All Topics / The Treasure Chest / Good return, but old house – still good?

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  • Profile photo of davidedavide
    Member
    @davide
    Join Date: 2003
    Post Count: 1

    I have been offered what appears to be a good property in a medium sized regional township. $203,000 for an 80 year old weatherboard house split into two residences with tenants producing $295 pw combined.

    I am just attending to the inspections for structure etc. But the age worries me. If it weren’t for the income/price, I wouldn’t even be bothering. Is my attitude wrong? Does anyone have an opinion or experience about weighing up age against return?

    Cheers…DE

    Profile photo of EskapeEskape
    Member
    @eskape
    Join Date: 2003
    Post Count: 17

    Hi Davide,

    Sometimes the “Oldies” are more structurally sound than the newer stuff.
    I guess the “11 second solution” and your due diligence will take care of your decision irrespective of it’s age-gut feelings apart.

    Have a great day

    Robert

    Veni, Vidi, Vici

    Profile photo of dr housedr house
    Participant
    @dr-house
    Join Date: 2001
    Post Count: 281

    If its structurally sound (build inspection), they can be great renovators, and often have a lot of character.
    As long as its not in need of having to replace just about everything.

    Profile photo of wilandelwilandel
    Member
    @wilandel
    Join Date: 2003
    Post Count: 761

    Hi Davide,

    Are you buying this with the strategy of capital gains or positive cashflow?

    Using the “11 second solution” this ppty is far from a good return:

    rent div by 2 = $147.50

    $147.50 x 1000 = $147,500

    annual rent = $15,340

    Therefore, I probably wouldn’t pay any more that about $150,000 as I buy for cashflow.

    If you are buying for capital gain, then this is a different story, and it just might be a “diamond in the rough”.

    As far as the age of it goes, as long as you add into your sums around 5% of annual rent, for maintenance costs, and if it still fits your criteria when you include management fees, vacancies etc, then go for it.

    Good luck,[:)]

    Del

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