Opportunity to buy house in Tregear/What an for $375,000 with granny flat. Do i?

K

kimba88

Hi guys,
I've been presented with the opportunity to buy a renovated 4 bedroom house with a 1 bedroom granny flat in Tregear /Whalan for $375,000. A buyers agent has told me about it. The buyers agent have a fee of $13,000 and stamp duty is about $12,000. So approx $400,000 including everything. The house is rented to long term (8yrs) tenants apparently at $320. The granny flat has been rented for $205.

$525pw rent altogether.

Is this a good opportunity or does the stigma of the area really let it down? Onethehouse.com.au have it listed at value of below $300,000 (moderate guess). Would this be correct? Or has Sydney really died in growth and I should be looking interstate or at development sites?

I currently own one house which is a duplex site in Cambridge Park. I'm hoping to get $50k-$60k equity to use as a 5% or more deposit on another house.


Any help would be great! Thanks :)
 
BA fee seems high. $400k for is 6.8% which is OK but not blowing me away. And is the GF council approved?
 
Peak in previous cycle for Mt Druit for a standard house was 240 . Cycle before that around 120 , so that gives a target of around 480 in the current cycle. Yes it's got a granny flat

So some room up , but not a lot and then a long period sideways.

What are you wanting it for ? It's not going to give you much in the way of cash flow and it's in Mt Druitt ..... . Maybe 25 - 30 % growth in the rest of the cycle , but if I was a betting person . I'd expect you to be able to pick that property up for a similar price in the next trough . Historically Mt Druitt is some where that comes down in between peaks.

But then I was talking Mt druitt down when Skater and others were buying and they've done well , but they're not buying there now ,they stopped a while ago.

On a personal basis if any of my kids asked me if they thought it was a good buy I'd know what I'd be saying ....

Cliff
 
see_change said:
Peak in previous cycle for Mt Druit for a standard house was 240 . Cycle before that around 120 , so that gives a target of around 480 in the current cycle. Yes it's got a granny flat

So some room up , but not a lot and then a long period sideways.

What are you wanting it for ? It's not going to give you much in the way of cash flow and it's in Mt Druitt ..... . Maybe 25 - 30 % growth in the rest of the cycle , but if I was a betting person . I'd expect you to be able to pick that property up for a similar price in the next trough . Historically Mt Druitt is some where that comes down in between peaks.

But then I was talking Mt druitt down when Skater and others were buying and they've done well , but they're not buying there now ,they stopped a while ago.

On a personal basis if any of my kids asked me if they thought it was a good buy I'd know what I'd be saying ....

Cliff
Click to expand...

I think I was wanting it as a way of cash flow. A property paying for itself and more is better than one that isn't, right? I was hoping the cash flow would allow for quicker equity to be released and possibly help me develop my property in Cambridge Park into a duplex.. Or buy another potential site. My ultimate goal is to obviously have financial freedom at some stage
 
Why would you pay someone 13k to buy a property in this market, when you can just go yourself, in most cases offer more than asking price and secure it.

13k does seem very high. I can negotiate something like that in half :D but I am not a BA.
 
kimba88 said:
I think I was wanting it as a way of cash flow. A property paying for itself and more is better than one that isn't, right? I was hoping the cash flow would allow for quicker equity to be released and possibly help me develop my property in Cambridge Park into a duplex.. Or buy another potential site. My ultimate goal is to obviously have financial freedom at some stage
Click to expand...

How is 6.8% cash flow positive, really? Is it cash flow positive for you as you are putting in a big cash deposit? if it is all equity (50-60K as you noted earlier), then I think the cash flow (and 6.8% return) does not appear to be any flashy for a dual occupancy.

We have a few in Mt Druitt - mainly strata properties, with the latest one purchase mid last year - it returned 6.7% at the time of acqusition.

Don't know how long the growth will go on for...but I would recommend you reconsider this acquisition.

$13K BA fee is ridiculous. As you are in Sydney, why don't you go negotiate yourself?
 
13k for a BA.....do yourself a favour save the 13k and book a holiday for you and your family otherwise the BA will be doing that with your money. BA's make casinos look like angels.
 
Apparently this particular buyers agent calls it a 'training package' so you can claim the fees on tax.. Rather than it going to 'waste'. Not sure if that makes a difference.

I was hoping to purchase the property with just equity at this stage. Don't quite have enough cash there. I'd rather my cash stay in the offset account
 
Kimba, in the end its your call, its your money. If you are happy with the deal, go or it.

You done your research? Can you find a cheaper house with the same inclusions anywhere else? Anything else in the area give you a better return? Do a building and pest inspection though - highly recommend this.

Everything OK? Scared you are paying too much? What 50K too much? I don't think so - but that's my opinion. Anyway, in this day and age 50K isn't that much money.

Property prices seem to always go up in the end so that's reassuring.

As for the area. I got property there and its quadrupled in value. My rental return is probally over 20%. I'm not really sure, I just know I've made heaps of money out of the Druitt.

When I first bought there people knocked me - Oh no I'm rambling on again - but gawd I love the Druitt, if I could I'd probally.... No thats sick, maybe...., at most. You can tell I've spent too much time in the Druitt. Better go now before I get in trouble.
 
Last edited:
kimba88 said:
Apparently this particular buyers agent calls it a 'training package' so you can claim the fees on tax.. Rather than it going to 'waste'. Not sure if that makes a difference.

I was hoping to purchase the property with just equity at this stage. Don't quite have enough cash there. I'd rather my cash stay in the offset account
Click to expand...

From our exchange of messages, I would say stay AWAY from this training BA
 
monalisa said:
I second this.. i was hoping to post the same!
Click to expand...

I will offer my special price of $3950.00 to find out if the granny flat is approved or not. This price is GST inclusive, but cheaper if paid cash. It will take at least 1 week of my time and hard work to engage council development and planners for this information..

sorry couldn't resist the sarcasm temptation here :D
 
7% yield is standard, for dual-occ I would be looking at least 8-9% gross yield upon purchase. So it doesn't seem like a particularly good deal by this benchmark - the vendor seems to be asking a bit much, low-mid $300k seems more reasonable. That BA fee is also really high...! How much assistance do you get for that $13k??
 
tess85 said:
7% yield is standard, for dual-occ I would be looking at least 8-9% gross yield upon purchase. So it doesn't seem like a particularly good deal by this benchmark - the vendor seems to be asking a bit much, low-mid $300k seems more reasonable. That BA fee is also really high...! How much assistance do you get for that $13k??
Click to expand...

I think its just the deal itself.. and probably whatever services might be needed to help get them money as a potential contact e.g. broker, conveyancer, etc as an extra.
 
What is the house worth if you have to rip down the granny flat??

You need to find out if it's approved first. If not it's not worth more than any other standard house.

Juat because they call it 15a doesn't mean a thing. I can call my garage 15a if I want.
 
At the end of the day it's up to you. If you think this is what you want, if it fits in with your risk profile & goals etc. Do you expect to see any CG from this? One "mistake" I've probably made in my investing journey is buying only higher yielding places with lower CG prospects. Meanwhile, my PPOR (in a metro area) far outperformed all my IPs due to CG. If you have the cashflow to support buying in a metro area I would consider that in addition to this kind of property as it might actually get you to your goals quicker (being able to develop your other site)...
 
You must log in or register to reply here.

Similar threads

Y
Unapproved granny flat in brisbane
Replies
2
Views
1K
ricflair
R
T
Do houses with granny flats = more rent?
Replies
3
Views
921
skater
skater
Speedracer
Granny flat option for my IP in Birmingham Gardens - Seeking your Feedback
Replies
14
Views
3K
MKP
M
angel0death
Help with construction loan for a granny flat
Replies
13
Views
3K
angel0death
angel0death
K
New house and land in Leppington or use buyers agent?
Replies
19
Views
7K
ej89
ej89
Back
Top