I read a book in January 2005 (book 1), and my days have not been the same since! I now know what I want to do, but how to do it without falling on my face! (There have been so many people saying, “but property is for neg gearing, wait for CG, the market’s down, you have missed it, blah,blah,blah etc,etc).I am new to all this, so here goes. Has anyone had experience in purchasing (or getting for free!) an old house , moving it onto a well located block and renting it out? My aim would be to have, once completed, a H/L combination worth well in excess of cost and either rent it out as CF +, or sell and use funds toward starting to buy other IP. To start an empire I would have to borrow 100%, is this too risky, but what if the IP is STILL CF+?. For example, if an old fibro house is 4sale for $200,000 but only offering 5% gross rental return, and a block across the road is $50,000, how can an old house be worth $150,000?. It should be possible to get it going for approx $110,000, but I have more research to do yet to find out the hassles(ie getting council approval which may take 3-4 (6?) months, and how I could carry the project until then.When I read the book I went to find CF+ properties and got discouraged. I think I’m learning that they have tobe made/found, not bought as CF+.
TFRYAN
True, you sometimes have to create +ve CF properties, or, find them, which you can, but you will have to search.
Approvals are an issue yes, also, have you actually had a look at what the cost of moving a house is. Getting it lifted, transported and set again?
If that is a true situation with the properties that you say above, and depending on where you are, it would actually be cheaper for you to have a brand spaning new house built on the $50 000 block. It will rent for more then too. Just an option.
Good luck.
J.
J.
fnccollector,
I nearly did just this a few years ago – the problem was finance. It’s just too risky for the lenders (in their opinion, yet the fibro/asbestos box is ok – go figure!)
If you have the cash or a line of credit, this kind of project can be a goer, particularly if you are handy with gyprock & plaster! Call around the house movers in your area to see if they know anybody who needs a house shifting. Many old Australian weatherboard houses were built on hardwood frames and if still structurally sound these will last longer than many new pine framed buildings – get a builder to check it over.
Look for:
+ colourbond (etc) roof with plenty of life left
+ solid frame, bearers & joists
+ solid timber floor (will save you floor covering costs if you can just puch, sand, finish)
+ decent weatherboards (not critical, these are easily replaced)Now the beauty of this plan is that although the seller will usually ask around $10k for a house plus removal of debris etc, they are generally prepared to negotiate as they’re not trying to make money from the deal so much as avoid having to pay for the house to be demolished.
The house movers/removal company will usually take care of preparing the block, stumps etc, and if they also look after permits it will save you some trouble.
Connections, external cosmetics and an internal refit (somewhere between a quick plaster and paint and a complete gutting!), driveway, garden & fencing – Bob’s your job!On the other hand you could just go for a 3 br Symonds or similar for $115k and save all the hassle! It’s still got to be worth more as a rental or for sale than the $200k fibro.
Cheers, F.[cowboy2]
Hi TFRYAN,
We were looking into this ourselves. Easy enough to find a free (or next to free) old house. Relocation costs between 25k and 65k depending on a variety of factors (eg distance to be moved, the number of pieces the house needs to be broken into for transport etc). Our biggest problem was that we needed an owner/builder’s licence (here in NSW anyway) and that is only available for PPOR not IPs. Suppose there are ways around it but we decided not to risk breaking the law.
Kind Regards,
SonjaThanks for the tips so far.
Yes, it could be complicated, but I need to investigate it further. I would not go ahead with it if the likely numbers would not work, considering that part of the plan would be not to do the rectification myself, but pay experts from my likely (no, estimated?) profit.What needs to be investigated:
Land cost: $50,000 max all up.
House cost: $5000
Move house and set up: $30000 (house would have to be no further than 60km away)
Fix house (?) needs to be no more than $10000
Interest costs:$4000
Value of house when completed: (needs to be $160000 to make it worth it)
Estimated rental potential (great word that “potential”!) $160-180 pw gross.
If that is the case, then have the option of:
-keep and rent out, refinance loan .
-sell and use gain to fund the start of the empire.
A second idea will also be kept in mind of moving two houses onto a suitable block and subdividing, to really use the value of the block. Multiply the above by 2 except the cost of the land!.
Obviously more due diligence needs to be done to reduce the risk of the “if” word; if it costs this, if it sells etc.TFRYAN
You might need to add the costs of hooking up the plumbing and eletrical works to the house to!
These are just a few things that might need to be looked at.
Keep the dream alive and i hope you find a good block.
Devin
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