We are in a situation where we’ve inherited a very run down property on Sydney’s North Shore. We’ve cleared it out and spiffed it up a little, but want to find out its potential. It is a single title, but there are 2 flats in the building, with a tenant on the lower level. Very old building, pre-1950s with a lot of structural issues. It won’t fall down, but is it worth it to sink mucho dinero to renovate, or should we look at demolish & re-start? Who do we consult for something like this? Help!!
Is there an option to leave it as it is and take the rent each week and use the equity to buy other IP’s?
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon –
The tenant has been here for years, and is paying minimal rent. We are currently living in the other unit while we are in Sydney. (just visiting from Canada) We just aren’t sure how rent-able it is right now. It really is a dump, and the minor facelift we’ve given it has been to make it tolerable for us. The powerpoints are poorly laid out…the kitchen it very very tiny, as is the bathroom….Not sure anyone would rent it in this state! We’re just trying to suss out potential when we decide to leave. (if we decide to leave [biggrin])I agree with Simon. Leave the renting side alone…the whingeing on a place like that from tenants would be enormous and unending. Throwing good money after bad.
Simply leverage the equity in the title to invest elsewhere.
Yep good advise from Dazz & Simon … in the mean time seek out a certifier (local) to front the council and see what the potential is.
allow for the costs of storm water and detention basins as they are very costly. On a 2 storey house allow $50,000 extra, very hard to add this to the value in the end product.
resiwealth
You shouldn’t compare what you want in a property to be the standard to what a rental property needs to be.
Get a PM to come through with you to make the minimal changes to have the property rented quickly and for a suitable amount. Understand that a coat of paint and a new stove will be cheap and get you a good rent rise. A new bathroom and kitchen will be expensive and you will poss not recover this outlay with the rent rise.
Apartments in Sydney rent well and if clean it will rent for an appropriate amount. Many people don’t care that a bathroom is small etc.
Ditch the current tenant – he is on a good wicket and wont be happy to pay more. Get market rent then use this and the equity to buy again.
With a reliable PM you wont have to do much on this place or deal with tenant problems. Look at the bigger picture and grow your equity rather than trying to grow your rent.
Use the equity in the building to buy a couple more and triple the rent rather than try to do it up to get 20% more rent. At the end of the day the first option will probably be the cheaper one after all is said and done!
Thats what I would be looking at doing myself but at the end of the day it is your call!
All the best,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
So you’re obviously not developers, and no experience in property management, both are minefields for the unwary and the inexperienced, made worse by distance if you’re overseas, and worse with an older property.
If you want to keep it, there’s a very steep and extended learning curve coming up for you.
In effect you have sudden blind ownership of a property with no research.
good luck
cheers
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So you’re Canadian and you’ve had a nice little windfall.
I’d flog it. Unless you’ve got plenty of money and time and want to chance your hand at developing.
If you like the idea of having something in Australia for the future, buy something with fewer headaches from the sale proceeds.
Have you had the place valued? What are the tax implications for you if you sell it?
What a nice dilemma to have.
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