House relocation/removal

[Sunstone]

Dear guys,

Lady Lea posted a good question that I think has got lost.

QUOTE]does anyone do take away houses? ie pick up a house, relocate it and sell on for profits? [/QUOTE]

I think that this could be an interesting technique to learn about and would welcome any further feedback on this.

Is it really a viable option to pursue? What are the key factors in a success/failure of a relocation? Could it be profitable as part of a buy and hold mainstay strategy?

Cheers,

Sunstone.

 

[geoffw]

Hi Sunstone,

While not answering this question directly, I do have an ex relative (via an ex marriage) who started his property career (many years ago) by buying houses from a soon-to-be-flooded area, buying cheap land in a new area, and moving those houses. That was a nice little earner, and he is now very big time. His car is worth more than my PPOR.

So I guess it can be worth while doing.

 

[Michael Croft]

Go forth and multiply!

Hi,

It can be VERY profitable.

The system I use is as follows:

- find a sympathetic council; this now happens mainly in the regional centres as the cities planners are less than cooperative (Brisbane and Hobart may be the exceptions)

- find a house on a good sized/shaped block showing average or better than returns for the area; buy it and rent it out

- get council approval for a second dwelling to be located at the rear or side (large corner blocks are ideal if the original house is located at the front)

- find give away houses (fibros and weather boards are the go) and house relocator (house relocators often have houses available or 'on the books')

- pay to have house relocated to the block and connected to services

- do a reno (it will be required on the relocated one and possibly the original)

- rent out second dwelling

- returns should now be well over 10% - a cash postive deal no matter how it's looked it (the returns in the smaller regionals can be much higher)

- get council approval for strata title of the two dwellings

- get package revalued (if done right,and assuming 100% finance, I should have created at least 25% equity in the properties)

- refinance the now cashflow positive properties (as I now have two) access the equity and do it again.

In short this is how I create equity and a cashflow positive deal out of an average situation and I am doing it right now in this market.

Oh how I love this game! I consider the above my 'Go forth and multiply' strategy

Warm regards, Michael Croft

 

[Jas]

Re: Go forth and multiply!

Originally posted by Michael Croft

- find a sympathetic council; this now happens mainly in the regional centres as the cities planners are less than cooperative (Brisbane and Hobart may be the exceptions)

- find a house on a good sized/shaped block showing average or better than returns for the area; buy it and rent it out

- get council approval for a second dwelling to be located at the rear or side (large corner blocks are ideal if the original house is located at the front)


Do you fence off the area from the first tennants, or otherwise let them know what's going on.
I'm envisioning a fmaily waking up in the morning to see a house moving in, in 'their' backyard.


- do a reno (it will be required on the relocated one and possibly the original)


huh? Haven't you just rented out the first place? Are you renovtating the first with tenants in place?

Last question, how long has this whole process taken you, from start to finish?

Jas

 

[beech]

yes Michael like Jas a couple of questions.
How long might this take on average?
also the costs involved?
Ibelieve the moving costs of a house can be very exp?



thanx Darren

 

[Michael Croft]

Hi,

Full disclosure always to my tenants and the yards are fenced off separately (usually required by council anyway as part of the application). The tenants become willing participants in my ventures and are most co-operative.

I may do a reno on the first house if it needs it before it is let out, sometimes this is just paint.

Quickest one from purchase (settlement) to second dwelling occupied was 3 months. Longest was 15 months (council started out cooperatively and then the town planner changed and made life hell). Average about 4.5 months from settlement.

Expensive is a value judgement! If the numbers work the cost is simply a number. Cheapest move, reconnection and reno was $22,000, most expensive $54,000. Again it's the numbers that are important as the more 'expensive' one provides a better return and is more profitable than the 'cheapest'.

regards, Michael Croft

 

[beech]

Michael would you still invest in regional areas with relocations where there was minimal growth but good returns or are you still looking for good growth as well.
I know you say if the numbers work the cost is simply a number but i dont think you would go to all this trouble just to do this to help out with serviceability issues.



thanx again Darren

 

[Michael Croft]

Hi,

I always attempt to have all the info on the towns into which I put my monies/efforts including historic cap growth rates. It will surpise you to know that these growth rates are not as terrible as the marketeers would have you believe.

Check out the likes of Ballarat, Orange/Dubbo, Wagga, Albury/Wodonga and the like.

Question; would you settle for a 4% return and a 6% cap growth rate or a 10% return and a 4.5% cap growth rate?

regards, Michael Croft

 

[beech]

thanks Michael have enjoyed all the info you have posted on both threads today,much appreciated and ive learnt a bit as well which is why we are here.



thanx Darren

 

[Sunstone]

Dear Michael,

Thanks for the detailed reply.

Certainly an area that now warrants further investigation from myself.

Cheapest move, reconnection and reno was $22,000, most expensive $54,000. Again it's the numbers that are important as the more 'expensive' one provides a better return and is more profitable than the 'cheapest'

Michael does this include the purchase price of the "giveaway" house? Otherwise what would you consider to be a "giveaway" price?

Again thanks for your valued input.

Cheers,

Sunstone.

 

[Michael Croft]

Hi Sunstone,

The house are often given away for $0 but you may have to do a site clean. This can include removal and disposal of concrete footings, pads and paths; so budget for this (last one I did was $1,500 and this was the dearest). If the house has a new kitchen and appliances the sellers may want a contribution - once I paid $3k for a house but it was fully refurbished including new (1 year old) kitchen, ducted gas heating (also 1 year old) and a new bathroom!

The house givers get another win as the demolition costs are around the $5-6k mark for a cottage plus the site clean. So although they 'give' you the house it saves them thousands of dollars.

The transport costs are hugely variable; distance, access, number of power disconnects and reconnects and so on.

Service connections are also very variable; water, sewer, stormwater, power, gas are all local trades and supplier dependent.

Stumps/piers/footings are at local trade rates but are often co-ordinated by the removalists.

Some house movers will do it all for you (except the reno) and it has been worth it at times.

regards, Michael Croft

 

[brains]

- get council approval for strata title of the two dwellings.


Wouldnt it be better to torrens title the two houses/blocks rather than strata them?

ie: no shared services, two completely separate titles..etc..

I did something similar years ago (circa 1996) and I torrens titled them for a higher end sale price.


Also, do local councils still consider dual occupancy and sub dividing a block two different things? I remember it was easy to get the dual occ. approval but a real drama to do the sub division of the original block.

 

[Michael Croft]

Hi Brains,

Perhaps I should have used the words unit title not strata title.

Some councils still allow subdivision ie create 2 seperately titled blocks form one, but these are few and far between and it is then block specific.

Unit title involves the creation of a body corp and unit entitlement etc. The unit (or strata) title sits over the top of the original title be it Torrens or Old System. However if you went to unit title an old sysytem title council (via land titles office) would grant a Torrens title and extinguish the old.

Strata title is basically a vertical unit title, as in stratafication or layers of units such as high rise.

For any more detailed explaination have a look at some of the REI sites.

regards, Michael Croft

 

[Lady Lea]

WOW

Thankyou so much sunstone for requoting my question.

It is appreciated very much.

Thankyou for all your responses too

So what are my chances of moving a Scottish Castle to NZ? LOL

I think it will take me a few weeks to process all of the info here!

Lady Lea

 

[brains]

Hi Michael

Thanks for the detailed explanation.I asked why you didnt divide the two lots as a torrens title, as in 2 totally separate blocks with 2 totally separate titles as in 2 housing blocks in a street) rather than strata (unit) titling them and do without body corp...etc...

.A friend of mine took his local coucil to the land & environment court to allow him to subdivide & torrens title a large suburban block and won the case against the council in 2 hours. In my case they allowed the subdivison & torrens title after a lengthy debate (but no court case).

 

[snowkiwi]

Sunstone and Lady Lea, thanks for posting this question.

Michael, thanks for the fantastic answer. When I arrived in Australia 18 months ago, I was amazed at the number of houses given away for free every week and figured there had to be a good way to profit from it. Unfortunately at the time I was pretty financially illiterate and even more confidence derelict, so I didn't really think too much on it.

Now, thanks to this thread, the whole concept has been stirred up again. This time there WILL be action.

thanks again,

snowkiwi.

 

[bweed]

Hi Michael,

What about to relocating to vacant block? Is there typically any value adding to be gained in doing this?

 

[Sunstone]

Dear Bweed,

Think Michael at the moment may be consumed with some cleanup after the Canberra fires.

Hope that he is okay. Anyone got any updates that MC is alright?


In partial answer to your question I would not see any reason why you could not relocate to a vacant block.

The issues are what is your strategy?
Is it to buy a giveaway house, relocate to reasonable block, reno and then sell?

Is it to purchase a big block of land with old house on it Subdivide, do a duplex townhouse development out the back of the block. Then relocate the old house to another block you have purchased and sell? Then do another townhouse development on the old house block?

Is it to relocate a giveaway house onto an existing doubleblock that you have to double the gross yield?

Relocated houses have opportunities the issue is that the ongoing maintenance costs will be higher. Something to consider, I'm still working to understand the mentality of how people can "fall in love" with old Queenslander's.


I have done some research into the area and a key thing it appears on costings is NOT to buy from a house relocator that is already in a holding yard.

When you obtain the relocatable house you should:

a) Get the house at a giveway price from someone that doesn't understand the value of the house or sees you as a solution by saving their demolition costs.

or

b) Purchase the house from the house relocator BEFORE it moves. If you have purchased the house after it has been relocated to their yard then there is suddenly two lots of transportation and therefore a large increase in the fixed costs in the equation. You are charged more and you will not make the profit you could on the transaction.

Cheers. I'm looking forward to Michael's return as well.

Sunstone.