澳洲Australia property First IP - Is it worth it? | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


I am interested in purchasing the following as my first IP.

Details: 3 Bed room house, 900 sq meter in South Canberra

Asking Price: $415,000

Rent Estimate: $380 p.w

According to my calculations I would have to pay around $185p.w out of my pocket.

Given the size of the block (900 sq meter), I think it is worth spending $10,000 out of my pocket / year. I believe it will come good in the long run.

What do you think? Any suggestions?  

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So why do you think it will come good in the long run?  

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orton said: ↑
Given the size of the block (900 sq meter), I think it is worth spending $10,000 out of my pocket / year. I believe it will come good in the long run.

What do you think? Any suggestions?Click to expand...
Moreso, you are not just believing it will come good, but relying on it to come good in the long run, because in the short run it is potentially holding you back with those sorts of holding costs.  

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Other properties in the same area that have 400-500 sq metre block size are selling for around $400-410K.

The particular property I am interested in has double the size (900 sq metre) and yet is selling for the same price as others ($415K).

So here is the thing, my mind tells me that holding on to this property will come good in the long run as the land price will appreciate over time.

On the other hand I am thinking whether the holding costs will potentially hold me back from purchasing future investment properties.

There is a new property in one of the newer suburbs that is selling for around $410K and would fetch a far better rent ($490 p.w) - however the block size is less (250 sq. metre).

I am bit confused as to which one to go for. This is my first IP and I am open to suggestions and advice.

Orton  

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Hi Orton

The price seems reasonable for the area. There are houses on much smaller blocks being snapped up in Banks, etc for around the same price.

I think you could bump that rent up a little as well. We had a 3 bedroom house in Calwell rented out for $450 in its original state so you could probably achieve something similar.

Good luck.

Jamie  

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Hi Orton,

I think your reasoning is ok, if you plan to subdivide the property at some stage down the line (eg. 2 x 400m2 blocks each worth around $400k).

However, if you are looking at buy and hold, I think your reasoning is floored. Land itself, does not have any value. The reason land appreciates is due to the value that people place on it. Supply/demand is the main factor that will see land appreciate in value.

Therefore it's quite possible that people prefer a smaller block in your area, over a bigger block. I don't know, that's something you should reasearch. The fact that it is for sale with similar prices to a much smaller block already shows you that the bigger block is not necessarily more valuable.

I can show you were to buy a house on 5 acres (not in canberra) for around $400k in a capital city. Just saying that to point out the size of the land has little to do with it's value.

The other factor, being the large negative cashflow is also an issue. You will get some tax breaks but it is still a significant drain on your income. You would only accept this cashflow if you believe that the property will appreciate at least twice that amount per year.

At least with the 2nd property, it will not cost you much to hold, so if the capital gain does not eventuate for a few years, you will still have a good cashflow.

Cheers.  

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Maybe before you make an offer get an opinion from a private town planner or draftsman about about viability of sudbividing, what you could do with it & how profitable it might be. Being unable to continue investing due to cashflow would certainly some people off. But you might look at viability of developing sooner using equity created by subdividing, or just selling off the subdivision to fund another purchase.  

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.toe said: ↑
Maybe before you make an offer get an opinion from a private town planner or draftsman about about viability of sudbividingClick to expand...
Good point. Give ACTPLA a call and ask them about it. From memory, the block has to exceed 800m2 and be within a certain proximity to local amenities (shops). I'm sure there are heaps of other rules to consider as well.

Cheers

Jamie  

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Investor78 said: ↑
Therefore it's quite possible that people prefer a smaller block in your area, over a bigger block. I don't know, that's something you should reasearch. The fact that it is for sale with similar prices to a much smaller block already shows you that the bigger block is not necessarily more valuable.Click to expand...
I doubt this is the case in Canberra. We love our space - bigger blocks generally command a higher price and are often more popular. Complaining about the small pokey blocks in newer developments has become a favorite pastime for many Canberran's.

Cheers

Jamie  

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Check for easements. It may well have one or more which will make subdivision impossible. May be priced the same as smaller lots for this reason.  

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