Hello and welcome to another edition of our Client for Life newsletter.
I learned something last week that I found deeply disturbing. One of the leading valuation companies here in Melbourne have started up a buyer advocacy business specialising in buying old art deco apartments for their clients. As many of you know, I wrote ‘The Formula‘ to demonstrate easy investing with the maximum amount of returns and an ‘easy to fund’ investment strategy.
Interestingly, I am working closely with a single woman who had been reading up on the strategy of buying old art deco apartments. We both agreed that there is nothing more charming than the high ceilings and cosy fireplaces.
We searched on RealEstate.com.au and found several. The average price was circa $675,000 for a two bedroom, one bathroom with one car space. We then searched the rentals market and found that the current, average rent for these old apartments is around $375 per week. What was interesting is that with no depreciation, and the low rent, her ‘out of pocket’ was going to be $229.00 per week. On the other hand a well structured, brand new apartment in a good area, 10km’s from the city centre was going to cost her $35.00 per week ‘out of pocket’.
What I also find interesting in the hunt for these old apartments, is the use of a buyers advocate which drives your purchase up by a further 1%. So if you are spending $675,000 to purchase, then your Advocate will charge you a minimum of $6,750 plus GST in fees and the stamp duty will be up around $30,000.
I believe that all real estate will double in 7-10 years, pretty much no matter where you buy it in Australia. What you need to consider is what you can service, what you can afford and what is your capacity. Let me tell you, I could not have built the property portfolio that I have today on $229 per week ‘out of pocket’.
Should you wish to discuss this further or meet with Lynne Wilton for a free 2 hour consultancy, please phone Olivia on 03 9500 8000.