RP data valuation

CIP?

 

commercial investment property

 

If it is for an owner occupier home, what has rental yield got to do with it?
But it is not uncommon on the LNS to have poor yields as this is off-set by higher CG over time.

 

How do you get capital growth without underlying earnings growth. All seems like loose credit .. goings good till the taps turned off... ultimately these assets need to earn their keep.... otherwise why not just buy at 1% yield?

 

If you were an owner occupier why would you lock up 5.6m in a house after stamp duty that you couldn't offload in a hurry and could only get 1700 a week after costs? You could just leave the money in a bank and earn a risk free capital protected return

 

If you were an owner occupier of a 5.6m house you wouldn't get $1700 a week after costs and you wouldn't have money in the bank earning risk free capital protected returns.

You would have a really nice house.

Expecting owner occupiers to behave as investors will cause headaches.

 

A house so nice that a tenant sees fit to pay only 1900 a week for? That which cost $5.6m to own?

 

Btw that home was purchased mid last year. .8 months later, its on the rental market. Seems ill advised for a broker to be suggesting that the quantum of debt that needs to be serviced out of one's earnings on the investment is immaterial. Circumstances change, but for whatever reason, if one needs to move elsewhere and rent the home out, accepting a yield of <1.5% is a recipe for ruin.

 

purchasing IPs = largely an investment decision, number talks.

purchasing PPOR = largely an emotional decision, heart rules.

big difference.

 

I tried to pay for something with emotion at the shops.. it was rejected

 

Because you can.

If you cant walk away

Same reason you buy a. C63 AMG. Makes you happy costs a lot.

Do you also winge when buying a nice car?

 

No one here acknowledges mortgages run over 15 years but life events intercede that may require you to upend your plans

 

I think a C63 would cost way more to rent on a daily basis than outright ownership. A home is many order of magnitudes cheaper to rent than own with debt.

 

put in a written offer with your conditions and amount and closing date, then walk away if you dont get a counteroffer.

I would value a house by using land value plus construction cost for a similar house(this is the harder part but easy if you have had experience with looking at building your own home. If not you can check out some builder's costs for different builds online to get a ballpark idea) This will be a fair value amount.

Then you will have to compare recent sales in the area and best if you can get comparable properties and adjust your value accordingly.

The RP data values are really only useful for cookie cutter houses in newer estates or apartment blocks with many similar units. And you wont know the actual bank valuation until they send someone out to value it, after the contract of sale has been signed.

For a downward going market like Sydney, a 10-15% discount from that fair value should be a reasonable offer, though it sounds like the seller is in no rush to sell and may even take it off the market and wait for a while before listing again.

 

Maybe the owner is exceptionally wealthy so a 1.9% gross return isn't too much of a problem.

 

450 sqm 2 story brick veneer home 4 bedrooms
Timber slab ground and ceiling
High end finishes.. sandstone accents on exterior, smooth rendering shadowline ceilings
Ducted air conditioning
Frosted glass windows
Stone bench top
Limestone bathrooms

What would that cost to build on a sloping block?

 

To do the block justice on the lower north shore... Won't be cheap. Add a minimum of 100k for the sloping block factor.

I wonder how much my uncle spent on his Castlecrag house build? Anyway, as a condition of the build, the council made them install in 3000ltr water storage tank - it's under their front lawn.

 

yes as gockie said, building costs can Balloon out of control when you build on things like sloping blocks and bad soil.

wow 450sqm is a pretty huge house and you are probably looking at $1500-$2000/sqm for such a place. Sorry bout the big range but its really hard to put a number, as costs for high end type materials can vary a lot. If you take $2000/sqm then it probably cost 900k-1m to build(if you include additional foundation work). And floorplan design may be custom as well which can make it a "unique" type property which will make it hard to pin a "fair value" on or to compare with other 4 bedrooms in the area. You'll probably have to write down the "upgrades" in each room/toilets and cost them out individually.

Also with higher end finished houses, RP data value will be useless as it wont price in the high end upgrades or additions like a pool.

And sounds like a house of this size will probably be sitting on a big block as well, i am guessing 800sqm? which may further increase its land value as newer blocks nowadays are all tiny.

It's gonna come down to how desperately the sellers need to sell this house. make a formal offer and let us know what happens, good luck!

is there a link or address we can have a look at the house?