Attention Investors: I'm looking to flip...

G'day Matt here - son of Les (one of the Mods). It's certainly been a while since I've posted, or even visited, here - just busy with current things, I guess - so my apologies, if I've posted in the wrong location, and I thank in advance the moderator who moves it to where it needs to be. :)

Anyway, the reason for the post... I'm currently under contract with this little gem and I'm considering the possibility of flipping it (first-time flipper BTW). Given that even the most basic (though well presented) 3bdrm workers cottage on 400m2 in East Brisbane is selling today in the mid-high $500Ks, this one is a winner, and it's available today for ~$565K but, yes, it does need work!!

I would not be offering this, except for being pretty much "jointly and severally stuffed" by the Banks. The potential income is huge (depending on your purpose for it). I have plans to provide a >15% return from it (eminently achievable based on my experience when renting to students). After fighting for several weeks now on this, it seems likely that I'm not going to win - but YOU can...

Circa pre-1900 Queenslander former Mansion with Maids' Cottage (underneath), converted into three registered flats in 1952. Lot: 3; Plan: RP91176; Parish: South Brisbane.

In need of considerable TLC however, perched on 607m2 LMR (currently multi-unit dwelling - flats), the possibilities are endless.

But pls don't allow me to limit your imagination with the following suggestions;
  • Rent as flats (in existing configuration - est rtn ~$1,060/wk)
  • Add more flats (under)*
  • Add townhouses (at the back)*
  • Rent to the still strong, local o/seas student market* (in existing configuration or convert to large boarding house* or back-packers*)
  • Convert back to the Grand Old Mansion she once was, highlighting her existing features; such as 3 fire places, 4 bay windows, pressed metal & plaster horse-hair ceilings, etc.
  • Move it off the land (I doubt you could bring yourself to flatten it) and build whatever suits*

With 7+ bedrooms, 3 bathrooms, 3 kitchens and over 290m2 of current internal living space this property also boasts;
  • Story Bridge, City & River glimpses from front room (at current elevation).
  • 1 min walk from bus stops (4 routes).
  • 4-min, 10-min & 12-min walks from Supermarkets, Post Office, restaurants, bottle shops, deli, etc (3 urban shopping precincts).
  • 10-min & 15-min walks from Cross-River Ferry (to New Farm) and City Cat (to City / Griffith Gardens Point / UQ) respectively.
  • 10-min & 15-min walks from 'Churchie' (Private Boys College) and Shafston/UNE respectively.
  • 1km from NSBT (North-South Bypass Tunnel) entry/exit - due for completion 2010.
  • 2kms from Story Bridge (connecting to Fortitude Valley and Brisbane CBD).

I've included a couple of pics to moisten one's pallet...



Building and Pest Inspection Report and some RPData info available upon request. However, pls do your own due diligence. For those who are already familiar with East Brisbane (4169), I guess I'll be hearing from you soon... :cool:



I welcome any questions via replies on the forum, but as I'll be on-line only periodically over the weekend I'd suggest any urgent questions be asked via my mobile.

Expressions of interest only this weekend pls...

Regards,

Matt B-)
0411 505-001
0431 587-958

* - these are suggestions only, made without any understanding of or approval from the relevant authorities, and as such may be subject to the respective laws, grants and diligence.
 
Last edited:
Im impressed.

You may wish to consider including the street address for those people who do not have the ability to search by registered plan.
 
Could you provide more details on what sort of TLC is actually needed? Did the building inspection uncover any nasties?

What sort of timeframe are you looking at selling?

Cheers

V
 
G'day all,

I just wanted to validate Matt's post. When he first found this, I went "Yeah!" go get it !! The value therein is pretty obvious when comparing other properties in/around East Brisbane.

Unfortunately, the Banks have different rules, which tend to bypass "diamonds in the rough" which this is.

And that "jointly and severally stuffed" comment has somewhat slowed my progress too. We're moving on that now, but, unfortunately, not quickly enough for this one - damn shame..... Hopefully someone else can take over this diamond in the rough,

Regards,
 
Do you mind sharing if there is specific issues we should know regarding getting finance, or was it purely on your individual circumstance?

Was it simply the fact you needed a commercial loan? big deposit? or is there something we need to know ?

:eek:
 
I don't know about Matt's circumstances. But generally, "jointly and separately liable" arises when more than one person gets together to buy a property. So if, for instance, Les and Matt had bought a $500K house with $400K debt, the bank would consider, when working out LVRs and the like, that Les had a $400K debt- not half of $400K as one might expect- and that Matt also had a $400K debt.
 
I have driven past that house hundreds and hundreds of times over the years as I lived out that way for most of my life. It is like going down memory lane for me. This type of house gets my heart racing, it is a grand old lady indeed. I would love to get stuck into that renovation, but what a lot of work.

One thing though..... this is a busy road and there doesn't appear to be a driveway either side, or maybe it is just the photo. Is there any vehicle access on to the block?

(And what a shame it is not on the other side of the road and fronting the river because you could add another million or more onto the price.)
 
Yeah, Geoff's got it - Matt and I own another property nearby.

The problem comes when Banks say that BOTH of us are "jointly and severally liable" for the mortgage on the property. Severally means "separately".

They want BOTH of us to be answerable for the total mortgage (individually) - but they also will only allow HALF the rent received to be allocated to either of us. It's a rort, but they make the rules !! Hurts like hell when you are trying to overcome their DSR checks - I haven't found a way around it yet, but would LOVE to hear of any successful stories....

Regards,
 
G'day Wylie,

One thing though..... this is a busy road and there doesn't appear to be a driveway either side, or maybe it is just the photo. Is there any vehicle access on to the block?
There is a driveway - on the right side looking at the photo. So, yes, there is vehicle access. Just don't have a super-tall 4WD as it could take out one of the bay windows :eek:

Regards,
 
G'day Stu,
Do you mind sharing if there is specific issues we should know regarding getting finance, or was it purely on your individual circumstance?

Was it simply the fact you needed a commercial loan? big deposit? or is there something we need to know ?
Re specific issues, this place doesn't present as it could/should - but therein lies the gain. It will take some $$ to present it as it can be. So maybe not one for anyone starting out (unless they have access to external funds). And a BIG deposit would help to overcome the Bank issues....

In our case, the "jointly and severally liable" clause was the big killer - along with the current state of the property. Yes, it needs money spent on it - but hey, the value is there, if you can look past the current state (seems most lenders can't). At $550k, it's not too far over land value....

Regards,
 
G'day Boomtown,

As I don't buy flats, I don't know if this answers it....
converted into three registered flats in 1952.
.... or whether council approval is separate to that.

Perhaps Matt can confirm when he pops back in,

Regards,
 
Do you mind sharing if there is specific issues we should know regarding getting finance, or was it purely on your individual circumstance?

Was it simply the fact you needed a commercial loan? big deposit? or is there something we need to know ?

:eek:
Hi stumunro,

Here's a bit of an overview of some of the issues we encountered;

Being a multi-unit dwelling immediate eliminated the application from a number of lenders (in relation to non-commercial loans) - most will accept up to 2 units on one title/dwelling...

Given some or all of the following criteria, our lenders who thought we could service the loan (i.e. not skewing our existing "joint & separately liable" numbers) couldn't value the property or accept it as security. Because;
  • dwelling is constructed from wood & tin and ~100 years old
  • dwelling is currently unoccupied
  • dwelling is a 'diamond in the rough' and doesn't present well
  • dwelling sported some boarded-up broken windows
  • more than 2 units on the one title

In fact I encountered similar problems when it come to insurance - but Suncorp came through on this one.

Finally, those lenders that liked the building as security, reckoned the loan was unserviceable because they played the "you are jointly liable for the income" (i.e. only acknowledging half of the rental income) but "you are separately liable for the mortgage (i.e. 100% for the debt) - even though the numbers for the property itself showed serviceability (+vely geared).

ta,
Matt B-)
 
May I ask whether the flats are council approved?
Hi boomtown,

My enquiries were able to establish the following;
  • first registered in 1952 (still current)
  • internal re-configuration that didn't increase the internal/liveable m2 or alter overall external footprint doesn't require permit/application*

This is from BCC's POV, as I understand it.

* I understand that other considerations in building codes may be required.
 
I have driven past that house hundreds and hundreds of times over the years as I lived out that way for most of my life. It is like going down memory lane for me. This type of house gets my heart racing, it is a grand old lady indeed. I would love to get stuck into that renovation, but what a lot of work.

One thing though..... this is a busy road and there doesn't appear to be a driveway either side, or maybe it is just the photo. Is there any vehicle access on to the block?

(And what a shame it is not on the other side of the road and fronting the river because you could add another million or more onto the price.)
Thanks wylie. Yeah, if only... though I wonder how much better the view gets if one were to look through dormer windows (later constructed above the existing living space). Like the house next door...:D

Re access;

There is a driveway - on the right side looking at the photo. So, yes, there is vehicle access. Just don't have a super-tall 4WD as it could take out one of the bay windows :eek:
Dad's spot-on, especially re the clearance - as two of the bay windows sit over the drive.

In addition though, adjoining the left of the property (and attached to the title) is an easement (leading to the two properties at the rear). So I guess that one may be able to achieve a U-shape driveway of sorts - great to overcome reversing out on to a busy road (or overcoming any clearance issues for high vehicles).

ta,
Matt B-)
 
I don't know about Matt's circumstances. But generally, "jointly and separately liable" arises when more than one person gets together to buy a property. So if, for instance, Les and Matt had bought a $500K house with $400K debt, the bank would consider, when working out LVRs and the like, that Les had a $400K debt- not half of $400K as one might expect- and that Matt also had a $400K debt.
Thanks geoffw,

And while some lenders want to consider me for 100% of the debt, they only want to consider half (in a two-party joint ownership) of the rental income.

Which is just plain ridiculous - halve the short-fall (if it's -VEly geared) perhaps - but not halve the rental income, an IP's rental income doesn't halve because of a change in circumstance of one owner - but that's what they argue, "if something were to happen to your investment partner, you'll loose half the (rental) income...".:confused:

With that said however, there are some lenders that play fair and either consider;
  • 100% of the mortgage debt & 100% of the rental income, or
  • 50% of the mortgage debt & 50% of the rental income

And unfortunately these fair lenders, whom have deemed the loan serviceable, have then been unable to get a valuation of the property that is near (or same as) the contract price or wont accept it as security.

And for those that value it realistically and accept it as security - we're "joint and separately stuffed"...

ta,
Matt B-)
 
Could you provide more details on what sort of TLC is actually needed? Did the building inspection uncover any nasties?

What sort of timeframe are you looking at selling?

Cheers

V
Hi Miss V,

Ideally, I'd like to know where I stand in the early part of the week and initiate the necessary processes soon thereafter...


The building inspection uncover any nasties as such, it's a pretty honest property "what you see, is certainly what you get" - one could easily second guess what the report would find.

In general, the property is what you can expect for a hundred y.o. wood & tin house that has had very little up keep. There's a lot of "looks bad but easy to fix" type problems, e.g. doors off hinges, loose door handles/locks, small hole in the floor, a few holes in the walls, wobbly (missing, or no-longer-compliant) hand rails and some broken steps on external stairs.

There is evidence of former termite damage and some weather exposure to timbers - but nothing structural (that could be seen - refer to the report).

While most of the stumps appear to be structurally sound, the floor is out of level in a number of places. I don't necessarily see this a major $$$ fix - we re-levelled a 180m2 Queenslander in two days for less than $1000 (including re-adjusting doors, etc), which was far less than we expected (when compared to re-stumping/raising costs).

And (now) knowing that re-levelling can create new problems, i.e. doors and fixtures that we're previously adjusted/fitted for old out-of-square angles, I would even suggest it is not necessarily an immediate necessary fix (not at least until you've gotten a little back from it first:)).

Though I respect that others may have a different opinion/experience in this regard...


The tin roof appears to have been replaced maybe 3-5 years ago (all, but not the tin over the four bay windows).

There are no smoke alarms (required in Qld, at least).

There are safety switches and the wiring appears to have been modernised at some point (i.e. it's not the old stuff).

It needs a good clean and paint, inside and out, plus carpets, curtains, etc, and vegetation cleared from off and around the building.



The bathrooms in unit 1 & 2 don't look like they've has any upkeep since it was converted in flats (reg'd in 1952). My thoughts on #3's bathroom is that it would clean up quit well with only an upgrade on tap/shower head fixtures (and a more water-wise toilet).


The kitchens are basic and small - and unit 1's is a blank canvas with huge floor area. It's still got the old Kookaburra gas stove...:)



Some window glass (5 panes in total) have been broken - and since boarded up - due to the place being unoccupied for some time...

There are also about 15-20 louver glass that has been removed (some broken) due to folks attempting to gain entry.



The Building & Pest Inspection Report and a collection of pictures (compressed to ~40MB) can be e-mailed to you - just give me a call... Thanks.

ta,
Matt B-)
 
Thanks Matt,

Looks like it would be an interesting renovation to get stuck into. The rewards would be huge. It's a shame I don't have the time or the money (or the experience) at the moment.

If anyone takes on this project it would be interesting to be kept up to date on the reno's.

Cheers

V
 
Are you looking to secure a higher price than what is in your contract with the vendor currently? Or are you simply flipping for the same amount?
 
Top