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Should I stay or should I go

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  • Should I stay or should I go

    Really appreciate your input people I just can't decide what to do.
    I have a home and income under contract with the following terms:
    1. Purchase price is at valuation (1mil)
    2. Owners want to stay as tenants for 3 years. Willing to pay $50 under market ($950 a week), but no need for PM and no maintenance costs for 3 years.
    3. 30% seller finance at 3% for 3 years.

    So it's no money down, high quality property in good location and cash positive on IO with ability to pay down some principal.

    The downside is I am paying full price which I never do. But do the other benefits negate this.
    Property is fabulous condition and owners known to me so little risk of them damaging property or leaving earlier than 3 years.

    Would you buy it?

  • #2
    Why would full price or not matter? Do the numbers meet your buying rules/criteria?

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    • #3
      One of my rules is equity that's part of the problem. The yield is "OK" but made better by the absence of PM fees and maintenance. This is why I am in a quandary.

      Normally my rules would be my rules and I would walk but this is a pretty great deal in a good market and no money required so weighing everything up is harder than normal.

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      • #4
        Originally posted by Bobsyouruncle View Post
        Really appreciate your input people I just can't decide what to do.
        I have a home and income under contract with the following terms:
        1. Purchase price is at valuation (1mil)
        2. Owners want to stay as tenants for 3 years. Willing to pay $50 under market ($950 a week), but no need for PM and no maintenance costs for 3 years.
        3. 30% seller finance at 3% for 3 years.

        So it's no money down, high quality property in good location and cash positive on IO with ability to pay down some principal.

        The downside is I am paying full price which I never do. But do the other benefits negate this.
        Property is fabulous condition and owners known to me so little risk of them damaging property or leaving earlier than 3 years.

        Would you buy it?
        If it suits you yes
        I am like like you i don't pay valuation either
        The last 35 places I paid more than the registered valuer has valued it
        Ps Don't treat the valuation as gospel if it looks good buy it!
        Last edited by Beano; 25-06-2016, 09:26 PM.

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        • #5
          Run the numbers as if you had to pay for a PM, maintenance etc over 3 years and see what your position is relative to where you will be in 3 years with your current deal. Is the difference more than your expected discount price? Very rough comparison but should put your mind at rest.

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          • #6
            Yes that's a great idea Dunning thank you!

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            • #7
              Since you pay nothing now and expect to pay down some of the principal from the rent, you would be building equity by the time 3 years is up, isn't it? To say nothing of CG since we never know where the market's going.

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              • #8
                Yes I've worked that out Connor. The equity gain is minimal in comparison to the debt and the risk of interest rates etc. all concern me. I had my round of gungho prior to the GFC so am much more conservative now. Buying a good property in Auckland that is cash positive with no money down is fairly compelling though!

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                • #9
                  just out of interest ..which suburb is this property?

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                  • #10
                    @web. Pakuranga.

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                    • #11
                      Whats is worth in todays market? Is there any equity at PP? Pretty risky IMHO is there is no equity as we are near or at the top of the cycle. What would happen if the market dropped 10 % over the next year, do you have enough equity elsewhere to handle this.

                      FH
                      "DEBT BECOMES IRRELEVANT WITH INFLATION".

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