Sydney suburbs with potential to do a renovation and sell?

[Kam]

Hi all
The more I read this forum the more ideas pop into my head! I'm looking to buy in western Sydney, maybe south-western as well (I'm talking outskirts). I have two which I'm holding long term, but would like to have a mix of long term hold and some to fix up and sell to improve CF. I've been looking along the train line from Penrith through to Blacktown in particular, and also Granville. My questions are:
1) Do you think it is feasible to do that in those areas at this time?
2) Do you think it is even possible to make a profit, given that the difference between renovated and unrenovated properties is not great, particularly once purchase/sale costs are included.
3) Are there other areas better suited to what I want to do? But please don't suggest inner west etc, my budget sadly does not stretch that far A total loan of $350k is the absolute limit (including the reno), and under $300 would be preferred.

Thanks in advance
Kam

 

[momo]

reno

Hi all
The more I read this forum the more ideas pop into my head! I'm looking to buy in western Sydney, maybe south-western as well (I'm talking outskirts). I have two which I'm holding long term, but would like to have a mix of long term hold and some to fix up and sell to improve CF. I've been looking along the train line from Penrith through to Blacktown in particular, and also Granville. My questions are:
1) Do you think it is feasible to do that in those areas at this time?
2) Do you think it is even possible to make a profit, given that the difference between renovated and unrenovated properties is not great, particularly once purchase/sale costs are included.
3) Are there other areas better suited to what I want to do? But please don't suggest inner west etc, my budget sadly does not stretch that far A total loan of $350k is the absolute limit (including the reno), and under $300 would be preferred.


Kam

Kam
Having been through a major renovation recently, I can attest to the fact tradesmen and builders (and construction in general) is too darn expensive. You would have to do the bulk of the work yourself. However, if you are prepared to buy in eastern , northern or inner west suburbs, a carefully considered reno will do wonders to your equity. EG,in the Roseville, Lindfield and Killara area, people do look for 4+ BRs, 2+ bathrooms, pool, outdoor entertaining, yard, right school zone, older style federation or Californian,etc.
In the west, I would say the appropriate number of BRs, definiteley garage, close to public transport,etc
Good luck.
Thanks in advance

 

[skater]

Kam, I live & invest in Western Sydney. Yes, it is possible to do, however you must realise that in order to do well, you really need to buy well in the first place. You won't make a profit if you pay list price on an unrenovated property. There are gems out there ripe for the taking, but you need to look hard to find them.

 

[Kam]

So there is hope!

Wow, some fast replies considering I posted in the middle of the night!
Skater, thank you, I just needed someone to tell me that it IS possible. So thanks for your encouragement, I am going to keep looking, lots of auctions to attend starting this Saturday! (just research at this stage )
Thanks
Kam

 

[skater]

Can I ask which ones you will be looking at? Don't worry, I'm not in the market ATM so I won't bid against you, just thinking that I might be able to help if I'm in the area.

 

[pebbles]

So skater you think its possible to go in, renovate completely in 6-8 wks and turn a profit in the region kam talked about?

I certainly agree with you about making your money when you buy, but isn't the market in the western suburbs still quite unsteady at the moment? BTW I'm not doubting your local knowledge, but i think you'd have to have an exit strategy. For me, if the market got worse it would be better to hold till the jitters settled. So i guess i'm saying i'd hate to buy the property, renovate and find that i'm stuck holding long term if that wasn't the strategy i had in mind. I'm just looking at the opportunity cost.

 

[skater]

So skater you think its possible to go in, renovate completely in 6-8 wks and turn a profit in the region kam talked about?

Anything is possible. I just didn't say it would be easy. I know of one investor who does just that in this area. He has bought & sold at least a dozen & made money on all of them. I can't stress enough though, the importance of buying well in this market.

 

[asdf]

Kam
Having been through a major renovation recently, I can attest to the fact tradesmen and builders (and construction in general) is too darn expensive. You would have to do the bulk of the work yourself.

Can't agree more. What building slow down? Try getting a tradie to start when you want him to and come back to finish the job. Labour is the most expensive commodity. We did a full reno on a 2 bed unit that cost about $45k all up. I reckon $5k, if that, was materials. Tempted to start a company for investors only who wants to do renos and I will sponsor some cheap labour from SE Asia who does the job in 1/2 the time and 1/5 the pay.

Heck, the licencees all do that now anyway. How often will the boss who comes out to quote actually do the job? Its going to be the ethnic slave who speaks broken English but does a damn good job.

 

[dash11]

Hi Kam

My recommendation would be to first get to know your target area. As you would appreciate, the Western suburbs can vary street by street let alone suburb by suburb. You would also need to know how much your reno is going to cost you before you actually purchase.
We have done quite a few reno's out that way and sold probabley half of them in a short period of time. We aim to have the property back on the market 6 weeks from the time we settle or better still we try to get early access and if we are lucky, have a simultaneous settlement.
The buy and sell tactic is not something I would recommend unless you know your market better than anyone else and by this I mean have contacts who can "steer" you in the right direction as far as whats for sale and how flexible are the vendors etc, are confident that your purchase is at least 20% below market value, that you can keep your reno costs on budget (it helps if you can do a lot of the work yourself) and that you are confident that your property will sell quickly at a price that will give you a profit or be able to refinance at a value that will also give you profit.

I hope that points you in the right direction and good luck.

 

[handyandy]

Hi Dash

Just wondering how extensive your 'reno"s' are.

From your previous post the houses seem to be mainly fibro with maybe brick veneer. How are the bathrooms in these properties? Do you fit new kitchen or tart up the old?

Bottom line do you work to a formula or make it up as you go?

Cheers

 

[Kam]

These are the ones we're looking at, the first three are at the Blacktown Main Event Centre, the rest on site. Some are 'renovated' some not, we're just going to see what they all go for at this stage. The beginning of the lengthy research process!

http://www.realestate.com.au/cgi-bin/rsearch?id=104451384&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104410982&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104411183&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104433960&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104359311&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104430314&a=qfp&cu=fn-rea&t=res

http://www.realestate.com.au/cgi-bin/rsearch?id=104420570&a=qfp&cu=fn-rea&t=res

Dash, I'm also curious as to the extent of your renovations. We would be doing pretty much everything ourselves (we've done two before this but we did use tradespeople for some things and in a different area). Our budget would be under $20000 including kitchen and bathroom (nothing structural).

Thanks

 

[BenG]

Hi Kam,

I thought you may be interested in reading this from the Domain site http://blogs.domain.com.au/renovation/

The interesting point to note is that the average renovating cost for the bathroom and the kitchen is $20k plus each based on HIA figures

 

[skater]

These are the ones we're looking at, the first three are at the Blacktown Main Event Centre, the rest on site. Some are 'renovated' some not, we're just going to see what they all go for at this stage. The beginning of the lengthy research process!

Good. You will need to do the research. The last lot that I bought, I had a book where I kept records of the auctions that I was interested in & their eventual sale price. Be prepared to go to a lot of auctions. Talk to the R/E agents too. Some are quite helpful & will let you know if they have something that needs to sell (for a low price of course).

 

[dash11]

Hi Andy & Kam

How much we spend is obviosly dependant on how the house is at time of purchase. Most of the time however, we put new kitchens in (with granite tops if the property is to be sold) at a cost of around 4k installed and the bathrooms we nearly always do at a cost of also 4k which includes all labour, materials and fit out. On average we spend 25-30k if the house is to be made "brand new" internally. This includes things down to new power points and switches as well as circut breakers. We employ a builder which we use only if we have to and a full time labourer as well as myself if I have time or if we have a few on the run. Our costings are "screwed" down fairly well and we have a costings sheet we take into every property we are interested in so that we can walk away and sit down to work out the exact costs with a 5% buffer built in. The big factor we have found is once you have made the plans on what you want to do to the house, stick to it, as when you start changing midway through a reno is when the costs start to blow out.

 

[stumunro]

what profit margins do you generally aim for when you are flipping these properties?

 

[Kam]

Well, we attended the Saturday auctions and I have to report that I feel both disappointed and inspired at the same time. Disappointed because we missed a bargain! Even with our limited research so far, this one was obvious - sold for $210,000 in Sylvia St Blacktown, and one around the corner went for $272,000 earlier that day! On the plus side, we're now newly inspired to keep looking, because they ARE out there.
So more auctions to attend this weekend and some open homes as well
I've already started a folder to keep records, like you Skater.

Dash, where do you buy your kitchens from? We are looking at ebay to get the costs down as low as possible. You can get whole kitchens with appliances fairly cheap, but I'm not sure how difficult it is to fit them in a different house. We've had quotes for bathrooms before, but they were closer to $7000, that's almost double your cost! I like your idea of a costings sheet, I'll have to come up with something similar.

 

[stumunro]

Well, we attended the Saturday auctions and I have to report that I feel both disappointed and inspired at the same time. Disappointed because we missed a bargain! Even with our limited research so far, this one was obvious - sold for $210,000 in Sylvia St Blacktown, and one around the corner went for $272,000 earlier that day! On the plus side, we're now newly inspired to keep looking, because they ARE out there.
So more auctions to attend this weekend and some open homes as well
I've already started a folder to keep records, like you Skater.

Dash, where do you buy your kitchens from? We are looking at ebay to get the costs down as low as possible. You can get whole kitchens with appliances fairly cheap, but I'm not sure how difficult it is to fit them in a different house. We've had quotes for bathrooms before, but they were closer to $7000, that's almost double your cost! I like your idea of a costings sheet, I'll have to come up with something similar.

best place to get kitchens and stuff is from the auctions

 

[skater]

We get our kitchens from Paradise Kitchens in Wetherill Park. A small kitchen with granite bench tops is under $2k. You have to install yourself & arrange delivery.

 

[dash11]

Hi Stu

Our profit margins vary depending on the amount of work or the amount of money we have to spend. On something that we spend a couple of thousand and a day or two, we are happy with 20k, or if we do the full reno, we aim for 40k plus. It all comes back to a cash on cash return for us. We only trade properties that we think will not fit our portfolio as "holds". Some reasons may be a townhouse in a complex that may deteriate quickly, high mortgage shortfall, bad street or in the last instance, it had a granny flat that had no seperate access and an inground swimming pool.

The kitchens we get are from a small company at Penrith. The price I quoted is for turnover. I will check with them to see if they mind giving out their number on the forum just to be safe. The granite benchtops are from a different supplier, a Korean supplier called Green marble in Wetheraill Park. Once again, the price quoted is for turnover.
For the bathrooms, we source all our materials direct from the importers, our plumber is cheap due to the amount of work we give him, as is our tiler. We also make sure that when we decide to do the bathroom, we completely gut the bathroom back to the frame so that we have a clean skin to work with and to also make sure we give the water proofer a even surface so that he has no excuses when we ask for our 5 year gaurentee.

Hope that helps