Hello,
We are new to the Property Investing forum and this is the first time in which we have posted.
We would like to ask some advice from anyone who feels they may be able to offer guidance/assistance.
We recently saw a duplex whereby both properties were for sale. The asking price is $245k and property one is a 2 bedroom, property two is a three bedroom, both 1 bathroom. It is directly opposite a school and close to shops, hospital and public transport. The combined anticipated rental return would be $390/week.
Our concern is that although the roof appeared in good condition, there appears to be a leak. The gutters were in a poor condition and there is mould evident inside the property (e.g. loungeroom wall and roof). We could not see evidence of white ants. The second property was not open for inspection. The second property (through glancing through windows) appears a little worse for wear (needs new floors/paint etc.) however we were unable to assess property fully (e.g. mould/white ants etc.).
The second property we are interested in is a four bedroom duplex in a similar area, close to a school and across from a park with an asking price of $145k and anticipated rental return of approx. $240-250/week. We found some dirt tracks and are concerned that this may be white ants and the gutters are also in need of repair and were leaking out the back, despite no recent rainfall. In this area the property appears to be sinking, but not as significantly as others in the area.
We understand that in order to get a “bargain”, and positive geared investments, we are unlikely to find a “perfect” home, and are willing to find a “problem” in order to find the “solution”, however we do not want to risk buying “duds” or places that will lose/cost us money. Furthermore, the agent stated that investors don’t worry about things such as white ants and sinking… I don’t know whether to laugh or cringe at this comment?
What advice would you have for us, and would our concerns be red flags when looking for a possible investment?
Of course we would obtain a building and pest inspection, but we would be appreciative of any advice you have for us starting out on our investment journey.
Thank you in advance and happy investing,
M & S
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This topic was modified 9 years, 6 months ago by
M & S.
Hi M&S,
When it comes to red flags the advice I would give if asked is trust your gut. After that what I would do if I was new to an area and trying to work out if a “problem property” was a deal is do a bit of digging.
The first thing I would to is try and find a comparable property that was in tip top shape or the condition your would bring your property up to. Get a realistic value of the property buy either finding out the actual sale price or look at the listing price and do some extra work.
Next get some estimates to fix all the issues that have come up ( these need to be fixed price tenders before you commit to the purchase).
If your purchase price + plus closing costs + renovation cost is less than the value of the comparable property your are in front. If not move on or simple purchase a property without the issues.
Mould and damp are one of the most common things tenants complain about and damp houses are generally unpleasant. Cost to fix are usually hard to gauge.
Probably better to start with something that is “ugly” but if push comes to shove you could fix yourself or organise cheaply, that is, paint, carpet and fittings.
Hi Don,
Thank you for taking the time to reply. We really appreciate your advice and will take it on board.
M & S
I would get the pest and building inspections done first. They will determine if the building is structurally sound and if there are white ants, termites or any other pests.
You could offer on the property with a pricetag that you feel is suitable for the problems you suspect exist (offer should make it clear you’d be subject to finance, building and pest and anything else relevant). If offer is accepted go under contract subject to satisfactory building and pest inspection results.
Just doing building and pest inspections on properties that vendors have not even agreed to sell to you can become an expensive exercise.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You could offer on the property with a pricetag that you feel is suitable for the problems you suspect exist (offer should make it clear you’d be subject to finance, building and pest and anything else relevant). If offer is accepted go under contract subject to satisfactory building and pest inspection results.
Just doing building and pest inspections on properties that vendors have not even agreed to sell to you can become an expensive exercise.
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Agreed – also if there are defects which you are willing to repair, you can use the report to potentially negotiate the price down.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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This topic was modified 9 years, 6 months ago by
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