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Hot investment property

Tuesday, 12th Apr 2011
Categories: Newsletter

Overview:

Our client, a first time investor, was looking for assistance in making their very first investment property purchase. Wary of making the wrong move with such an important purchase, they enlisted the help of buyer’s agent Ray Chua.

Ray eventually came across a great property that met all the client’s criteria. It was a solid brick 3×1 in Cloverdale, on a full duplex-potential lot of 935sqm. In an area that’s popular with families and singles for its convenient location, this particular property was ideal being just 900m to Belmont Forum and just one street back from a great park. It even came with a long-term tenant to boot, saving the hassles and expense of finding a new tenant. However, this also posed a unique problem for our novice investor.

This long term tenant was locked into a fixed lease for 5 years with a 5 year option. Thanks to a poorly written lease by the previous owner who managed the property without a professional property manager, the lease did not allow for rent increases and hence was stuck at a rent of just $135 per week, around $200 under market rent! Ray, who prudently reviewed the lease documentation before finalising the purchase, picked up this mistake straight away and set about finding a way around it. Thanks to Ray’s expert negotiation skills, we were able to acquire over $20,000 rebate to our client for the loss of future rental income as a result of the lease. On top of that, Ray secured the property for well under market value creating instant equity for our client.

Result:

Purchase of a 3×1 brick and tile home in Cloverdale, 10km from Perth CBD.

Purchase price:                                                    $408,500
Estimated market value at time of purchase: $445,000 – $455,000
Savings:                                                                 $36,500 – $46,500