Hey there gang,
Our first investment property only settled in Sept this year, but when we refinance down the track I was thinking of adding an extra couple of bedrooms + an ensuite. I will try to explain;
3 x 1 1970’s (brick & tile) on 804 sqm
390k renting at 200/w
Sunroom built on early 80’s spanning 2/3 width of back of house (roughly 8 x 5) – council approved.
Sunroom built out of wood veneer panels on walls and ceiling
2 x extra large windows spanning back yard wall.The problem is, that to get to the sunroom extension, you have to walk through the 3rd (v.small) bedroom. This bedroom is really only big enough for a single bed and maybe a tallboy. Then you walk through it and take 2 steps down into the sunroom through double sliding doors. The 3rd bedroom has no windows.
As this is a pretty stupid design in my opinion in terms of functionality, I thought it would be a good idea to create a wall/short passage way to the sunroom, making the 3rd bedroom even smaller. Then divide the sunroom into 2 new bedrooms, one of which is the master because it connects to the old 3rd bedroom which would be turned into an ensuite.
Firstly I would like to know what you think of this idea ie. turning my IP into a 4 x 2 (in line with the 90 degree angle of brand new housing estate near completion)?
Secondly I would like to know what sort of building materials are economical yet sturdy with a professional finish. Is it better to get a tradie to do it (I have no building exp) to save time between tenants? If any of you have experience with this kind of reno, I’d like to hear your thoughts because if a professional does the job at least I can picture what they mean in terms of building material choices/costs etc.
Your opinions are greatly appreciated
Adding an extra bedroom always adds value but you need to balalnce that out with your costs and what you eventually plan to do with the place ie rent out or sell.
It is difficult to tell without seeing the plans, what might be possible.
Feel free to pm me with the plans if you like.
Warm Regards
SueMIT | Owen Real Estate
Email MeWill have to hunt for the plans among end of year uni papers!
The plan is to keep the place and continue to rent out. Unless it turns out to be a dud, we want to keep it and aquire others to eventually fund our retirement. Would I need council approval for this kind of reno? The council has suggested that they are not reviewing R Codes in the near future, but maybe develop it down the track if things change.Hello again
I would think that you would need council approval for any structural change. Just pose a hypothetical question to them and see what transpires.
Is this place of yours currently +ve cashflow? Using The 11 sec solution it doesn’t look like it based on the info you supplied, it looks more like a Negatively geared property. Unless you have a lot of equity tied up in it.
You talk about keeping this one for retirement etc, is that why you bought this one in the first place?
You also talk about refinancing down the track. How far off is that? Are you preferring to refinance vs sell and have you thought about the reasons for doing either?
How much do you plan on spending on the changes you suggested and what is your “exit” strategy?
Oh by the way where is this property, as that to some extent will dictate the appropriate strategy.
Sorry for all the questions but there are so many gaps in what info you provided, I’m not really sure what you are trying to achieve with this property
Regards
SueMIT | Owen Real Estate
Email MeHello again
I would think that you would need council approval for any structural change. Just pose a hypothetical question to them and see what transpires.
Is this place of yours currently +ve cashflow? Using The 11 sec solution it doesn’t look like it based on the info you supplied, it looks more like a Negatively geared property. Unless you have a lot of equity tied up in it.
You talk about keeping this one for retirement etc, is that why you bought this one in the first place?
You also talk about refinancing down the track. How far off is that? Are you preferring to refinance vs sell and have you thought about the reasons for doing either?
How much do you plan on spending on the changes you suggested and what is your “exit” strategy?
Oh by the way where is this property, as that to some extent will dictate the appropriate strategy.
Sorry for all the questions but there are so many gaps in what info you provided, I’m not really sure what you are trying to achieve with this property
Regards
SueHi Sue, thanks for the questions, I’m so happy to answer them because I know you have a little more insight into investing than I do and I appreciate your interest.
The house is -ve cashflow (390k vs 200/week rent). The equity from my mum’s home allowed us to put down a 20% deposit + closing costs. I can only guess when we will be able to refinance, but I am hoping some time in the next 18 months.
Yes, I did buy this one in mind for retirement income. It is in Shoalwater WA (41km from Perth). It is surrounded by 3 beaches, 2 of which are less than 2km, the other 2.5km. The most identifyible town is Rockingham where there is plenty of stuff happening in the area now and soon eg. Train station (3km), Freeway extention (4km), Waterside appartments (2.5km), free bus transit, ?marina (2.5km), upgrading major shopping centre with retail streetscape (2km). We are hoping that these factors will entice tenants away from the city due to better facilities and transit links.
Hopefully we will get good capital growth, but it will be a long time before we see it. This will limit us for a while, but we will try and put as much as possible into an offset account meanwhile until we can purchase again. Although I would love +ve cashflow with good capital gains, I can’t see us getting that in WA unless we reno & sell or develop, but our rent is ridiculously cheap and if we buy near where we live we lose our rental. I am reluctant to purchase a money spinner with poor capital potential because I worry that it will limit our growth. I thought this might be a way to offset our negative cashflow, but still hesitant. I’m in for the long haul, but I don’t fancy dragging any tyres through the mud with me! I guess I’m saying I’m cautious at this stage of my investing career because we are the first in our families to try this as a means for securing our future and I don’t want to stuff it up. Also only on 1 wage as I’m a student.
Back to the reno! I estimated it would cost around 12k without the ensuite, so + 8k = 20k. Therefore, I would make sure I had at least $30k available before I started. Even if the above figures are hypothetical, that would be how I would plan it.
Because we are so negatively geared, my goal was to add value to the property without over capitalising, thus either increasing equity and/or rental income. We can manage the repayments for now, but if I can get us an extra leg up by doing this later, it may make our investment stronger. [blink]
Hi Dee Dee
Have you read Steve’s article on Negative Gearing.
As I see it the best way to approach negative gearing is to pick an area with strong potential growth otherwise you ahve the potential to go seriously backwards.
To my way of thinking, I would much prefer to do the renos and developements that put money in my pocket in a relatively short space of time as opposed to “buying and hoping”.
capial growth is such a nebulous thing, one can never be sure of it. I prefer to have a bit more control over my cash.
Also with the renos and developments I am less likely to be at the mercy of interest rates in the sense that my money is moving around.
Have a look at Steves chapter on Lazy Money in his new book – should be in the shops this week 0-270+ properties in 7 years.
In terms of being new to the property game, thats ok but property or rather any investing and or business venture that we undertake requires a large percentage of “mindset”, ie having enough knowledge and where with all to take calculated risks and of couse by improving our emotional stability in these sorts of situations, lessens the risk or perception of risk anyhow.
This is an ongoing growth process we all need to undertake in order to master ourselves in these sorts of ventures.Warm Regards
SueMIT | Owen Real Estate
Email MeHi Dee Dee
Have you read Steve’s article on Negative Gearing.
As I see it the best way to approach negative gearing is to pick an area with strong potential growth otherwise you ahve the potential to go seriously backwards.
To my way of thinking, I would much prefer to do the renos and developements that put money in my pocket in a relatively short space of time as opposed to “buying and hoping”.
capial growth is such a nebulous thing, one can never be sure of it. I prefer to have a bit more control over my cash.
Also with the renos and developments I am less likely to be at the mercy of interest rates in the sense that my money is moving around.
Have a look at Steves chapter on Lazy Money in his new book – should be in the shops this week 0-270+ properties in 7 years.
In terms of being new to the property game, thats ok but property or rather any investing and or business venture that we undertake requires a large percentage of “mindset”, ie having enough knowledge and where with all to take calculated risks and of couse by improving our emotional stability in these sorts of situations, lessens the risk or perception of risk anyhow.
This is an ongoing growth process we all need to undertake in order to master ourselves in these sorts of ventures.Hi Sue,
I am hoping that we have picked an area with high growth potential, quietly confident anyway. I would like to branch out a bit with my property investing in the future if it is viable because it is clear that we can’t afford to hold more than 2 more of the above properties before we run out of cash.
Once we have some leverage, I would like to explore my options with some kind of professional. It would probably be a good accountant when I can find one [buz2]. I am not against trying new things once I know we are ‘safer’. At least until then, I can read, research the forum and ask people like your kind self when I’m not sure. I like the idea of reno or develop once we have a bit of equity to back ourselves up.
How is your investing going?Hi Dee Dee
Mine is going fine, I demolished a house in Adelaide a couple of months back and am awaiting the Building and council approvals for my two dwellings along with the final stage of the Land division. No building is likely to start much before the end of Jan, given the Christmas shut down.I’m currently in the market for a “cosmetic” reno to do in conjunction with my money partner and am looking at a prospect on Thur once I return to Adel (I’m in Melb at the moment).
I am also investigating the possibility of getting another deal up an running using the cash in my SMSF.
Other than all that I have heaps of Strategic Planning to do and tidying up of my “systems” both soft and hardcopy over the Christmas break prior to launching into Internet Business and Share Trading along with Property over the next 12 months. Oh and all the Personal Development, such as the Brendan Nichols inner Circle, Kurek Ashley’s Life Success Club and the RESULTS Bridging program I have set myself up for. So 2007 looks like being a busy and productive year.
Warm Regards
SueMIT | Owen Real Estate
Email MeHi Dee Dee
Mine is going fine, I demolished a house in Adelaide a couple of months back and am awaiting the Building and council approvals for my two dwellings along with the final stage of the Land division. No building is likely to start much before the end of Jan, given the Christmas shut down.I’m currently in the market for a “cosmetic” reno to do in conjunction with my money partner and am looking at a prospect on Thur once I return to Adel (I’m in Melb at the moment).
I am also investigating the possibility of getting another deal up an running using the cash in my SMSF.
Other than all that I have heaps of Strategic Planning to do and tidying up of my “systems” both soft and hardcopy over the Christmas break prior to launching into Internet Business and Share Trading along with Property over the next 12 months. Oh and all the Personal Development, such as the Brendan Nichols inner Circle, Kurek Ashley’s Life Success Club and the RESULTS Bridging program I have set myself up for. So 2007 looks like being a busy and productive year.
Warm Regards
SueMIT | Owen Real Estate
Email MeI think you can easily do it without council approval. In my experience when you ask if you need approval they always say yes (more money to them), and then you have long arguments why you do not need approval.
It will also add considerably to your costs as you now need all kind of plans and documentation as well as to your time frame (allow at least a couple of month for their paperwork).
All you are doing is install internal walls, that is not structural! But even if you were to cut new window/door ways I would not bother, as long as you/your builder knows what you/he are/is doing. I think if done smartly you may be able to this for less money (remember Steve’s tip: add more in perceived than actual value)
Good luckI’m not sure I would class adding and ensuite as not requiring council approval. Particularly if it is to be connected to Council services such as stormwater and sewerage.
Sue
MIT | Owen Real Estate
Email MeI’m in a similar position as you with an IP 3X1 with a games room and semi enclosed outdoor entertaining area addition. My idea’s are to turn the games room into a forth bedroom. This could easily be achieved by leaving a hall way and getting a suitable wardrobe from IKEA or have it built by a professional and it will serve two purposes. I’d probably also include a couple of bi-fold doors to save on space too. Then I would add windows and a door to the outdoor room and make that the games room. Maybe something like that would work for you also?
“I’m not sure I would class adding and ensuite as not requiring council approval. Particularly if it is to be connected to Council services such as stormwater and sewerage.”
As long as you do not change the outside walls of the house, I would not go to the council for approval.
This is from the Randwick City Council Website:
“Exempt development is development of a minor nature which may be carried out without consent subject to compliance with specified criteria. Exempt development includes certain:
* non structural internal alterations”So unless you are taking out a load bearing wall, you can do internally whatever you want. And even then I would be more concerned about getting a good solid job done than what the council has to say. They only look at the engineers report.
Hi Bridgebuffdoes Minor development include sewerage works etc, this is where I was coming from in terms of my comment re structural?
SueMIT | Owen Real Estate
Email MeHi Sue,
I have had lots of dealings with councils in my work and I have learned to avoid them whereever possible.
They want all kinds of totally unnecessary plans and documentation, charge a lot of money and normally do not have a clue.
Ask yourself what could be the worst possible scenario if you do not apply. If you erect an illegal structure they can ask you to tear it down, but this is internal renovations we are talking about.
If you first ask a load of questions and then you do not apply, it will be a lot worse. And my customers have been told that they had to submit apllications, when their are clear guidelines to the contrary. But once have asked the question, you will have a hard time to get out of it.
But we are hardly talking here about “minor structural issues” where sewerage is concerned, I supect council would be
“most interested” to see the job done properly. I for one am not about to compromise my integrity for such an issue.Sue
MIT | Owen Real Estate
Email MeLets agree to disagree.
We converted a smaller bedroom into a bathroom in a house we owned a few years ago. We wanted a separate bathroom for each bedroom so we could run a B&B, so we needed to add an extra bathroom.
My brother-in-law is a plumber, so he did all the plumbing work with my help and I did all the rest. All the plumbing work was 1st class.
There were no inner walls or outer structures altered and we didn’t go to the council. The end result was awesome (the bathroom should have been in Vogue but I am biased!). We tried to do the most professional job we could so there would be no question that it was done right.
We sold the house a few years later and had a building inspection carried out by the purchaser. There were no problems, and no-one asked for a building permit.
By the way, I asked a builder I know before hand if we needed a permit, and he said the same as Bridgebuff – don’t ask and you won’t be told no.
Cheers,
Marc.
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