Is this a good offer?

C

cimbom

I have found a townhouse that I am interested in. It has 3 bedrooms and 2 bathrooms and is 122sqm.

I was just wondering if someone could let me know whether this is a good offer. I did some research and found a comparable townhouse (renovated) on the same street as the one I'm interested in that sold for $412,000 six months ago. This one is listed for $390,000 and requires the follow renovations:

- Fixing of bathroom and garage ceiling
- Entirely new kitchen fitout inc new applicances and tiling
- Enitrely new main bathroom and small bathroom fitout inc tiling
- Demolish wall between laundry and small bathroom as the latter is very narrow (width of standard shower) and unappelling
- New carpet throughout
- New paint throughout
- New window furnishings
- Remove ugly wardrobe doors and replace with mirrored sliding doors (3 bedrooms)
- Replace interior doors

I'm thinking $360,000. Does that seem reasonable?

Thanks :)
 
cimbom said:
I have found a townhouse that I am interested in. It has 3 bedrooms and 2 bathrooms and is 122sqm.

I was just wondering if someone could let me know whether this is a good offer. I did some research and found a comparable townhouse (renovated) on the same street as the one I'm interested in that sold for $412,000 six months ago. This one is listed for $390,000 and requires the follow renovations:

- Fixing of bathroom and garage ceiling
- Entirely new kitchen fitout inc new applicances and tiling
- Enitrely new main bathroom and small bathroom fitout inc tiling
- Demolish wall between laundry and small bathroom as the latter is very narrow (width of standard shower) and unappelling
- New carpet throughout
- New paint throughout
- New window furnishings
- Remove ugly wardrobe doors and replace with mirrored sliding doors (3 bedrooms)
- Replace interior doors

I'm thinking $360,000. Does that seem reasonable?

Thanks :)
Click to expand...
The only question is Who is going to do all the work,and once you cost up just the materials alone,then take the Labour Cost Factor,you would have to buy this place for under250k,just to keep the end numbers in the $$$$ profit range..imho..
 
I think the last 3 to 5 points are pretty basic in terms of renovations and many people would do those kinds of things even if the property was reasonably new. The first four would be the biggest tasks in terms of labour and cost I think. We are planning on going for a flatpack kitchen to keep costs low and will also select the bathroom fittings ourself for the same reason.
 
It's not so much what I want but whether buying at the price would allow me to make the changes listed and make a decent profit on top. It's our first IP and first renovation so I am not really sure how to cost everything.

The main reason I am considering it because the rent in that area is really good. I could get $500+ per week when it's renovated.
 
Must say, I have no idea as I have never bought a property requiring that much work upfront. Always preferred to claim off tax as a repair than impovement..... ;)

The Y-man
 
I dunno it seems like a lot of work....renovations always cost more than you think. You might as well buy a newer townhouse that doesn't need that work and rent it out for $500 pw
 
The main thing it has going for it is its location. Very central and within walking distance (500 metres) to government offices, shops and other amenities.

Secondly, most renovated townhouses cost more than we want to spend for our 1st IP. There is one that looks decent which is advertised for 400k atm (located slightly further out) but around 380k is our limit and I doubt they'd drop the price that much.
 
Will you rent it out as is, or renovate then rent out?


If you renovate and then rent, there are holding cost implications - in other words, may be better to save up more and buy a $400k place.


The Y-man
 
The Y-man said:
Will you rent it out as is, or renovate then rent out?


If you renovate and then rent, there are holding cost implications - in other words, may be better to save up more and buy a $400k place.


The Y-man
Click to expand...

Yes especially since renovations usually paid by cash...whereas buying a pricier place you can use pretty much all of the bank's money instead so less opportunity cost.
 
Are you *sure* you'll get $500 per week? Also check the strata fees, they can be significant and really reduce the returns.
 
We are planning to renovate, live in it for 1.5 years and then rent it out. We have purchased an OTP property so will move into that once it is built. Seems like the renovation costs are likely to be very high though.

The body corporate is just under $2000/year. I think $500/week is the minimum as the cheapest 3 bedroom townhouse in that suburb is $485/week and it is pretty average looking and quite a distance from amenities.
 
The trouble is that it probably doesnt stack up either as an IP (needs to much work, eating up capital for further investment) or a PPOR (not good enough to live in, eats up too much capital when its not going to be a PPOR for long).

I would look for something thats good enough for you to live in for 1.5 years then rent it out.
 
they havent seen it and you have so its really up to you and you seem to know the suburb
if you think its a good deal and can work out the numbers to know how much you have to buy it for to make a profit then go for it
especially since your going to live in it while you reno
dont forget renos always take longer than planned
 
I've done a rough calculation of the numbers and checked online as a guide. New fittings estimated at about $25,000 for what I want with a further $20,000 as labour costs (over estimate but better to have some leeway). I would want to make the same amount I spent back in profits meaning if the renovated value was say 430k, we would need to get it for $340k for it to be worthwhile. Not sure if I should even bother making that offer as I doubt they'd shave that much off the price. Back to the drawing board I think
 
cimbom said:
I think $500/week is the minimum as the cheapest 3 bedroom townhouse in that suburb is $485/week and it is pretty average looking and quite a distance from amenities.
Click to expand...

Cimbom - allhomes has a 3br place just down the street for $395pw.

There are also heaps of units being built in that area at the moment - several blocks going up near the labor club and another going down near the bus interchange.
 
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