First timer. What might I be missing?

Hi All,

I’ve been lurking for quite some time and have loved reading all the information, thoughts and opinions you guys all contribute. I have learnt so much reading all of your posts and as a new investor I’d like some thoughts on a property my hubby and I recently looked at. It all seems to stack up to us and our untrained minds but I feel that as we have no investing experience, and no friends or family with any investing experience either, that we may be forgetting about something or overlooking something major with the property. Our strategy is to buy and hold with possible subdivision in long-term future.

We’d love to hear some thoughts/advice/guidance/recommendations/anything really. :-) Apologies in advance for the long post, but I wanted to give as much info on the property as possible.

Located in Frankston North, VIC. Asking Price is low – mid $300s

Property is advertised as a 5br or duplex (1x3br and 1x2br unit) on 1 title.

Unit 1 is at front of house – 3br, 1bath, kitchen, laundry, 1living. Outdoor area use = 3mt wide access down blind side (RHS) of house plus front yard. Unit 2 is at rear of house – 2br, 1 bath,kitchen 1living. Outdoor area use = whole of backyard.

There is only 1 meter for each utility provider connected to the property. – Is this an issue?? RE agent advises that you could apply for separate meters but would cost $8 -$10k?? Or charge higher rent and include utilities??

Rental market -Unit 1: Couple, maybe 1 or 2 children -Unit 2: Single, maybe student (rented furnished if needed????)

RE Agent advises possible rental return if both units rented = around $400pw (excluding utilities) with Unit 1 could fetch $240 & Unit 2 could fetch $150 (Maybe more)

Property is located in a growing area and there is lots of Government and local investment/development happening now and earmarked for future. There is some re-modelling and sub-divides being done in the local area. Property is easy walking distance to schools, parks, and a small set of shops with supermarket, swimming pool and other recreational facilities. Close to freeways, beaches, 2km to train station and walking distance to bus stop, short drive into main hub of town and uni’s tafe’s etc.

Solid red brick house (Ex-government housing) buillt in the 60s sitting on a 700m2+ lot with a storm water easement down the side of the property. RE said it’s on Concrete stumps??? Kitchen & Batroom in Unit 1 recently updated and a rather dodgy DIY paint job.

House location is certainly not what I would call in the most desirable or cosmetically pleasing area of town, but I don’t have to live there and the REAs we’ve spoken to assure us that the rental demand is there. It’s on a long, irregular (but workable) block and shares a boundary with 4 other houses.

There is only 1 door in/out of each unit – are there any rules/regs which would make this a problem??

We know there has been quite a bit of interest in the property since it was listed just over a week ago and I overheard one person say they would be in touch regards making an offer whilst we were there and the agent told us someone else was drawing up an offer with their conveyencer to include some special conditions, one of them being to have all debris removed.

There are no other comparable sales in the area. Except other 3br brick homes in the area average $260k. and a 4br home around the corner sold for $310k but it was a complete package (much nicer) with nothing else left to do to it. So is it worth paying the extra for what you get with this property and with what we would have to do?

Needs a little cosmetic work inside: Carpets replaced in both units, Painting throughout, Bathroom and kitchen in 2br unit could do with an update to make it more appealing. The current internal door between the 2 units would need to be properly blocked off, at the moment it’s just some wood panelling nailed into the recess.

Outside: Front and Back yards need a little TLC and it would need some work done to give privacy to each unit. Unit 1 would need high fencing added to front boundary and to enclose the front yard, with medium sized conifers to be taken out and a stone driveway created to allow for off-street parking. Current side fencing would need to be moved back to allow room for off-street parking for unit 2.

Maybe budget $20k-$30 for changes??? (not sure if this is a reasonable amount as we have no ideas on costs to do things)

Obviously we would organise a Pest and Building Inspection if we want to pursue, but is there anything we not have factored for or anything anyone can think of that we may have missed? Could this property be considered a good investment? Is the asking price reasonable? What would be a good initial offer?

Thanks in advance for your help. :-)