Your Latest Purchase

Discussion in 'Investment Strategy' started by MTR, 17th Jul, 2015.

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  1. jim1964

    jim1964 1941

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    Westcoster Strahan Tasmania
    8 acres just out of Currency Creek,surrounded by vines, steam ranger runs next to the property, Finniss River just out of pic on the right.No neighbours.................................
     
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  2. ellejay

    ellejay Well-Known Member

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    Jealous! :)
     
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  3. Michael_X

    Michael_X Mortgage Broker Business Member

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    Gold Coast/Sydney
    Thought I should share my two latest purchases.

    Woodridge Purchase

    Managed to pick up a two bedroom house on 700sqm+ for $220,000. Thanks to @rico2011 for spotting this one. I was in Sydney, preparing for knee surgery when Richard called one hour before the auction. For kicks, decided to register and luckily no one else bid and managed to snag it for a great price.

    It was risky since I hadn't seen the property and had only an hour for DD but the numbers made sense so decided to go through with it. Normally I am a strong advocate on seeing the property in person but decided to take a punt on this one. As a guide a 600 sqm block of land generally sells for $220,000 so essentially got the house for free.

    When the property settled, I just had knee surgery so managed the renovation remotely. Had a really good builder recommended by @Taku Ekanayake who project managed the entire renovation and completed it within 3 weeks. Costs came to a little over $25,000 and included

    - Paint exterior & interior
    - Front & back deck
    - New bathroom
    - Polishing flood boards
    - Landscaping
    - New carport
    - Front fence

    Currently on the market for rent at $295 per week. The numbers aren't great, a little under 6% but hard to find houses for $255,000 in Logan these days.

    Logan Central Purchase

    A few weeks after the Woodridge purchase, managed to pick up a three bedroom, lowset on 600 sqm for $245,000 in Logan Central. Contract on this one crashed twice, once on B&P and another on Finance so third time it came back to me. Good lesson here, even if the property is under contract definitely keep in touch with the agent, you never know if it will come back onto the market.

    It needs around $10,000 and currently finalising the renovation. Should be finished this week, and have a tenant lined up for $330 per week. Funnily this has been much easier to rent than the two bedroom house, not much of a demand for small houses in Logan.

    I get asked why I keep buying in Logan and honestly, it's not because I aim to. I was actually looking further up north around Moreton Bay Council. Ultimately depends on the numbers and the deal itself. Happily buy anywhere, as long as the numbers stack up and has good fundamentals.

    Cheers,
    Michael
     
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  4. Gen-Y

    Gen-Y Well-Known Member

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    Nice find Michael,
    Do you only aim for cash flow positive properties?
    If you have the time, I won't mind having a quick chat with you.
     
  5. EN710

    EN710 Well-Known Member

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    @Michael_X Do you find the rental market slow? PM keep telling me it is kind of slow... the last Logan Central property took 3 months (!!) to be tenanted, although I must say mainly because of the previous shortlived PM is incompetent
     
  6. Gen-Y

    Gen-Y Well-Known Member

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    3 months of no tenant? That's like $3000 or more.
    I can't say I have experience anything more than 2 weeks of vacancy. Is it that bad in Logan or it's just your property?
     
  7. Michael_X

    Michael_X Mortgage Broker Business Member

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    Generally I would say a bit slower, a combination of winter and influx of investors but really depends on the property. I had another property come up for rent recently and was leased after the first open with an increase of $30 per week rent and the three bedder was leased before the renovation finished.

    The two bedroom has sat on the market now for 3 weeks, and have dropped the rent a touch. If anything I guess less demand for smaller houses.

    Cheers,
    Michael
     
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  8. EN710

    EN710 Well-Known Member

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    i'd say mainly the (ex) property manager - she was terrible compared to her predecessor. The house itself has some maintenance item but were not earth shattering
     
  9. Michael_X

    Michael_X Mortgage Broker Business Member

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    Yes, generally go for properties that are at least neutrally geared. A few reasons

    1. If you lose your income, you don't lose your portfolio. The investors that get caught out are those who are forced to sell when they don't want to. If you have enough cashflow, you can time your exit and if you hold your properties long enough, will generally do well. In a way, positive cashflow buys you time.

    2. Allows you to service for more properties. It's the leverage that makes property investing enticing, so take advantage of that. On a average income, properties yielding 3% will decrease your borrowing capacity very quickly

    3. A way to exit the rat race. If you have enough properties generating recurring income, you create choices. This was the one reason why I decided to start investing.

    Any more questions, feel free to drop me a PM.

    Cheers,
    Michael
     
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  10. Gockie

    Gockie Life is good ☺️ Premium Member

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    All I can say is.... wow... such low purchase prices....
     
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  11. larrylarry

    larrylarry Well-Known Member

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    Low is one thing. Michael must be confident in its growth.
     
  12. C-mac

    C-mac Well-Known Member

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    I love what @Michael_X said about building a portfolio that gives you options.

    It is totally my goal to do so. Maximise your borrowing capacity and leverage during your 'golden' salary earning years of your late 20's to mid 40's, gear up, get going with high yield and grow.

    I do like to see some injections of capital-growth in amongst this, however. You need servicing to keep growing, sure, but you also need deposits. Deposits come from equity releases (which come from capital growth).
     
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  13. sash

    sash Well-Known Member

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    Yep....capital growth is the rocket fuel....also add don't put your eggs in one basket....buy and spread your investments.

    You will find that if a market does not grow for years due to the cycle....you are dead in the water from a equity release perspective. Some people in Sydney and parts of Melbourne are finding this the hard way....
     
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  14. HUGH72

    HUGH72 Well-Known Member

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    @C-mac That's a bit depressing. My golden salary years must be coming to an end.:eek:Maybe the tap on the shoulder is coming at 44.

    Great effort Michael, I thought you might be slowing down for a while after changing careers.
    Great purchase prices, I don't know how you snagged them, well done.
    Shows the benefit of buying places with good yields.
     
  15. TFBoy

    TFBoy Well-Known Member

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    Since we are on Logan, I have recently purchased a 2 Bed Villa in Logan Central.

    I was not planning on buying anything at the time, especially a TH/Villa in Logan, as a house in Logan would have been within my budget too if I wanted to purchase something. I have driven through the streets in Logan Central/Woodridge/Slack Creek etc previously, whilst it does not scare me, it wasn't on top of my list for places to invest.

    However this opportunity came up which was about $20k less than anything else on the market with a potential yield ~8%.

    Given I'm interstate, a big reno job on a house was not something I wanted. Also with a house I'm worried about it been unoccupied for a long period of time in a location such as Logan Central.

    What attracted me to the purchase
    - Low entry cost
    - Potential yield
    - Reasonable strata, $500/yr
    - 180m2 land on title
    - Stand alone
    - Comparables rented for $260-285pw
    - Not much more than the cost of building a GF

    Upon settlement, drove up and stayed a week to renovate: a new kitchen, floor boards, lights and paint - internal, all up $7k including accommodation and expenses.

    Final purchase price after reno was $173k, rental market for Logan Central/Woodbridge 2 Bed TH/Villa had a significant slowdown when the property was listed. This was not something I had envisaged, finally secured a tenant after 4 weeks at $260pw= 7.8% gross yield.

    Would I buy another one? Probably not. As research indicates 2 Bed Villa/TH/House is not the most high demand product for the area. However (in Michael X's words) the numbers worked for me for this particular one. Also I do not expect great CG's from this one, as its more a cashflow play.

    Thanks to RPI (settlement) and @DiligentPM (advice on rental market).
     
    Last edited: 6th Jul, 2016
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  16. RedMarty

    RedMarty Well-Known Member

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    I heard a rumour that Logan City Council are creating a new suburb which they will name Michaelville in honour of the top investors in the area :)
     
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  17. Brady

    Brady Well-Known Member

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    For those that are interested, this is the property.

    For Sale Ad
    32 Altola Road Modbury SA 5092 - House for Sale #122760374 - realestate.com.au
    For Rent Ad
    32 Altola Road Modbury SA 5092 - House for Rent #418776710 - realestate.com.au

    Was lucky enough to get access to the property prior to settlement
    Spent around $7.5k on renovations/clean up including labour costs.
    Rented out at first open for $340p/w including $10p/w garden maintenance

    - 6%+ rental yield
    - 640sqm corner block w/ development potential
    - <15km to CBD
    - Near major shopping centre (westfield), hospital, transport (o-bahn) and multiple schools
     
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  18. Lacrim

    Lacrim Well-Known Member

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    Well done Michael. With so many holdings in QLD are you paying land tax now? Or are you getting around that by using diff shelf companies?
     
  19. Michael_X

    Michael_X Mortgage Broker Business Member

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    Gold Coast/Sydney
    Yes, paying land tax. I have trusts too, but getting to the point where there is enough in QLD. Next couple of purchases pending the timing let's see, might move to another state. Sprinkle the holdings around, VIC or SA :)

    Cheers,
    Michael
     
  20. Gen-Y

    Gen-Y Well-Known Member

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    Questions for those with $2 million or more worth of properties - Do you buy low end like mortgagees house?
    Or buy towards the big ends like 2 houses at $1 mil+ each?
    Or somewhere in between - Median Price properties?

    I just want to get a feel on how well your strategy have worked in your case. Is there something you would do different in the future?

    Cheers,