Hello all,
We are serious about the buy, reno sell option and saw an amazing property today which would be biting off more than we could chew.
It’s still for sale and if someone thinks they could make it work, we would love to know how they work through it!!
In brief, it’s potentially a small 3Br house for sale at $165 on a 767sq metre block. Other 3Brs are $220++.
It really is the WORST house in the best street. It has a building report because of termite damage and would need $40 000? spent on it. It needs a complete rebuild of the interior and cutdown of the garden (although this wouldn’t be such a big job).
The big worry is that we don’t have the reno experience or the capital at present.
If anyone’s interested we’d be happy to pass on the info in return for an insight! This is out of our league, but if anyone would take this project on and thinks it is viable we would love to see how it works!
What are your thoughts…
Typically most renovators would baulk at $40 000 worth of termite damage. Dont worry about not having the capital for this one, there are plenty of renovator properties that would be quite lucrative and they are everywhere!
Keep looking and you’ll eventually find your ‘worst house, best street’ pot of gold.
Thanks for the reply!
$40 000 may be more than the reality to renovate.
Is the margin between money spent and made in a flip such as this not worthwhile?
How much would people typically expect to make doing this in the current market?
I know it’s case by case, but generally?I’m interested in similar cases or how people view termite damage and have made a success story? Do you really have to be a builder/carpenter to make this work?
Any further views?
Hi,
We have renovated acouple and looking at figures only, I’m a bit skepical that this would make money.
Here’s how I see it:
Purchase $165000
Reno $ 40000+ (you need to include power etc)
Purchase Cost $ 6000 (S/D + Conveyancing)
Mortgagae while reno $2000 (2 months mortage during reno, more if doing it yourself as it will most like take longer)
Mortgage while Sell $2000 (2 months mortage while selling)
Sell Costs $7000 (RE fees to sell)Total costs $222,000
You said the average house in the area was selling in the $220’s. You’d need to sell for more thatn that to make money on this deal or you’d need to get the price down a lot more.
This doesn’t allow for things you “find” when you start the reno that you weren’t aware of and there is always something. It’s also being conserative that the reno would be completed in 2 months, and sold within 2 months after that. If you’re going for a higher than average price to cover you’re costs then it most likely won’t sell withiin the short time but may take longer, which means more costs.
Also in the reno cost of $40,000, did that include connection of power, gas and whatever else is there and then the bill for usage of the power, water etc by yourselves or your tradesmen? Was the garden included in the rneo costs, often you need to replace plants or repair retic or you’ll find termites in a tree when you cut it and then need the termite fellow back. There’s hidden costs to what seem simple tasks.
Now that I’ve been all doom and gloom, don’t give up, just make sure you always consider all known costs and then add a percentage for the “unknown” as well.
Good Luck
PKAnd don’t forget to allow for capital gains to come out of any profit you do make as well
PK.
I agree that this is probably not the sort of property an inexperienced renovator should touch.
A tradesman may be able to make something out of this but for a renovator to pay others to repair structural (termite) damage is usually not lucrative.
When you renovate it is better to put your money in cosmetic upgrades -that that look good and make the property more appealing than in structural owrk that no one sees.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auThanks for the replies,
Don’t worry about doom and gloom, realism is a useful tool.
We hadn’t thought of the power for tradesmen!
I think the $40000 is an overestimation and would include everything, although I appreciate anything is possible!
As I said, we wouldn’t attempt this one but as an excercise it is interesting.
I think $165 is more than the reality it will sell for.
What percentage/mark up/selling price would make this worthwhile for “YOU”?
We had thought of asking the realestate if they would pass our details to the person who finally buys it and see if they would mind sharing their journey (assuming they are an investor!)and allow us to learn more.
Nothing ventured, nothing gained?What do you think?
Why not see if the purchser will let you learn along the way, the worst they can sya is NO. If they say yes, then you could learn a lot.
Good luck
PKI think you have got to expect 15 to 20 percent nett for any reno. I hasten to add I have only done 2 -(I usually do developments)
Perhapd someone else has a closer idea!??
Giddo
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