"Milk your cash cow here"

[Keys]

You see an advertisement for a property for sale. No price listed.

You find it on Trade Me under the search criteria $0 to $250k

The property is in Northcote, Christchurch.

Price by negotiation.

Rental return is set at $330 per week on a fixed term ending 13 months following the advertisement (advertised in 2012).

What would be your offer?

Why would you offer that amount?

[speights boy]

You find it on Trade Me under the search criteria $0 to $250k

I wouldn't hang my hat on the vendors expectations are actually under $250k
http://decisions.dotnous.com/reaa/pdfs/CA3643635_Determination.pdf

http://properazzi.co.nz/opinion/property-price-searching-online-needs-to-be-more-accurate

[Keys]

What would you offer and why?

Considering the heading "milk your cash cow here".

[PTILoveYou]

It's been advertised since 2012??

I would find out the address first then ask myself 3 questions:
1) Why has no one bought this?
2) Why has no one bought this?
3) Why has no one bought this?

Then proceed not to waste my time and find something else =D

[Ahar]

Sounds like it's suffered a wee bit from the earthquakes.....just because it's rented doesn't mean it's sound

Might be worth checking....nothing ventured etc

[Keys]

The property has been sold. It was in good condition.

My question was not obviously put well enough.

If it was advertised as a property that you could "milk your cash cow here" Those words are important ......................

What return would you expect to get from the property and how would you calculate this return?

[Wayne]

you would expect to get a very good return - 10%+ - way better than average.
Calculate the offer based on expected rent.
Assumes rates etc normal (not a lease hold etc).

[PTILoveYou]

9% return, then work backwards to get the price.

If it's a decent area, maybe lower return.

[Wayne]

9% return, then work backwards to get the price.

If it's a decent area, maybe lower return.

Keys point, I think, is around the 'cash cow'.
Do you think 9% or maybe lower is a 'cash cow'?

[Ahar]

The property has been sold. It was in good condition.

My question was not obviously put well enough.

If it was advertised as a property that you could "milk your cash cow here" Those words are important ......................

What return would you expect to get from the property and how would you calculate this return?

We see.....and the answer to this is quite obvious

Cash cows generate a yield about equal to the lowest going mortgage rate....about 6% I think

Well at least that's my experience of how real estate agents think

With this in mind the property obviously sold for around 290K.......(330*52) / 0.06................and note properties are always rented for each and every week of the year

Or perhaps it sold for even more.....this depending on how ignorant/gullible the buyer was (and how good a salesman the agent was)

Now how much would "we" offer?

Something with a yield of about 10% ..... around 165K...based on 50weeks rent

Now that's a cash cow LOL

[PTILoveYou]

Keys point, I think, is around the 'cash cow'.
Do you think 9% or maybe lower is a 'cash cow'?

It depends which city and which part of the city.

7% in Central Auckland (apart from apartments and leasehold crap) would be considered cash cow.......

[speights boy]

He said it was Northcote, Christchurch

[PTILoveYou]

He said it was Northcote, Christchurch

I know that, but I don't know Christchurch.

[speights boy]

So why the 9 % figure ?

[Wayne]

It depends which city and which part of the city.

7% in Central Auckland (apart from apartments and leasehold crap) would be considered cash cow.......

Jez Gary - did you not read this at all (or are you just trying to argue)

The property is in Northcote, Christchurch.

Not everything is about Auckland Gary - take off the shutters!