Sydney rennovator bargain houses

OK So I am interested in people's thoughts on Sydney suburbs that are currently under priced or have some doer upper bargains going .

My purpose:

I have some investing partners with itchy feet so we are looking at some buy-renno-sell or buy-renno-refinance deals in the next few months.

Me: I have a number of shorter and longer term deals under my belt, 5 myself and another 8 where I have had differing levels of input for family and friends. Still consider myself a newbie and small fry but keen to improve. My cash flow is tight so no deals on my own for a while, 4 young kids, newly finished 5br home build for us and carrying plenty of debt means we are stinky to the banks! Several who know me and have seen the results want to JV, with their capital and my time to put the deal together in a sort of 50/50 split. I am looking primarily at Sydney as it’s a big market and if the deal is done right I am hoping to either find a buyer quickly or obtain a solid refinance to access some equity if the partners decide to rent out. I could also look at other areas (Gladstone is one area I am already in and 2012 should be ok year) but want safe, big, diversified markets to rinse and repeat deals as opposed to a small booming town where I can do 1 or 2 then get priced out. For now immediate CG is the priority above yield but obviously both are important factors.

I have a bit of a cosmetic reno formula going that I have used a few times, looking to perfect this.

Criteria House:

*Free standing home on own block, land size not vital but imo generally more is better.
*Brick and tile preferably or clad if has metal roof if a complete repaint would bring it into the new millennium (not fibro unless the deal is amazing) brick and color bond roof ok too. (just do
*3-5 bedrooms, the more space the better as long as its cheap.
*Single story probably but not essential (no scaffolding if bagging/rendering the bricks)
*Garaging or room to build carport, improve driveways etc.
*I like properties that are jungles, cutting back is the easiest way to improve street appeal
*Small amount of fire or termite damage ok but no complete rebuilds
*I replace kitchens, floor coverings, paint, bathroom tiles/shower screens/vanities light fittings etc
*I love landscaping as much as possible to improve outdoor useability and appeal

Criteria Deal:

I will have cash for purchase to trying to obtain best possible price and terms if available like pre settlement access for start of rennos etc, a fantastic purchase price is obviously the main driver for a deal like this so no subject to finance clause.

In terms of building and pest inspections I don't buy without them but if the deal looked good enough and market was quiet I would do them prior to offer to have a cash unconditional offer making a low price offer as attractive as possible to someone who is motivated to sell.

JV - as I said 50/50 split with a money partner, I do all the work for the deal and the renno (project managing with most of work done by others but I have been known to get dirty myself when needed to keep renno on time/budget. Structure for the JV is still hazy looking at some options - happy to hear where I can find good eg JV agreements as currently we will be paying a solicitor to draw one up.

PROFIT (the main issue) - partner and I want to try and safely make 10% each, so net 20% profit from substantial but primarily cosmetic (trying to avoid huge extensions or big structural work) renovation.

MARKET (2nd to main issue) - can go higher later but for this deal probably aiming at not much more than 320k for a purchase price and based on my previous deals and everything I read approx 10% renno cost maximum. I am used to doing a house over for around 20k so don't imagine cost blowouts to be a problem. At this price I know I am probably gonna being in middle to outer western Sydney. (with the emphasis on outer)

Sample numbers

300k purchase (hoping to buy 5-10% below comparables if motivated vendor and cash offer are worth something. So maybe its worth 320k

Allowing 5% purchase costs, so cost base is now 315k

up to 30k renno, eg kitchen, bath, floors, paint, lights, blinds, bag or render/paint bricks, landscape etc cost base is now 345

Refi or sell for 410-425 to create approx 10% equity profit each to split

For the purpose of this please ignore capital gains tax as this will be dealt with after the profit split, and yes I am well aware of the cg implications of immediately selling vs hold 12 months vs holding forever.



Can it be done in today's market?

What suburbs do you think I should focus my attention?

Is there somewhere outside of Sydney I should be thinking of instead.


I guess after reading what I have written I think what I am looking for is a suburb that is bordering more expensive suburbs, that itself has a median house price well above 300k, maybe close to 400k if possible but a few really ugly ducklings left that I could target.

Cultural issues are not a problem, and happy to reno to the taste of who ever is buying in that suburb if that adds desirability.

Anyway, appreciate your advice.
 
For the purpose of this please ignore capital gains tax as this will be dealt with after the profit split, and yes I am well aware of the cg implications of immediately selling vs hold 12 months vs holding forever.
I'd take more advice on this if I were you. e.g. I believe that if you are doing this as a business, the property/s are considered as stock. NO CGT would apply, but business profits would of course be taxed. But we are talking perhaps 30% company tax here not 48.5% CGT at PAYG payer's marginal tax rate.

Can it be done in today's market?
Yes. In fact I think this caan be done in almost any market.

Is there somewhere outside of Sydney I should be thinking of instead.
You have said outer Western Sydney, others have said Woy Woy / Central Coast. I will just add to the mix - inner Newcastle suburbs like Carrington, Maryville, Islington, Tighes Hill, Mayfield and Mayfield East.

Many times you can buy a 2brm that is easily converted to a 3brm just by rejigging the existing floor plan. Also look to add car parking that may currently not be utilised on the site. Both these add value before you even start on the cosmetics.

We recently purchased in one of these areas for $295K. Next door was a post-reno comparable which sold at $399K.

If you are playing in the inner of Newcastle, make sure you retain:
Wooden fretwork, stained glass windows, fireplaces, polished wood floors, pressed metal ceilings, decorative conrnices etc.
 
WP that is a great yeild! Are you renting it by the room? For my other places I would love to hear more about how you advertise that and manage issues etc.

For this exercise I am looking at immediate equity gain only and I am worried that the central coast is pretty dead from a resale value perspective at the moment. I am unlikely to be able to sell it or get the best reval. Perhaps different areas of central coast vary but I have family with a house in Glenning Valey and can't sell it for their land and house build cost:eek: That wasn't a deal I advised on as I think they spent too much on the land and the build for the area.
 
I'd take more advice on this if I were you. e.g. I believe that if you are doing this as a business, the property/s are considered as stock. NO CGT would apply, but business profits would of course be taxed. But we are talking perhaps 30% company tax here not 48.5% CGT at PAYG payer's marginal tax rate.

Yes. In fact I think this caan be done in almost any market.

You have said outer Western Sydney, others have said Woy Woy / Central Coast. I will just add to the mix - inner Newcastle suburbs like Carrington, Maryville, Islington, Tighes Hill, Mayfield and Mayfield East.

Many times you can buy a 2brm that is easily converted to a 3brm just by rejigging the existing floor plan. Also look to add car parking that may currently not be utilised on the site. Both these add value before you even start on the cosmetics.

We recently purchased in one of these areas for $295K. Next door was a post-reno comparable which sold at $399K.

If you are playing in the inner of Newcastle, make sure you retain:
Wooden fretwork, stained glass windows, fireplaces, polished wood floors, pressed metal ceilings, decorative conrnices etc.

Prop,

ta for the advice, will be seriously considering the structure prior to purchase just didn't want to muddy the water on this question.

I had never considered inner Newy, thanks will look at this. I have hear they have some trend factor but lower base than trendy Sydney. Downside is its a bit far to drive as I will be project managing the renno and I have family(free accom :D) in Syd and Im on the south coast. Have purchased in 4 states tho so really distance isn't gonna stop me if the numbers work! Thanks again
 
a house with back cabin in Umina Beach or Woy Woy can be easily get rental yield 7.5%-8.5%

I sold a IP apartment in Wolli Creek in July this year and got $190,000 to buy 2 IP houses in Umina Beach in last 2 months

I sold 2 IP apartments in Rockdale to buy 1 more IP house in Umina Beach and 2 more IP houses in Woy Woy


I plan to sell my IP houses in Baulkham hill, Carlingford, Blacktown, Lidcombe, Epping next year and then put all monies earned to buy more IP houses in Umina Beach!

WP wow you must know something about umina beach that I dont! Why do you want to sell all those Sydney locations to put more eggs in that basket? Do you think it has a special reason to do better than Sydney in the next few years?
 
Top