Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

Bad Num3ers?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Bad Num3ers?

    Hey Folks
    Here's some numbers for you to poke & prod.
    I have a mate who has offered his rental to me to buy. (private deal)

    Asking 160k
    Rented out at 145 /wk (cheap I know)
    In a good area of town
    2 dbl bedrooms 1950's brick with single garage & w/s
    In good cond, low maintenance but kitchen bathroom & wash house probably needs morderniseing at some stage.
    Excellent tenant, who's been there 5yrs, & will probably stay there for the rest of her life.
    I need to borrow 110k & will have to prop it up
    My total exps to service the loan & pay rates insurance etc work out to $250.00 / week

    I know he's probably going to get 180k for it if he put's it on the market!

    crazy huh? but this is the way it is in my neck of the woods.
    Cheers

  • #2
    Originally posted by green as grass View Post
    Hey Folks
    Here's some numbers for you to poke & prod.
    I have a mate who has offered his rental to me to buy. (private deal)

    Asking 160k
    Rented out at 145 /wk (cheap I know)
    In a good area of town
    2 dbl bedrooms 1950's brick with single garage & w/s
    In good cond, low maintenance but kitchen bathroom & wash house probably needs morderniseing at some stage.
    Excellent tenant, who's been there 5yrs, & will probably stay there for the rest of her life.
    I need to borrow 110k & will have to prop it up
    My total exps to service the loan & pay rates insurance etc work out to $250.00 / week

    I know he's probably going to get 180k for it if he put's it on the market!

    crazy huh? but this is the way it is in my neck of the woods.
    Cheers
    Hi

    What do you plan to do with the property?
    Can you kick the tenant out and raise the rent, as its going to be -ve CF pre-tax ?

    Does it fit your buying rules?
    James

    "Time is the great equalizer. It will either promote or expose you." -Jeff Olson

    Comment


    • #3
      Hi GAG

      Were is this?

      Steve

      Comment


      • #4
        Hi Volatile
        Well at this stage I have first option to buy. I could kick the tenant out & try & re rent it, probably get 160 - 170 /wk for it as it stands. There's personal issues here thou. My mate has looked after this tenant & never had her in the rental for investment $$ purposes. He's been happy to take the CG on the place & needs to sell to finance another purchase. The lady is also the mother of a friend of ours... So really I'd (for these reasons) get her as part of the package. That's what my mate would want. The tenant is all ready worried about his plans to sell. She's an excellent tenant, never complained once in 5 yrs about anything. I could basically buy the place & forget about it lol!
        What's my plan? Try & get my foot in the door on my first home..... If it wasn't rented out I couldn't afford it basically.

        Steve Good ol Dargaville!! (up north near Whangarei)

        Comment


        • #5
          Hi Green. You need to ask yourself why you think this is a deal. 12ish % below valuation maybe, but with no cashflow and needing work?
          If you think you can flip it contemporaneously and make ten to twenty K then it's a deal, but otherwise it's just another retail property. Or am I missing something?

          Comment


          • #6
            G'day Pooomba
            I suppose it's a good / bad deal depending on how you look at it. I could flip it & pocket some quick cash. As a rental investment I could see it's lousy investing, hence the heading of my post. But then again if I was to buy this house to live in I wouldn't have a snowballs chance in hell of meeting the repayments, so it makes sense to leave the tenant in there for a few years & claim all expenses against my personal income. This is a typical deal I see around here. Houses way over valued considering the returns you get. It seems that the northward migration of Aucklanders is keeping the prices up. I wouldn't consider selling it for quick cash.

            Comment


            • #7
              green as grass

              I think you need to frame the question to us a little more precisely as to what you want to understand

              My two cents worth is that you should keep mates mates and property investing property investing. Dont buy it and define your purchase criteria more specifically.

              The numbers under my criteria /rules dont stack up, hence cant suggest to buy. You may wish to buy if you understand your criteria?


              Simon.

              Comment


              • #8
                Hi Simoncoles
                What I can't understand is how rentals can be a viable investment here in Dargaville when even a so called deal like this is still poor buisness. As pooomba says it's just another "retail property"
                Surely when the slump hits proper there will be alot of dissilusioned "investors" out there.

                Comment


                • #9
                  Originally posted by g-a-g
                  What I can't understand is how rentals can be a viable investment here in Dargaville when even a so called deal like this is still poor buisness. As pooomba says it's just another "retail property".
                  It depends what you mean by "viable investment". some people will be happy with one IP, which they need to prop up by $100 per week for 10 years. Why would they be happy with this? Because (a) they made money at the time of purchase by buying below value, and (b) they are happy to invest $100 per week in order to access the capital gains at the end of the ten year period The combination of immediate equity on purchase together with future capital gains makes such properties a viable investment for some.

                  You need to ask your self what your goals are, and whether you can achieve those goals by purchasing one negatively geared property now. What effect will that purchase have on your ability to service debt for a second puchase? Do you even want a second purchase?

                  Best wishes,

                  Paul.

                  Comment


                  • #10
                    Good reply Paul, it is exactly what I was told when I first started out, define the reasons why you would buy the investment.
                    Why wait for the slump to kick in, move on to one that has positive cashflow NOW, the deals are there to be found so I have been told.

                    Good luck.

                    FH.
                    Last edited by FreezingHot; 26-10-2006, 12:37 PM.
                    Home Buyz
                    [email protected]

                    Comment


                    • #11
                      Patrick,

                      I'd like to take credit for the ideas I expressed, but they are not mine. When I first started posting on PT, I asked about a deal that is similar to green as grass's. People pointed out that starting off with a negatively geared purchase would stunt my investing. They also advised that I sort out my goals.

                      Paul.

                      Comment


                      • #12
                        Good advice then.

                        FH
                        Home Buyz
                        [email protected]

                        Comment


                        • #13
                          Quote: Superdad
                          (a) they made money at the time of purchase by buying below value, and (b) they are happy to invest $100 per week in order to access the capital gains at the end of the ten year period The combination of immediate equity on purchase together with future capital gains makes such properties a viable investment for some.
                          That's precisely what my mate did. I have the RV that was done for him in April 2001 when he bought it.
                          RV 81k
                          He purchased it for 70K
                          It's value has basically doubled in a little over 5 years! I doubt it will be doing the same in the next 5 yrs. In fact the valuation report notes; quote "Previous selling prices in 1998 and 1999 are now not been achieved"
                          98 / 99 was a pretty mild boom compared to this one so it makes me think what's not going to be achieved this time around?
                          when I get the time I might post other typical examples of houses suitable for rental around here, just so you can have a laugh
                          Thanks for the comments.

                          Comment


                          • #14
                            Originally posted by green as grass View Post
                            Asking 160k, he's probably going to get 180k for it if he puts it on the market!
                            Cheers
                            Why is your buddy giving you 20K?

                            Why are you taking it?

                            I would steer clear of it just because a buddy is worth more than 20K...there is the chance of bad feelings around a deal.

                            Comment


                            • #15
                              Hi McDuck

                              Why is your buddy giving you 20K?
                              Would you be suspisous if you were in my shoes?


                              This deal does have a personal dynamic in it in more then one way....

                              I've just come back from their place, they were surprised that I'm not jumping at their offer.

                              Comment

                              Working...
                              X