Debbie
Reply: 1.1.1
From: Mike .
Re: HELP - ATTENTION ANDREW G & LES
From: Debbie
Date: 4/10/00
Time: 12:28:37 PM
Hi Andrew, thanks so much for responding. I wasn't able to get back again on Friday or over the weekend - better late than never.
The property is a block of 6 x 1bed + sunroom/study units on Torrens title. It is owned by 7 individuals over 4 certificates. They are all related and I think are the original owners (some by inheritance). They are very spread out geographically and I am led to believe that it's just "too hard" for them to strata themselves. But I don't know why they have decided to sell especially with the income it is producing. They have just done some repairs (new gutters, lintels to windows etc) but otherwise, by all reports, it's a very sound building.
So, the appeal for me is of course to strata them. The agents are saying it will go for between 1mil & 1.5mil. I know the area pretty well, I work one block away and have been watching the market here for the past 12 months, and at 1.2mil it's FANTASTIC value. At 1.5mil, you would have to cut costs and be sure of getting at least 2mil at the end. The building is approx 50 years old and needs some standard fire rating work done and some cosmetic work but all could be done for about 350k AT THE ABSOLUTE MAXIMUM, possibly $250k. If I add about 50k for stamp duty and legals etc, that still leaves a minimum $200k profit ie, minimum 50% return - in six months.
The rental income is currently $83,700 per annum which would more than cover the interest repayments on 1mil @ 8%. I could upgrade the internals of one unit at a time, covering the rent myself (included in the costings above) then empty the building and renovate the common areas and the exterior - a quicker job and no chance of being sued for injuries. Or, I could empty the building from the beginning and do all the work at once, probably a slightly cheaper way to go and they could be sold a lot sooner.
I expect to see at least 5 other serious bidders at the auction but have decided on a limit 1.2500mil for myself. The best thing that could happen is that the other bidders don't turn up, don't bid or maybe it will be passed in - but I don't really think any of those things will happen. I have been at every opening over the past weeks and there is a lot of serious interest. The department of housing is playing too.
I have a partner doing this with me now (as of Thursday), between us we have enough cash for the deposit and expenses, and enough income to satisfy almost any bank, but of course I want the best deal.
Well, what do you think? Does it sound like something you would look at?
keen to hear your thoughts, Debbie