I made a vow not to purchase any more fire damaged properties due to time constraints now days.
Whats bad with that?
Well, I woke up Saturday morning to have the agent ringing me as no one has registered to bid on a property for sale? I said I wasn’t interested, and the reply was, it is going to be cheap (i.e. land value) and thats when I thought I would scan a phone bidding consent to the agent.
The result is, that I purchased the property for $25,000 and requires a $20,000 – $25,000 renovation completed at the property.
$50,000 purchase (after reno)
$100,000 market value (after reno)
$200pw rent.See pics attached, I drove down to inspect my purchase on Saturday arvo and took a video which I will put up soon.
https://www.facebook.com/media/set/?set=a.10150409441389173.379746.820929172&type=1&l=0524b187fd
Enjoy!
p.s. I will post some of my most craziest deals over the next week.
Hey Nathan, I was drawn to your post as we have just found a $15K house to buy, in the NW QLD town in which we live. Livable, original condition depression era home. Corrugated iron construction typical of outback homes of its time. Main building is solid. Last tenants which just left were paying $80 pw. It will be our fourth investment property and the first time we venture in to value adding / renovation. Pretty keen to keep all the costs down – which is hard given our location. Any tips gladly received. Found a retired builder happy to work for us for $25 per hr. We're not very handy but can use a paint brush, and a lawnmower. We see it as an ideal learning opportunity. Pretty amazed with how much you reckon it will cost you to fix that burnt out house – are you a tradie – therefore your own labour time not counted in the cost?
Cheers
SHShales,
you mentioned this property in a separate thread. And i gave my opinion on it in that thread. But my overall recommendation is .. if you like it .. go for it.
When i'm an investor i look at a property and do the figures and work out what its worth to me .. what its REALLY worth on the market .. whether the rents are sustainable or overpriced .. the bedrooms are an ok size .. the property is light … with a garden .. or view of a garden … more importantly .. would I like to live there?
If its selling for 15k and you LIKE it .. go for it. Your adventure and knowledge begins where you start. If you feel its something you can handle being empty or vacant .. take it on. If you think you can tart it up at minimal cost and have a nice place .. go for it. With the current rise in rents vs living conditions .. people are often seeking a little more lifestyle and they dont care where they get it .. if you think your property is of a standard where you can have people living in it without too many issues .. go for it.
Nathan takes on problems and makes solutions. That comes from experience. I tend to look for value .. minimal maintenance .. good positioning and low out of pocket costs. I should also mention that if I'm buying a property I look with an investor eye and not with a bout of vendor enthusiasm. If i feel for one reason or another that I'm looking with a hyped up perspective .. i'll pull back from the transaction for up to 48 hours. Vendor enthusiasm is the result of a good salesman and not something an investor should rely on. Its cost me immediate sales sometimes. But historically .. recognising the opportunity is the hard part. Outside of that .. opportunity tends to happen more than once.
At 15k you are more likely to be taking on a problem than a veritable solution. And a problem is usually an expense. The question will be at the end of this .. is price and outlay going to be cheap enough to provide a return and value once the property problem is solved?
P.S. Nathan .. still love the deals you manage to pull.
Hello xdrew,
The value equation is what we normally go for. We like entry level housing on freehold land. Buildings which need little maintenance, target a retiree tenant. Good location, but cheap stuff needing next to no work.
Yes, we are enthusiastic. Concerned not to miss out on a very cheap deal – yes. Good sales person? I think we are excellent sales people and we sold it to ourselves. The agent, who does quite a bit of business with our business, wasn't very enthusiastic. They have even been quite negative about the tenable quality of the property.
Is it a problem rather than a solution? Quite possibly. The property is priced slightly above block value. Another house in much worse condition, but with a larger block and a half decent shed sold across the road for $40K just recently. We believe we are buying below the market. Another vendor, diagonally across the road recently turned down and offer of $15K on a house which has a condemnation order on it – chasing $25 apparantly.i do wonder if perhaps tenants expect better living conditions than I have put up with in the past. Are we out of touch with what is expected? But then, there is a real accommodation shortage in this town, and people do live a bit rougher here than in, say Townsville.
We DO like it. It is just nice. It has an appeal – it is one of those old houses that feel historic, rather than just crappy. It has great shade, which is important up here. We CAN afford it. We can afford for it to go empty. We can afford to learn a lesson. And we could do with a wet season project.
The down side is really that it will just occupy a bit of cash that we might have used for something else, or put in an offset against another loan. There is another property that could come up next door to our ppor and when it does we want to buy it, but might hesitate to do that if we buy this little renter.
To me, the greatest up side is that it is a good little wet season project and seems like a fairly low risk way for us to learn about adding value for profit. It's a new recipe to try – a new adventure.
As they often say, you make the money on the buy, and I'm confident that it is a very good price to pay for this property.
Quick reply –
I make sure there is an exit strategy, demand, and of course buying well below market value to minimise risk.
This thing @ $25,000 is just for kicks make no mistake its not the properties I personally built my portfolio on (they were sydney metro) nor would I suggest for investors to chew on this one.
It will be renovated using labourers which I will collate from both Sydney and locally at the site.
Not a tradie, just an investor.
Nathan.
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