Renovating (Again)

[WebBoard]

From: Miakat .


Hi all,

I know some of you helped out when Adam had a question on renovating/redecorating, so i thought I'd try my luck.

I looked through an older house today which is converted to two flats. Front one will rent for $90 (1 bedroom). It could use a paint and the carpet and curtains are pretty ugly (orange and green I think). Kitchen and bathroom are decent but once again, pretty ugly.

Would it be worth some minor cosmetics or should I just rent it as is? I could also put some furniture in it and rent it fully furnished. It is a good layout and a good size.

Hoping to get some feedback. Thanks all

Miakat

 

[WebBoard]

Reply: 1
From: Robert Longmore


rent it as is, and give the new tenants permission to paint the place if they dont like the colours either.

 

[Jude H]

Reply: 1.1
From: Jude H


or, do some cosmetic surgery, have it revalued and use the new found equity to buy more property.

Michael am I learning or leading someone up the garden path?

Jude

 

[WebBoard]

Reply: 1.1.1
From: Miakat .


Hi Michael,

Here are the answers to your questions.

Asking price is $132000. Similar property in worse condition recently sold for $125000.

Second unit is currently getting $90 per week because the landlord is 80 odd years old and hasn't raised the rents. Tenants have been in there for 14 years. Market rent on second unit would be around $120-130 as is. Don't think I would bother doing that one up at this stage unless the tenants left.

After renovation for the first one? I could probably ask $110. I've been looking at comparable rents in the paper but it is difficult to determine the quality of the places that are asking higher rents. Perhaps I could pose as a prospective tenant and have a look inside some but unfortunately most of the agents know me.

I don't want to live in the other half.

Yes the house is close to CBD. 5 minutes drive. The suburb is a good growth suburb and achieved 15% growth last year.

The outside of the house could use some cosmetics too like paint and picket fence perhaps but I don't want to spend money if it is not worth it.

look forward to your reply.

Miakat

 

[GoAnna!]

Reply: 1.1.1.1
From: GoAnna !


Hi Miakat

I think front fence etc is important as street appeal will effect both banks valuations as well as rent tenants are prepared to pay.

Could follow Michele B's idea and let the tenants tell you how much they are prepared to pay. I guess this would work best if there is healthy competition for rental
places in the area.

Or you could ask a friend to pretend to be a tenant or you could just ring up on the phone.

Are you going to gradually put up the rent on the back unit? Otherwise they will stay on forever on that low rent.

GoAnna !
(aka Anna before she got real)

 

[Les]

Reply: 1.1.1.1.1
From: Les .



Mike,

LOVE the Disclaimer ;^)

Regards

Les

 

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Reply: 1.1.1.1.2
From: Miakat .


Hi Guys,

Thanks for the feedback. I took Hubby to have a second look at the place. We had some massive storms last night so thought it would be a good opportunity to see if the roof leaked. Guess, what, it does. So, now I need to replace the roof. We also noticed that the ceiling is quite mouldy in the second flat due to water damage I assume. I also think the second flat has asbestos behind the walls. What do you guys reckon? Still worth looking into or should I walk away from this one?

Thanks in advance.

Miakat

 

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Reply: 1.1.1.1.2.1
From: Keith J


There's to many unknowns. Leaking roof, probable asbestos problem, complete paint job in & out, possibly replace ceilings, are the roof trusses rotten?, what else is there that you haven't noticed?. Get a building inspector in - he will tell you how much it will cost to fix it all.

If the figures still add up, renovate, up the rent, and generate some equity, and do it all again.

 

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Reply: 1.1.1.1.2.2
From: Terry Avery


Don't walk... RUN.

If there is asbestos there you are talking big bucks. If exposed you will
have to remove it, a specialist job unless you want some nasty lung disease.
I watched a workman in full suit, respirator and mask remove asbestos
sheeting (2 small sheets). It was wrapped in plastic, sealed in drums and
taken away to specialist disposal. You can't dump it in the local tip, huge
fines if not gaol. Have I mentioned legal liability to your tenants if they
get any illness that could be tied to asbestos?

Leaking roof? Could be more big bucks. You really want to tie your money up
while extensive renovations are being done with little guarantee of
increased rent to cover the reno when the money could be earning you profit
in another IP? Weigh up all the costs very carefully, perhaps consult
Archicentre for approximate costs.

 

[WebBoard]

Reply: 1.1.1.1.2.2.1
From: Miakat .


We didn't buy it. For the amount of problems it had, we wanted a huge discount which the vendor wasn't prepared to give, so we walked.

The search continues.