Property Focal Point - Would really like some input on this one

[rj]

Hi guys,
At present I am looking at various properties within the inner regions of Brisbane that require "light" renovation work to purchase, tidy up then onsell. Ideally I would like to think that I could make a small yet reasonable profit. After having looked at quite a few houses it has become apparent that the price range that I am in (350+) is making things somewhat difficult to find something that fits this profile. Just to clarify, I have been looking at inner city areas, such as Kelvin Grove, Woolloongabba, Annerley, Red Hill etc.

In most cases, I am finding properties that either require far too much work, or are simply out of my price range. As this is my first initial experience at investing in property I would certainly feel more comfortable making a purchase of a property that doesnt involve large scale structural work, such as roofing, restumping or anything else that could prove costly.

In saying this, I would like to get some thoughts, feedback and opions regarding a certain property that I have taken a liking to. Its got really nice street appeal. The house is listed at Woolloongabba at $349,000 however i have spoken to the agent and get the impression that it could sell for 20K less. I have inspected the house and although its listed as a 2 bedroom, it is infact a 1.5 with a small office/study as the other room.

Many houses in this area are far higher than this house in terms of price. The location is good, its walking distance to the gabba, close to all ammenities etc, however with only the single bedroom, daggy bathroom, and nothing downstairs, I can understand why this property has been listed for some time.

I would like to get some feedback on this one and hopefully you may be able to answer some questions that I have.

1. Would it be worthwhile raising this place? Restumping and building in underneath? What would this cost? 20-30K? Would you recommend not taking this on as a "first" project?

2. Could this place potentially sell for somewhere in the vicinity of $5-600K with an additional bathroom and 2 or 3 bedrooms underneath?

3. Some of the stumps are on a bit of a lean, obviously restumping would fix this - but does that mean more work, would the walls be out of shape or square?

4. What are your thoughts on this place overall?

Heres the property in mention with the link below...

House at the Gabba

Thanks,
RJ

 

[rj]

Anyone at all?

 

[ok180]

if it's such a good price why dont you just buy, hold and get a valuation done? If your buying at a good price you have already made $$$

to answer your question though.. you'll be lucky to pour a slab under the house for 20k let alone build.

 

[Sailesh Channan]

Hi
In order to profit from such an exercise you will have to buy well as this is where most of your profits will be in this market.

Based on the types of areas you are looking at your potential purchasers will be very discerning therefore a quick renovation will not cut it. Most buyers are looking at quality properties and quality renovations. They are concerned if there is any fibro present. Remember, it is a buyers market and they can afford to be choosy.

You may want to look into tha affordable markets of Logan and Ipswich where you may find the market may be more liquid.

You may also want to consider your in and out costs before embarking on a renovation project as the market may not appreciate fast enough for you to make a reasonable return on equity.

 

[Brenda Irwin]

Hey RJ, if you really want a challenge try the one in Line St,number 103149841
It is supposed to have 3 bedrooms, and its on a bigger block, and has already been restumped. Bargain hard and a darned good scrub after a vacant possession settlement would make a big difference.

 

[rj]

Hey RJ, if you really want a challenge try the one in Line St,number 103149841
It is supposed to have 3 bedrooms, and its on a bigger block, and has already been restumped. Bargain hard and a darned good scrub after a vacant possession settlement would make a big difference.

Hi Brenda,
yes already looked at that one - FAR too much work, needed new guttering, walls, roof, everything really! It had vines growing from the inside out!

RJ

 

[lauries]

I am relatively familiar with the Woolloongabba area and might be able to offer a few thoughts.

The place on Flower Street is on the corner of Deshon Street. This street is a sub arterial that is used to access Old Cleveland Road. It is also a street dominated by light industry such as automotive workshops. The lower areas of the Gabba below Logan Road are also prone to flooding from Norman Creek in extreme conditions.

The upside is that the Gabba is beginning to gentrify more and Flower Street backs onto a big development block, approximately 5 acres to the best of my knowledge,that is most likely to become mixed commercial/residential in the near future.

I have not looked very closely at the particular house you are interested in, but I would suggest that you would be hard pressed to get it into the 500/600k mark without significant renovation. I would go so far as to say that might even be overcapitalising at that level in the short term due to it's position.

I hope this is of some use to you in your search.

 

[rj]

Ok who was it!!!???

Someone has put an offer in!

RJ

 

[MichaelW]

Ok who was it!!!???

Someone has put an offer in!

RJ

I guess it wasn't you then...

 

[Jacque]

Hi RJ

At that asking price, you'd have to get it for a significantly cheaper price compared to other recent sales in the same street:

No. 6 sold mid last yr for $340K and is a 2 bd partially renovated place
No. 30 sold Aug 05 for $310K- also 2 bd but unrenovated
No. 20 sold end 04 for $350K- another 2 bd timber highset

Considering that the current owners paid $268K back in 02 I would consider it likely that they'd at least be seeking to recoup their costs plus purchase price. Even buying at $290K, with your reno costs, stamps and holding costs, as well as selling and cg expenses, a resale of much more than $350K would be unlikely, if even possible on this property, just by taking a quick look at recent sales in the street. Position is also a problem, as has been pointed out, as most people prefer quieter locations

Though this property appears to be already sold, take heart and keep looking. There are far better opportunities out there! Remember that the profit is in the buying and you really need to consider all costings and break even points before embarking on buying. Doing your research and due diligence properly beforehand will ensure you smell a bargain as soon as it comes your way. Good luck in the hunt!!
By the way, I, along with Nick M (a top accountant who is a forum member here too) have written an article over at InvestEd, which you may find useful. Simply register to become a member and you can read all the articles at your leisure The one to look for is called DO'S AND DON'T'S OF RENOVATING. Hope you find it useful in some small way.
Love your enthusiasm, by the way!!

 

[willair]

In 1. Would it be worthwhile raising this place? Restumping and building in underneath? What would this cost? 20-30K? Would you recommend not taking this on as a "first" project?

JR,
imho,
You can look at this both ways if you had bought this property for 300k
and that's all it's worth , then jack up the house block and glass the
lower section in and rent both top and bottom out as seperate flats
then the answer would be yes.But the cost factor to complete this
sort of refit will be high i would not like even to put a price on the
total costs.
Woollongabba is a funny area and when everybody started talking
about the tunnel that may have worried people over the last few
years, but you are looking in the right areas something always
pops up.
good luck
willair