Brisbane Low End Market Vs High End

[Tim86]

I'm wondering what your thoughts are on this one.

Renovating a low/medium end property or renovating a high end property. Examples:

Low/medium end of the market:

http://www.realestate.com.au/property-house-qld-salisbury-117438415

High end/blue chip market:

http://www.realestate.com.au/property-house-qld-paddington-117413879


This is what I think and what I roughly guestimate, I'm wondering your thoughts?

That example in salisbury, you could raise the house, build underneath, fully renovate inside, new kitchen, new bathroom and maybe add a deck for say $100 000 if you do all the work yourself. So buy price would be $420k, $100k reno, and I'd estimate you could probably sell it for $650k = $130k profit minus hold costs, buy costs, sell costs.

Then you've got the high end of the market. Blue chip suburb in Paddington, similar property. But it is an extra $230k. So $650k buy in, spend $100k, and you could sell it for maybe $880k. Total profit $130k minus hold, buy, sell costs.

Have I got those figures about right?

Am I missing any advantages or disadvantages between buying in a blue chip suburb and renovating or buying in a lower/medium end suburb and renovating?

 

[TMNT]

Well, purely from a numbers perspective the roi is lower for the high end since the profit is the same

Also there is more risk in overcaptilising in the more expensive one

If you needed to make the same roi %, then the profit might be needed might be 130k for the cheap end vs 180k for the high end

I'd personally go the cheap end, as all things being equal, it's easier to sell, and move

Had a friend who bought a 900k house, was going to spend 250 reno, all for a 120k profit and in 12 months,

I thought he was silly but luckily the market boomed and he made 400k

 

[strongy1986]

I would go the paddington

Will people really pay 650k for Salisbury?

They could buy in a much better location for the same price

 

[Beanie Girl]

Hi Tim, I notice that the Salisbury one is a 2 bedder. Would you be adding a third bedroom in addition to renovating the kitchen, bathroom and adding a deck?

Is your target market say, overseas buyers, who want to buy a place for their child to live in while they study at Griffith University in Nathan campus?

This was a nice property in Salisbury that sold recently, it had a nice house, location, number and a big block of 809 m. From memory, it was advertised in the 450-500k mark
http://www.realestate.com.au/property-house-qld-salisbury-116752555

 

[vbplease]

I agree with Strongy - a $650k house in Salisbury would be a lot harder to sell than a $880k house in Paddington.

How many previous sales have there been in Salisbury for a 4bed 2 bath for $670k? Compare that to $mill+ in Paddington.

You have no risk of overcapitalising in Paddington vs Salisbury.

For your Paddington example I'd rather try for option B;

Option A - Buy $650k, reno $100k, sell $900k, profit $150k minus costs
Option B - Buy $650k, reno $300k, sell $1.3mill, profit $350k minus costs

Lots of research would be needed beforehand with agents so your reno is spot on..

 

[willair]

Then you've got the high end of the market. Blue chip suburb in Paddington, similar property. But it is an extra $230k. So $650k buy in, spend $100k, and you could sell it for maybe $880k. Total profit $130k minus hold, buy, sell costs.

There are a few properties in Dutton Park that I have looked at over the past few days ,,some corner blocks rezoned that one would rate inner-blue-chip but they may be a bit higher for the entry price then Paddington,have a look at the corner blocks 2 street entry that are soon to be auctioned,but a lot are not getting to auction sold prior..imho..

http://www.drakos.com.au/

http://www.drakos.com.au/Sales/L0310.html

 

[Tim86]

I would go the paddington

Will people really pay 650k for Salisbury?

They could buy in a much better location for the same price

You can buy in a better location but the quality of house is not going to be the same. Block size will be smaller too. 650 buys u a lot in salisbury. Plus salisbury is still a nice suburb. 10 mins drive to the cbd, schools, parks, quiet leafy area.

 

[Tim86]

Some good points so far. Ive got no idea what the best option would be, so its good to get ideas from others.

 

[strongy1986]

Tim

4 bed median in Salisbury is 500k
4 bed median in paddington is 1mill

I think your underestimating paddington and over estimating Salisbury sales figures on your Reno

 

[strongy1986]

You can buy in a better location but the quality of house is not going to be the same. Block size will be smaller too. 650 buys u a lot in salisbury. Plus salisbury is still a nice suburb. 10 mins drive to the cbd, schools, parks, quiet leafy area.

What's the block size of the Salisbury one?

 

[Tim86]

Tim

4 bed median in Salisbury is 500k
4 bed median in paddington is 1mill

I think your underestimating paddington and over estimating Salisbury sales figures on your Reno

Maybe, but its a lot to do with the quality of houses. Salisbury has a lot of run down houses that sell for cheaper and are being knocked down and developed or reno'd. So the dregs are bringing down the median price while the nice houses are easily 600k. Whereas paddington has already had development and places have been extended etc... Already. So the really nice places are bringing up the median and not really reflecting the more normal homes in the area. To get more than a mill in paddington for example i think u would need city views so that one i posted wouldnt cut it. And to get a mill the places have to be pretty amazing and massive.

Also that house in salisbury was on a small block. However you can still get good price 600+ blocks while paddington is all small blocks.