Country Case Study

I thought I’d go over and eke a bit of information out of my Father (it’s like trying to get blood out of a stone) but he must have been in a good mood so he let me get a bit of information out of him. I told him I wanted to do a case study of all the details to do with his house renovation and all the costs involved. “ I asked him is I could ask him a few questions” He said yes I could do that and I progressed to ask him all the questions about the property. Though I new quiet a bit about what was being done! Because I have been helping him at curtain stages, I did not know much about what he had payed to get the things! Dad does not talk about financial matters. And filled out the Buyer Beware Template Analysis sheets. And later calculated it on my web page computer.

Just quickly Dad owns a block of ex elderly units (5) he purchased some ten years ago. The government was getting rid of them and building new ones. But that’s another thread. On each side of the flats were a paddock blocks 60x 120 metres.
It’s in a small town of 400 people but in the centre of two metro towns of 13,000 and 30,000 appro pop. He asked the person who owned the block who he new really well, if he could buy the block and payed him $1,000, that’s right wipe your eyes and try and believe that ( I was standing there in disbelief myself) , (it was $1,000 dollars) it was probably purchased eight years ago. Now to the details of the case study and this is the prices he payed for things and services and what happened in the last eight to twelve months till 06/2004.

Found a good sound two bedroom, hard wood built home, tin roof, that needed to be moved off a country farm 50 kays away, the house was a problem for the people because no one wanted it there (it was supposed to be done up but they never did it), it was time the house just had to go. He negotiated $6,000 for the purchase of the house. And the big cost $27,000 was for the delivery of the house onto the block next to the Units and complete restumping and levelling.

All payed for with cash
$6,000 Property Purchase Price
$27,000 Removal and relocating and restumping.
$1,000 for electric’s and services because the electrician is a Nephew of my fathers.
$1,000 for all the new hot water cylinder and pipes connected
$1,000 for new second hand bull nose veranda.
$1,000 for new cement driveway.
$1,000 for carport
$1,000 for paint and plaster.
$1,000 for furniture, second hand and in good condition ( it will be fully furnished)
$1,000 for Council sub-divide and paper work etc.

He is also under a contract of $4,000 if he completes the house in the specified time, or he can get an extention, This $4,000 if given back to him, which he is confident it will. the total house costs will be $41,000.

Total time worked on house – Full weekends for 10 months so far – and there’s a lot more to do probably 70% done– mainly all inside is done and probably all will be finished in a few months say, Oct.

Below is the figures when put thru the online calculator.

11 Second Solution:
Rent = 130
Occupancy rate ‘3 Weeks’ = 94.23 Percent
Solution = $61250.00
Asking price = $41000

Closing costs:
Deposit 100 Percent = $41000.00
Legal fees = $800
Stamp duty = $98.00
Mortgage app fees = $0
Mortgage insurance = $0
Valuation fees = $0
Other borrowing costs = $0
Clean up costs = $0
Inspection costs = $0
Other costs = $0
Total closing costs = $41898.00

Mortgage details:
Loan Principle and Interest = $0.00
Interest rate = 7.5 Percent
Term = 25 Years
Weekly mortgage repayments = $0.00
Total repayments for life of loan = $0.00

Annual costs:
Management fees 0 Percent = $0.00
Letting and advertising = $0
Body corp fees = $0
Rates = $800
Utility rates and fees = $0
Insurance = $350
Miscellaneous costs = $0
Land tax = $0
Maintenance 7 Percent = $445.90
Other ownership costs = $0
Total annual costs = $1595.90

Summary:
Total annual rent = $6370.00
Total annual mortgage = $0.00
Total annual costs = $1595.90
Total annual cashflow = $4774.10
Total funded costs = $41898.00
Risk free return = $1675.92 Bank interest rate of 4 Percent.
Annual Cash On Cash Return = 11.39 Percent
Cashflow Positive Weekly (CPW) = $91.81

***********************
Online Positive Cashflow Financial Analysis Calculator.