From: Michael Croft
Hi,
Someone asked about the auction I was going to bid at on the week end but I can't find the original post.
It is a block of 4 unapproved units, well 2 are approved the other two are not. Address is 84 Dryandra Street, O'Connor.
My pre auction estimate was $430 - $465k and $465k was my limit. It sold for $490k. A friend was also bidding and told me he would go to $480k but that was before we found the termites! He pulled out at $450k.
Bidding was reasonably quick to $470k and then it bogged down, the agent took a bid at $475k from the vendor. It went "on the market" at $485k.
So the property has termite damage say $20k? (could be $50k) and all units needed major renos say $60-80k, add 20k stamp duty plus 5k for "other" and you have spent $605k. This would return about $750 per week or 6.44% gross. Not bad for a high growth area with views of the city, but not brilliant either.
The biggest unresolved issue would be the lack of approval of the two units which under current planning law is just not possible. Personally I would have overlooked that if the rental yield was higher.
The other thing was that the lack of a cap gain hit from the reno. It would probably only be worth $620-650k after the reno - not worth the effort really.
So on to the next one.
Michael Croft
Hi,
Someone asked about the auction I was going to bid at on the week end but I can't find the original post.
It is a block of 4 unapproved units, well 2 are approved the other two are not. Address is 84 Dryandra Street, O'Connor.
My pre auction estimate was $430 - $465k and $465k was my limit. It sold for $490k. A friend was also bidding and told me he would go to $480k but that was before we found the termites! He pulled out at $450k.
Bidding was reasonably quick to $470k and then it bogged down, the agent took a bid at $475k from the vendor. It went "on the market" at $485k.
So the property has termite damage say $20k? (could be $50k) and all units needed major renos say $60-80k, add 20k stamp duty plus 5k for "other" and you have spent $605k. This would return about $750 per week or 6.44% gross. Not bad for a high growth area with views of the city, but not brilliant either.
The biggest unresolved issue would be the lack of approval of the two units which under current planning law is just not possible. Personally I would have overlooked that if the rental yield was higher.
The other thing was that the lack of a cap gain hit from the reno. It would probably only be worth $620-650k after the reno - not worth the effort really.
So on to the next one.
Michael Croft
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