I would dearly love some opinions on the following: A house has come up for sale, unrenovated and probably needing $10,000-15,000 worth of work, selling for $245000. It is on a road that does get busy in peak times. The area is a good growth area, rent for the property would be about 180 unrenovated or 250 renovated. A property around the cnr in a quieter street, almost exactly the same, but renovated, sold recently for 315,000. I’m thinking of buying and doing a reno job (it would be my second one). What does the forum think?
Hi Banner
it,s worth looking at the reno kings web site.one of them has made a lot of money buying on freeways highways railways and always undervalued because of their location to the “ways” like he says “ways” are often a good thing especially if the area has good growth.position does not always mean ocean, river,views.most inner city props are on very busy roads but look what they sell for.do the reno to suit the type of person is is most likely to live in that area.ie. yuppy, s.n.a.g. ,couple with 2 kids.good luck to you banner. cheers lynnemNoise is never an issue if you get good advice from an acoustic expert.
What are the walls of the house built of? If it is wood of fibro you’ll never get it quiet. unless you have very deep pockets. If it is brick veneer you might be OK. Double brick is easier.
If you are renovating you should replace the windows with proper acoustic windows. You can now get glass windows that have the acoustic equivilance of brick.
Which City, What road? how far is the front of the house from the nearest kerb. Is the traffic mainly cars or trucks.
Questions questions but it is doable. About 4200 houses have been noise insulated in Sydney against aircraft noise and the same principles apply to road noise. Some hundreds have been done in adeliade. (they should have done 16,200 in Sydney if they were true to the people though!)
If you can find a copy of Australian Standard AS 2021-2000 it has a whole section in the back of it about the issues of insulating houses against noise.
Having noise insulated a number of buildings it is eerie watching the cars come along the road with no noise!
Noise doesn’t scare me just the cost of doing it therefore the questions!
Not very good rental returns, even renovated. If you could buy renovate and sell for 312k or it would be worth it.
When looking for reno/development projects you should typical use 20% margin as your minimum, there are plenty of projects out there that can make you 20% if you look.
As far as holding it after reno, you’re talking about a return less that 5% which is not great.
BTW, don’t think the main road bit is an issue.
Slum Lord
Banner,
I not sure what you plan to do for 10-15K but ifthe property is totally unrenovated then kitchen and bathroom are likely to need work so that probably your 10 – 15K.
Yes you can do things to block out the traffic noise but additional dollars. I think one of the reno kings uses an example of a house on a main road in Brisbane that was bought and eventually turned into a car sales yard.
bribie
Thanks for your thoughts. Slum Lord, do you mean a margin of 20% of selling i.e. if the house is $245,000, then after renovating should sell for 294,000? sorry if I sound confused. The house is about 5 km west of Wollongong.
Leaving aside the example in Steve’s book about the ‘herbal cigarette’ crochet lady who loved traffic noise, the place on a busy road might still be OK as a rental proposition.
It could be hard to sell (buyers wanting it as their PPOR would want a quieter street), but the lower price would help with cashflow.
Particularly if the property is ultra-convenient to everything and your likely tenants do not include families with kids.
But if you can’t back out of it, well that could be an issue if the tenant drives to work during peak times.
Peter
Yah, total cost of house: Purchase Price + reno + stamp duty, etc you want to make 20% on top of that. So if the total costs is say 265k, you want to make 20% on top of that which is 53k, need to sell for $318k.
As a rule you shouldn’t have to take something on that you don’t expect to make 20% on. And don’t tie yourself to straight renos only, have a look at houses on big lots, which can be subdivide, and sell of the lot that is created. Look at putting house and land packages together and selling when complete.
If you look you should be able to find a 20% deal.
Slum Lord
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