared? That's my train of thought. Does this seem like a good investment?

    Any advice would be much appreciated! Thanks guy.
     
  2. Archaon

    Archaon Well-Known Member

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    If the rent doesn't cover the outgoings then you are negatively geared.

    Is this unit able to be Owner Occupied?

    You should get a depreciation report done also, there could be an amount to claim back off your tax.
     
  3. thatbum

    thatbum Well-Known Member

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    If this is a realistic estimate, then you should factor in some maintenance costs as well as some vacancy weeks per year.

    Otherwise no one can say if its a good investment on just some cashflow estimates. Well that's not completely true - I guess if you were wanting a yield investment, we can at least say its bad to average.

    What was your strategy in buying the property?
     
  4. The Y-man

    The Y-man Moderator Staff Member

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    Not sure what "decent" means to you, but on the numbers given, I say you'll get about $1,900 refund.

    The Y-man
     
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  5. Trainee

    Trainee Well-Known Member

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    No vacancies?
     
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  6. Sackie

    Sackie Well-Known Member

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    How much was the unit?
     
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  7. Timmah

    Timmah Well-Known Member

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    The strategy for me with this property is to pay back enough in the first year or so to make it neutrally geared, then I will just let the rent cover the costs and mortgage while I hold the property for the long term capital gains. And hopefully borrowing against the equity once neutral geared to buy another property.

    Okay that's a fair point I do need to add on property maintenance and an allowance for vacancies aswell. Thanks for the advice there.

    @the y man - I was under the impression that I will receive 30% of the tax deductible items back on my return? Could you please help me to understand how the figure of $1900 comes to you? Much appreciated. Thank you.
     
  8. Timmah

    Timmah Well-Known Member

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    The unit cost me $295,000 and I used a 20% deposit
     
  9. Trainee

    Trainee Well-Known Member

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    200k mortgage? Big deposit?
     
  10. Trainee

    Trainee Well-Known Member

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    Whats the interest rate?
     
  11. Timmah

    Timmah Well-Known Member

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    Interest rate is at 5.14%
     
  12. Trainee

    Trainee Well-Known Member

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    Your interest amount looks wrong then. 240000 x 5% should be 12000 interest.
     
  13. Sackie

    Sackie Well-Known Member

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    Could you afford 450- 550k asset ?
     
  14. Timmah

    Timmah Well-Known Member

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    By itself yes, with the unit aswell, maybe not.
     
  15. Trainee

    Trainee Well-Known Member

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    Im waiting for the but the attractive person at the gorgeous showroom told me it was all good story.
     
  16. Timmah

    Timmah Well-Known Member

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    Good point, my maths must have been wrong there. So 12k interest would be tax deductible? Correct me if I'm wrong. I'm still learning here.
     
  17. Trainee

    Trainee Well-Known Member

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    Yes this will turn out to be a big learning experience. Who got you the loan?
     
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  18. Archaon

    Archaon Well-Known Member

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    At that price point it sounds as though it wouldn't be able to be lived in by the owner, could be wrong though, but if it's actually the case, capital growth is not going to look strong, if at all.
     
  19. Sackie

    Sackie Well-Known Member

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    Ok then. I'll be totally honest and give my opinion, I think there are better investment options that have a higher chance of CG in the higher price range and that's what I would have gone for. Also these types of units carry other risks too. just my opinion mate. Anyway congrats on getting started
     
    Last edited: 5th Sep, 2017
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  20. Timmah

    Timmah Well-Known Member

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    Thanks for your opinion man I will take that on board. I do appreciate your feedback. I'm not sure what these types of units refers to though. Just to be clear it can most definitely be owner occupied and will be privately rented out through the real estate.
     
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