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