What is your stance on a small unit like this?

Discussion in 'Where to Buy' started by wannabe investor, 12th Jun, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
Page 1 of 2
  1. wannabe investor

    wannabe investor Active Member

    Joined:
    11th Jun, 2020
    Posts:
    36
    Location:
    Sydney
    wannabe investor, 12th Jun, 2020
    #1
    Paula Ospina likes this.
  2. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,894
    Location:
    Perth
    What is the expected rent?
    Any expected complex maintenance required/planned
    Expected outgoings?
    Net profit or loss?
    Assume minimal capital gains. Would it still be attractive.
    You still need some CG to cover buy sell costs

    Property is "cheap" for a reason
     
    Last edited: 12th Jun, 2020
    Shogun, 12th Jun, 2020
    #2
  3. wannabe investor

    wannabe investor Active Member

    Joined:
    11th Jun, 2020
    Posts:
    36
    Location:
    Sydney
    thank you for replying.
    I have spoken with the agent just this morning.
    Rent at this stage $1200/month. Apparently tenants are willing to stay another year.

    outgoings won’t be much. May be 5-10k with cosmetic touch ups here and there.

    have been looking at similar smaller properties and their price have gone up from $130k from 2005 to $250k now. Looks like stagnated for now.

    only thing I find attractive is proximity to airport and city.
     
    wannabe investor, 12th Jun, 2020
    #3
  4. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,894
    Location:
    Perth
    Outgoings. yearly
    I will use WA terms but I guess you will have similar
    Council rates $1800
    Water rates $1300
    Strata fees at a guess $30 a week and up
    Levies (sinking fund)
    Property manager towards 10% of rent
    Smoke detector RCD checks $100
    Renters insurance $300
    Maintenance at least $500.
    Loan fee
    bank interest
    etc etc

    we have record low interest rates at the moment. can you cover if it goes up
     
    Shogun, 12th Jun, 2020
    #4
  5. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    You could do a lot worse! (eg flash cbd OTP)

    I don't know the local market BUT it looks like a damn good price for a 2BR with sep toilet!!

    Looks like some rising damp at the base of the building but I assume this one is upstairs?

    Get the s32 and take a look thru the OC minutes - see if there are any issues.

    Looks relatively well maintained from photos.

    I was going to say "serious downside - rail across road" but I see form streetview that is looks like the level crossing removal mob have been there and rails going in a trench (good) and bonus mark - a bus teminus with 5 bus routes outside the front door.

    Now I am beginning to think this could be the underquote of the century!

    If you get this for $270k and is let for $280pw, that is damn near CF neutral and as good a yield as I was buying for back in 2013.

    I'm going to be shocked if this goes under $300k.... (unless there is a meth lab down one side and a gang hangout the other)

    The Y-man
     
    The Y-man, 12th Jun, 2020
    #5
    Bunbury, New Town and TMNT like this.
  6. wannabe investor

    wannabe investor Active Member

    Joined:
    11th Jun, 2020
    Posts:
    36
    Location:
    Sydney
    similar unit on same street was on market for about 500 days and didn’t sell.
    something fishy there.

    thanks for the reply. Atleast I know am looking at the right places
     
    wannabe investor, 12th Jun, 2020
    #6
  7. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    As I said, I don't know the area so hopefully you get some opinions from people in the know... or go and spend a few evenings in the area. If your car gets stolen or you get physically assaulted, it's probably in the category of "yet to show gentrification". :D:D:D

    The Y-man
     
    The Y-man, 12th Jun, 2020
    #7
    craigc, Archaon and wannabe investor like this.
  8. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,894
    Location:
    Perth
    Shogun, 12th Jun, 2020
    #8
    The Y-man likes this.
  9. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,894
    Location:
    Perth
    If I worked that out correctly over 15 years about 4%
     
    Shogun, 12th Jun, 2020
    #9
  10. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    @wannabe investor

    I have posted elsewhere but I started with a gaggle of these types of apartments - had about 7 or 8 of them at one stage.

    As @Shogun rightly points out above, the growth may not be great over a long period - so be prepared to "trade out".

    I hung onto one of my 1BR in Prahran too long (still have it!!) - it doubled in price in the first 5 years, then just did nothing for the next decade and a bit....

    The good thing is, IMHO playing down the lower end means there are always buyers (affordability factor - a 2BR apartment can actually fit a family of four.... ) which gives you liquidity.

    I'm a big fan of something like this in the right price range (where it gives you the old "stick three 0's on the end of the rent pw as the buying price") as a starting point. My only additional advice in hindsight from my own experience is "don't be afraid to sell and take profit". Contrary to the popular mantra, IMHO it's NOT the "time in" for these types of apartments - it's the "timing".

    The Y-man
     
    Last edited: 12th Jun, 2020
    The Y-man, 12th Jun, 2020
    #10
    Bunbury, wannabe investor and TMNT like this.
  11. Joynz

    Joynz Well-Known Member

    Joined:
    5th Apr, 2016
    Posts:
    5,755
    Location:
    Melbourne
    Looks like the bathroom needs a serious clean and also regrout and new silicone.
     
    Joynz, 12th Jun, 2020
    #11
  12. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    I'd say a full kitchen and bathroom makeover - but they are tiny so should not cost too much.

    The Y-man
     
    The Y-man, 12th Jun, 2020
    #12
  13. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    a new kitchen and bathroom would be a bit more than a repaint, but bang for buck, you can get a decent kitchen and bathroom setup and it would look a million dollars,

    but you need to work out how much extra rent it will bring in

    no point spending $7k, and only getting $20 extra per week
     
    TMNT, 12th Jun, 2020
    #13
  14. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    Yeah, it might be better to do the uplift just before selling....

    The Y-man
     
    The Y-man, 12th Jun, 2020
    #14
  15. wannabe investor

    wannabe investor Active Member

    Joined:
    11th Jun, 2020
    Posts:
    36
    Location:
    Sydney
    Thank you for the advise. to be honest with my limited cash, these are the only type of investments I can afford.
    would love to buy a house but too dear.
    Might plan a trip to melbourne from Sydney to review this apartment
     
    wannabe investor, 12th Jun, 2020
    #15
  16. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne

    Uh, didn't know you were from the north :D Definitely get to know this sub before you come down....

    The Y-man
     
    The Y-man, 12th Jun, 2020
    #16
  17. M_Chad88

    M_Chad88 Member

    Joined:
    13th May, 2020
    Posts:
    22
    Location:
    Adelaide
    Have you considered Paralowie, SA? Eg: https://www.realestate.com.au/property-house-sa-paralowie-130018718

    You can get a house for that price range with good prospects for growth. It's just near the newly opened Northern Connector freeway. The example above would rent for $320pw.
     
    M_Chad88, 12th Jun, 2020
    #17
  18. Beano

    Beano Well-Known Member

    Joined:
    7th Apr, 2016
    Posts:
    3,359
    Location:
    Brisbane
    Beano, 12th Jun, 2020
    #18
    willair likes this.
  19. Paula Ospina

    Paula Ospina Active Member

    Joined:
    10th Jun, 2017
    Posts:
    43
    Location:
    sydney
    omg haha can't believe this is actually for a property lol
     
    Paula Ospina, 14th Jun, 2020
    #19
  20. Beano

    Beano Well-Known Member

    Joined:
    7th Apr, 2016
    Posts:
    3,359
    Location:
    Brisbane
    It has a US$100m price tag :)
     
    Beano, 15th Jun, 2020
    #20
Page 1 of 2