Hi all
I inspected a property today that I have been considering for a while as an investment property. I am keen to make an offer and would appreciate some advise/comments.
The property
Is zoned town centre commercial. It is on a corner block of 1050 square metres. It has 2 lots on the one title. The current house is at what is basically the front of the block so is ideally situated for another house to be put at the back of it with access off what is currently the side street. Town centre commercial in our area means that if it has a house on it the house can stay but it can not be replaced. It can be substantially altered but some part of the original must remain.
Any ideas on what 2 lots on one title means. (I am going to the council tomorrow for a discussion). Does this constitute the block being subdivided or is that still another process? There is only one power feed to the original house although there is power to a shed at the back of the block.
The property is owned by a good friend of mine and is alongside a property owned by my business partner so we are well aware of the house and its history etc.
The house
The house is an older house which is structurally sound from our inspection. It is however very small and disjointed. Other than a coat of paint inside it is pretty much original. Another bedroom was added to it about 10 years ago. The roof iron was also replaced about this time. It is currently rented and the real estate agent is of the view that it is still adequate for a rental as is. My view is it needs serious internal work to open it up, the kitchen is less than 3mt by 3mt and has to fit in the kitchen table as well. By my standards (I live in a 110 year old farm house which I have spent a small fortune on renovating) the wet areas are barely liveable, the laundry and shower have a plain concrete flour. Internal walls are masonite. Floor is carpeted but is floor boards underneath. From stamping all over them they appear sound.
The purchase
The intention of this property is to purchase it with my current business partner (we have been in business 10 years and worked together for 11 years prior to that, our wifes are also cousins). I am aware of some of the views on this and the potential pitfalls etc. Our reasoning is sound from the point of view that our intention for the property is to purchase a removal house and put it at the back of the block and when this is in a condition to rent to then do renovations on the original house.
My business partner is a very good handyman, probably better than me and I am no slouch. We both have had a lot of experience at renovating our own properties. Between us we also have just about every bit of equipment we would need to do all the renovation work on the entire property. As we own our own business we are fortunate that if need be we can take time off to do renovation work during the week as well as work weekends. The only potential down fall is going to be financing but we will have to see where that goes. My business partner also has access to a qualified builder for assistance / advice. This builder works for the top builder in town and is probably pushing for that title in his own right.
Offer
The vendor wants $302,000. A house further down the street of cement brick construction but in fairly original condition sold 18 months ago for $380,000.00, better house but less oportunity for subdivision. A commercial shed (probably 50 -60 years old and not overly large) on 2 blocks with a transportable house behind the shed sold this year for $480,000.00. This one is across the street and down about 3 houses.
The vendor has told us previosly in discussion he would accept $280,000.00.
The vendor is not aware that we have inspected the house and I want the realestate agent to negotiate a figure that he is happy with before I put a name to any paper due to my friendship with him. Is this acceptable?
Given the amount of work that could be done to the house (but not necessarily needed immediately) I would like to offer around $250,000.00. Is this rude, I dont want to offend the vendor given our friendship. At the end of the day we would be happy to pay $280,000.00 providing we can get our development plan approved by council. Any thoughts on this, do I start at $250k and negotiate or just offer $280k with an accept it or I will walk.
Contract conditions
Is there an acceptable limit to conditions, my thoughts are:
subject to finance
subject to pest and building inspection
subject to council development approval (I do not want them to be aware of our plans as they may hold out for more money)
or subject to satisfactory clarification of definition of 2 lots on one title. (I say the second part because the vendor was not aware that there were 2 lots on the one title until the real estate agent did a title search. He is also not aware of what the 2 titles means). This may not raise as much suspision.
Any thing else we should add?
Sorry about the long winded post but trying to give as much information as possible.
thanks
I inspected a property today that I have been considering for a while as an investment property. I am keen to make an offer and would appreciate some advise/comments.
The property
Is zoned town centre commercial. It is on a corner block of 1050 square metres. It has 2 lots on the one title. The current house is at what is basically the front of the block so is ideally situated for another house to be put at the back of it with access off what is currently the side street. Town centre commercial in our area means that if it has a house on it the house can stay but it can not be replaced. It can be substantially altered but some part of the original must remain.
Any ideas on what 2 lots on one title means. (I am going to the council tomorrow for a discussion). Does this constitute the block being subdivided or is that still another process? There is only one power feed to the original house although there is power to a shed at the back of the block.
The property is owned by a good friend of mine and is alongside a property owned by my business partner so we are well aware of the house and its history etc.
The house
The house is an older house which is structurally sound from our inspection. It is however very small and disjointed. Other than a coat of paint inside it is pretty much original. Another bedroom was added to it about 10 years ago. The roof iron was also replaced about this time. It is currently rented and the real estate agent is of the view that it is still adequate for a rental as is. My view is it needs serious internal work to open it up, the kitchen is less than 3mt by 3mt and has to fit in the kitchen table as well. By my standards (I live in a 110 year old farm house which I have spent a small fortune on renovating) the wet areas are barely liveable, the laundry and shower have a plain concrete flour. Internal walls are masonite. Floor is carpeted but is floor boards underneath. From stamping all over them they appear sound.
The purchase
The intention of this property is to purchase it with my current business partner (we have been in business 10 years and worked together for 11 years prior to that, our wifes are also cousins). I am aware of some of the views on this and the potential pitfalls etc. Our reasoning is sound from the point of view that our intention for the property is to purchase a removal house and put it at the back of the block and when this is in a condition to rent to then do renovations on the original house.
My business partner is a very good handyman, probably better than me and I am no slouch. We both have had a lot of experience at renovating our own properties. Between us we also have just about every bit of equipment we would need to do all the renovation work on the entire property. As we own our own business we are fortunate that if need be we can take time off to do renovation work during the week as well as work weekends. The only potential down fall is going to be financing but we will have to see where that goes. My business partner also has access to a qualified builder for assistance / advice. This builder works for the top builder in town and is probably pushing for that title in his own right.
Offer
The vendor wants $302,000. A house further down the street of cement brick construction but in fairly original condition sold 18 months ago for $380,000.00, better house but less oportunity for subdivision. A commercial shed (probably 50 -60 years old and not overly large) on 2 blocks with a transportable house behind the shed sold this year for $480,000.00. This one is across the street and down about 3 houses.
The vendor has told us previosly in discussion he would accept $280,000.00.
The vendor is not aware that we have inspected the house and I want the realestate agent to negotiate a figure that he is happy with before I put a name to any paper due to my friendship with him. Is this acceptable?
Given the amount of work that could be done to the house (but not necessarily needed immediately) I would like to offer around $250,000.00. Is this rude, I dont want to offend the vendor given our friendship. At the end of the day we would be happy to pay $280,000.00 providing we can get our development plan approved by council. Any thoughts on this, do I start at $250k and negotiate or just offer $280k with an accept it or I will walk.
Contract conditions
Is there an acceptable limit to conditions, my thoughts are:
subject to finance
subject to pest and building inspection
subject to council development approval (I do not want them to be aware of our plans as they may hold out for more money)
or subject to satisfactory clarification of definition of 2 lots on one title. (I say the second part because the vendor was not aware that there were 2 lots on the one title until the real estate agent did a title search. He is also not aware of what the 2 titles means). This may not raise as much suspision.
Any thing else we should add?
Sorry about the long winded post but trying to give as much information as possible.
thanks
