Well had two deals fal through last week and it hurt.[axe]
Looking at nice big fat +CF props but the building and termite reports came back with way too many problems. [crying] Dodgy plumbing, walls knocked out, construction method posing serious termite problems, active runs into building slab etc etc, bother.
At least that only cost me a couple of $100 rather than a couple of $100,000.[ohno]
Live and learn and on to the next deal………
If you think you can you can, if you think you can’t you can’t.
So Rod, are you thinking of purchasing properties with less CF, or still pursuing with the CF+ properties? Are you finding it harder to find quality properties with high yields?
kay henry
Hey Kay
Still keen on CF+ and they are getting difficult to find (quality ones that is) but I’m sure that they’re there. Been wanting to get into LO’s/wraps seriously as these seem like the way to go in any market, your game your rules. B&H’s with higher yields are getting few and far between except where you want to start accepting dodgy props.[blink]
I’m sure I p$@@ed off the agent as he said the probs were minor and I should call him to discuss the reports. Minor my foot! [grrr] Withdrew the contracts a few minutes after reading the reports.
Later……..
If you think you can you can, if you think you can’t you can’t.
Hi HotRod
What sort of costs would you have been looking at to repair the said issues and how would that have affected the yield.
Cheers
Leigh K[biggrin]Hi Leigh
The main issue was the dodgy plumbing (shower outfall out onto the backyard!!!!) and internal wall changes (some appeared to be load bearing!). Costs to fix these up probably up to %$5 to $10K.
The other issues was the construction method which would really pose no barrier to termites getting into the place, cha ching!
Adding these up add looking at the age of the properties (25 to 30) it was just not worth the hassle.
BIR also said that building would need extensive work initially and planned and programmed maintenance over time, cha ching!
Who in their right mind wants to get into a deal that will be costing money from day one?
I’ll just keep on looking. Someone will probably get suckered into these properties as they had high yields (12%) but by the time all the maintenenace and repairs were added there would be little left over (if any) to put in your own pocket.
Later……….
If you think you can you can, if you think you can’t you can’t.
Just so long as you aren’t looking at it from the wrong angle and that you keep in mind that good deals are made and not found.
Cheers
Leigh K[biggrin]Geez Louise!!!! Lots of deals falling through lately and not just mine!!! Oh well Hotrod look on the brite side and think of the money you saved!!!! [biggrin]
Pepper
A little off topic, but we have looked at a few properties lately that looked good on email photos and the agent told us they “just need minor repairs”.
To say we were absolutley shocked at the condition of these places and the fact that they had tennants in them left us speechless.
eg1 This one had cats living in it, plus was full of damp and mould – a dark dingy cave – all sorts of structural problems – and the smell was beyond belief.eg2 A “cute” cottage where we could see the white ants marching in the timbers.
eg3 Another had huge cracks that went through to the outside – the back part of the house had virtually fallen over (stone).
I can imagine a keen renovater living in a room of one of these and slowly doing it up – maybe!!!
But I can’t believe these places are actually allowed to be rented out.
We are certainly glad we went and looked for ourselves.
We had previously looked at lots of homes in a city area that had been rented out for years and had minimal work done in that time, and therefore needed lots of wet area improvements as well as gutters/downpipes etc. Most needed upgrades on their metre boxes and wiring. The cost of these homes was what we considered 30g over market value, plus they then needed lots spent on them.So while we didn’t pay for inspections, we spent time and money travelling around looking and it certainly gave us an education into how deceiving photos can be!!
We now have realestate people who email us photos of cracks in walls and ceilings etc, rather than “pretty pictures” of a nicley set table or a view from a window!We always take our “buyer beware” sheets on these excursions – it’s been a while since I even needed to open that folder!
While we kicked ouselves for the big trip we did one day on our 4 hours off between shifts – we are glad of the things we learned and the contacts we made and will keep looking for suitable properties, that do only need “minor repairs” in our eyes!!
Diane
Hi Diane, my gosh we must have looked at the same property. I have never felt the vomit rise in my throat as i did when i entered this rental property the other day. The REA didn’t blink an eye, he said just give it a paint and rent it out again. We lived in a house that had a hole in the floor, the landlord was contacted to fix it, he arrived poured cement into the hole ( right over the floor boards) and left. We were amazed and humilated. I have vowed to treat our tennants/clients like human beings. Some landlords need to be strung up by their B*lls, or worst forced to live in their rented houses for a while.
Diane and Freak,
I’ve noticed it is my cheaper property, that needs more repairs/maintenance- anyone else noticed that? Cheaper = cheaper rent, but more maintenance. Given that tradespeople don’t charge on a pro-rata as per rental income basis, it’s annoying.
You’re right about tenants being entitled to live in a liveable space, for sure. Makes me think, though, that cheaper properties can be too high maintenance for me.
kay henry
Termites and realestate agents, reminds me of the day I went to inspect a prospective cashflow positive property.
When I noticed termite mud tunnels running up the stumps, I broke one of the tracks with my finger and white ants were clearly visible. The agent remarked, “I wonder what those little insects are? They look like little ants.” She was honestly serious.
If you want to get out of a hole, first stop digging.
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