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What is a good buy today? What would you buy today?

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  • What is a good buy today? What would you buy today?

    Great discussion for a Sunday night, what is a good deal today?


    If you were going to buy a rental in the next month, what would you consider?


    1) 10% below market value?
    20% below market value?
    30% below market value?





    2) A property that generates $5,000 positive cashflow? - this is rent less all expenses (property management, fair repairs too, travel and everything), including interest on 100% loan but no principal repayments. If you put in money you want a return, so hence the 100%. If you manage yourself, you still need a return on your time.
    Or $10,000 positive cashflow? Or $15,000?
    To make this an easy comparison, we will say the property is purchased for $500,000. So $5,000 is 1%, $10,000 is 2% or $15,000 is 3%.
    $655 per week or 6.07% gross yield based on 51 weeks to get the $5,000 positive cashflow
    $760 per week or 7.05% = $10,000
    $870 per week or 8.06% = $15,000




    3) A property that you can add value. Subdivision, house on back, 2 bedroom to a 3 bedroom etc etc
    On the $500,000 cost, you add value
    - $50,000?
    - $100,000?
    - $200,000?

    Say you spend the same amount of money to achieve the gain.
    So $500,000 cost , plus $50,000, to be worth $600,000
    $500,000 cost plus $100,000 to be worth $700,000
    $500,000 cost plus $200,000 to be worth $900,000




    What do you think?



    Ross

    Book a free chat here
    Ross Barnett - Property Accountant

  • #2
    I just bought one with factors 1 and 3 above. The conditions in the agreement make it a fabulous deal
    Last edited by donna; 23-04-2020, 01:38 PM.
    http://Www.renopro.nz
    021725219

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    • #3
      Originally posted by Dood View Post
      I just bought one with factors 1 and 3 above. The conditions in the agreement make it a fabulous deal
      Not bare sections this time I hope?
      Squadly dinky do!

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      • #4
        Originally posted by Davo36 View Post
        Not bare sections this time I hope?
        No not at all. The good thing about investing sensibly is the oomph to continue after a setback. I will steer away from overpriced sections for a long time.
        http://Www.renopro.nz
        021725219

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        • #5
          Davo36 why do you feel bare sections are not the goer right now?

          I was pondering without penning down positives and negatives the other day and wondered if bare sections may actually be the best investment in the market over the next year. But you are a smart man and are about to tell me why I am wrong, I hope.

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          • #6
            Originally posted by absoluteproperty View Post
            Davo36 why do you feel bare sections are not the goer right now?

            I was pondering without penning down positives and negatives the other day and wondered if bare sections may actually be the best investment in the market over the next year. But you are a smart man and are about to tell me why I am wrong, I hope.
            No income is the risk. If you are going to build on them and hold fine. If you are going to sell them, then you are speculating with no income. So sooner or later if you can't sell, you get into trouble

            Ross
            Book a free chat here
            Ross Barnett - Property Accountant

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            • #7
              Originally posted by Rosco View Post
              No income is the risk. If you are going to build on them and hold fine. If you are going to sell them, then you are speculating with no income. So sooner or later if you can't sell, you get into trouble

              Ross
              Plenty of cheap sections coming up so if cashflows not the problem then why not land bank.
              "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

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              • #8
                Originally posted by Frezzinghot View Post
                Plenty of cheap sections coming up so if cashflows not the problem then why not land bank.
                Easier to landbank by purchasing an existing property that is subdivisibe in my view. Cost of building materials will go up and more importantly the developers can get in the way of your purchase by changing the terms and conditions during the course to title amd settlement
                http://Www.renopro.nz
                021725219

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                • #9
                  Originally posted by Dood View Post
                  I just bought one with factors 1 and 3 above. The conditions in the agreement make it a fabulous deal
                  My last one was the reverse ...only 2
                  Paying over market and can't add value...great cf

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                  • #10
                    Originally posted by Dood View Post
                    No not at all. The good thing about investing sensibly is the oomph to continue after a setback. I will steer away from overpriced sections for a long time.
                    So not stepping back I see.

                    the best deals are yet to come.
                    this could be a very long L shape ...

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                    • #11
                      Originally posted by Frezzinghot View Post
                      Plenty of cheap sections coming up so if cashflows not the problem then why not land bank.
                      Sections are going to de-value and sit around for several years don't go near them

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                      • #12
                        Originally posted by chook View Post
                        Sections are going to de-value and sit around for several years don't go near them
                        7 years is a mighty long time!
                        "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

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                        • #13
                          Originally posted by Frezzinghot View Post
                          7 years is a mighty long time!
                          several
                          /ˈsɛv(ə)r(ə)l/
                          determiner · pronoun
                          “more than two but not many.”

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                          • #14
                            Originally posted by Rosco View Post
                            No income is the risk. If you are going to build on them and hold fine. If you are going to sell them, then you are speculating with no income. So sooner or later if you can't sell, you get into trouble

                            Ross
                            Plus if you sell within 5 years there's the CGT too aye.

                            cheers,

                            Donna
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                            • #15
                              Originally posted by donna View Post
                              Plus if you sell within 5 years there's the CGT too aye.

                              cheers,

                              Donna
                              Kind of. If you are buying with the intention to sell for a profit, then taxable under intention rules. So still would be taxable past the 5 year brightline period.

                              Ross
                              Book a free chat here
                              Ross Barnett - Property Accountant

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