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Updated almost 7 years ago on . Most recent reply
Am I doing this right?
Hey Team,
I've got a quick question.. could use some help from the hive mind.
I'm very early on my journey, I've got my personal finances in order and I'm smashing saving. I want to get into the market, but I can't be sure if I've over analysed it.
The numbers will vary, but I guess it should still be applicable no matter where you're from. For context, I'm looking to purchase property in a small town in Northern Tasmania, an island off the south coast of Australia. I live in Sydney currently, but I have many local contacts in this particular city to allow for remote management and easy refurb of it at a very cheap rate.
I'll list out some details about this below.
General Property Information | |
| Purchase Price | $140,000.00 |
| Deposit | $13,000.00 |
| Extra Funds | $0.00 |
| Total Money | $13,000.00 |
| Less Upfront Costs | $7,197.00 |
| Deposit % of Total | 5.42% |
| Loan Amount | $132,803.00 |
| Monthly Payments | $633.26 |
| Estimated upfront costs | |
| Stamp Duty | $3,835.00 |
| Concessions | $0.00 |
| Other government costs | $368.00 |
| Conveyancing | $1,000.00 |
| Bank charges | $600.00 |
| LMI | $0.00 |
| Total Estimated Costs | $5,803.00 |
So there is my state of play. I can buy the place fine, this isn't an issue. Now I have also done work on approximating the costs associated with owning this property. This is highly localized on some line items, but they're accurate.
| Cashflow Assessment | Weekly | Annually |
| Rent | $220.00 | $11,440.00 |
| Loan Repayments | -$158.31 | -$8,232.33 |
| Council Rates | -$21.15 | -$1,099.80 |
| Insurance | -$15.00 | -$780.00 |
| Property Management | -$11.00 | -$572.00 |
| Strata fees | -$20.00 | -$1,040.00 |
| Maintenance | -$4.00 | -$208.00 |
| Water Fees | -$15.30 | -$795.60 |
| Capex | -$15.00 | -$780.00 |
| Vanancy Costs | -$8.80 | -$457.60 |
| Total | -$48.56 | -$2,525.33 |
So in the end, a very cheap and on the face of it, positively geared property isn't actually that good when you have a low deposit (I'd have to have almost 50% down to make it positive)
Have I over analysed the property? Is it just a bad buy?
It's very cheap, has a good rental price ($140k buy, $220/week rent) but in the end it's not so great.
I'm not looking for advice to buy or not to buy. More advice in terms of, have I looked into the right things, have I looked too far into it?
Thanks guys.
PS, is this the right spot for this? :)