The Entrance Commercial Property Bargain

[eternit]

Hi Guys,

I have found a property which has a lot of net profit to be made but unfortunately I will not be able to finance it so I am putting it here :

http://www.realcommercial.com.au/cg...t=&header=&cc=&c=88152759&s=nsw&tm=1288163736

There is a lot of money to be made in this property once its strata titled and sold off individually.

Cheers

 

[ok180]

Profit depends on how much it goes for at Auction...

Or did you have an offer accepted but couldn't finance?

 

[Propertunity]

I think the issue will be trying to get finance for a mixed CIP/RIP when it is vacant. They were trying to sell this property a few years ago for $599K back 2.5 years ago.

 

[DavidMc]

Anyone care to share some more numbers as a real life example?

Expected purchase price?
Expected sale price of each unit?

 

[eternit]

I think the issue will be trying to get finance for a mixed CIP/RIP when it is vacant. They were trying to sell this property a few years ago for $599K back 2.5 years ago.

Yes looks like the max will be 70% LVR.

Was it in same condition as now when it up for sale at 599k?

 

[eternit]

Anyone care to share some more numbers as a real life example?

Expected purchase price?
Expected sale price of each unit?

Purchase price ~ 1 MILL

Need to get it strata titled (already strata approved)

Sale Price approx $220K each unit (very conservative) so ~ 1.32Mill + ~ $300K for shop

so about 1.62MILL

 

[Nathan]

I was going to buy this a year ago. Has some major structual issues.

It is important for one to do due dilligence on this product. Not just saying this, I will be there on auction day.

The building needs a few hundred thousand in repairs spent on it.

 

[eternit]

I was going to buy this a year ago. Has some major structual issues.

It is important for one to do due dilligence on this product. Not just saying this, I will be there on auction day.

The building needs a few hundred thousand in repairs spent on it.

Yes definitely.

Need to get a Building & Pest Inspection done on the property beforehand even though the agent reckons there is no structural issues only cosmetic changes like replacing common door etc.

 

[Piston Broke]

There is a lot of money to be made in this property once its strata titled and sold off individually.

So why they cant find a buyer?

 

[eternit]

So why they cant find a buyer?

not many people have approx 400K$ cash which is a minimum for this deal, probably closer to $500K.....

 

[Piston Broke]

not many people have approx 400K$ cash which is a minimum for this deal, probably closer to $500K.....

lol you gotta be kidding or living under a rock.

 

[eternit]

lol you gotta be kidding or living under a rock.

thats a very cryptic comment, care to expand on that?

 

[evand]

That's not cryptic. What he means is that plenty of people have that sort of money.

thats a very cryptic comment, care to expand on that?

 

[eternit]

That's not cryptic. What he means is that plenty of people have that sort of money.

ok i am not going to argue something neither you or i can prove.

Getting back to the inital question:

So why they cant find a buyer?

instead of making such a broad comment because there can be millions of reasons for why they cant find a buyer, can you please show me if you see anything wrong with my numbers.

i posted a property with some numbers, i am more then happy for you to challenge them and tell me something i dont know......

 

[Piston Broke]

Given a good enough deal I'm sure there's a few people on this forum who would plonk a suitcase of 500K in cash or bank cheque on an REAs desk within a matter of days.
You are very naive to think that people "dont have that kind of money".
The deal is not good enough for most investors that have it to want to spend the money at this time.
Those who want to spend it are incidently those that dont have it.
There's a lesson in that.

 

[handyandy]

I was going to buy this a year ago. Has some major structual issues.

It is important for one to do due dilligence on this product. Not just saying this, I will be there on auction day.

The building needs a few hundred thousand in repairs spent on it.

Wouldn't disagree.

According to the reports all fire rating is suspect - missing fire doors and frames missing centralised fire alarm, missing fire hose - most of these are required because of the com aspect.

Apart from the fire rating issues which will be expensive to fix particularly retro fitting fire collars to the plumbing, the building has major drainage problems (and possibly water proofing issues) which has led to flooding of all units and in particular the first floor. They have attempted a cover up by replacing all the internal doors but left all the skirting blown and buldging.

The water/ flooding issues has also led to cracking of the render in multiple places and cracking through the brickwork which could become structural. Some of the parapet could become unstable without major rectification.

It appears that the cavity walls have also filled with water again due to the flooding and this has led to paint blow in a number of areas of the building.

The retail area, I suspect, is near worthless as its right out of the way from the main drag. The main street area is already littered vacant shops and closing businesses. Then the street where these unit are located there are approx 8 empty shops including a similar sized one as the one in the block right next door which used to be a video eazy. Again this one is more marketable as has more parking avail.

So not only is there a substantial amount of money to be spent but there is a substantial risk from unknow aspects still to be discovered.

Cheers

 

[eternit]

Given a good enough deal I'm sure there's a few people on this forum who would plonk a suitcase of 500K in cash or bank cheque on an REAs desk within a matter of days.
You are very naive to think that people "dont have that kind of money".
The deal is not good enough for most investors that have it to want to spend the money at this time.
Those who want to spend it are incidently those that dont have it.
There's a lesson in that.

Hi Piston Broke,

I was not referring to the people on this forum but the public in general.

But for you to say then why they cant find a buyer if there is money to be made is very very naive (no disrespect).

Given 2 examples:

I bought a property in The Entrance for $203K
7/18 BATTLEY AVE, THE ENTRANCE, NSW, 2261
Sold For:
$203,000 Sold on:
09/04/2009 Sale Type:
Normal Sale Property Type:
RESIDENCE Land Size:

Sold it 3 months (the dates are contract dates not settlement dates) later for $260K
7/18 BATTLEY AVE, THE ENTRANCE, NSW, 2261
Sold For:
$260,000 Sold on:
11/11/2009 Sale Type:
Normal Sale Property Type:
RESIDENCE

Made about $40K net for not doing anything except buying and selling it. This property was on the market for some time before I bought it so why was there no buyers? I did not spend any money to add value etc.

I bought a property in Carramar for $132K which I still own:

6/1 WATERSIDE CRES, CARRAMAR, NSW, 2163
Sold For:
$132,000 Sold on:
03/11/2008 Sale Type:
Normal Sale Property Type:
RESIDENCE Land Size:

Recently a sale in the complex of similar property at $200K, that is 50% profit in 2 years:

11/1 WATERSIDE CRES, CARRAMAR, NSW, 2163
Sold For:
$200,000 Sold on:
10/08/2010 Sale Type:
Normal Sale Property Type:
RESIDENCE Land Size:

This property was on the market for 6 months and was listed at $150K. Why couldn't they find a buyer ?

I could have spent all my time thinking why can't they find any buyers if its such a good deal just like your comment but I decided not to.

 

[eternit]

Wouldn't disagree.

According to the reports all fire rating is suspect - missing fire doors and frames missing centralised fire alarm, missing fire hose - most of these are required because of the com aspect.

Apart from the fire rating issues which will be expensive to fix particularly retro fitting fire collars to the plumbing, the building has major drainage problems (and possibly water proofing issues) which has led to flooding of all units and in particular the first floor. They have attempted a cover up by replacing all the internal doors but left all the skirting blown and buldging.

The water/ flooding issues has also led to cracking of the render in multiple places and cracking through the brickwork which could become structural. Some of the parapet could become unstable without major rectification.

It appears that the cavity walls have also filled with water again due to the flooding and this has led to paint blow in a number of areas of the building.

The retail area, I suspect, is near worthless as its right out of the way from the main drag. The main street area is already littered vacant shops and closing businesses. Then the street where these unit are located there are approx 8 empty shops including a similar sized one as the one in the block right next door which used to be a video eazy. Again this one is more marketable as has more parking avail.

So not only is there a substantial amount of money to be spent but there is a substantial risk from unknow aspects still to be discovered.

Cheers

Hi handyandy,

Thanks for that info. Its very useful.

Regards.

 

[grossreal]

hi all
question 1
do you know this market
question 2 do you know where this property is
question 3 do you understand where the entrance sits with regards to getting anywhere
now answer these three and then think of investing.
there is a few site within a spit from this site and non have sold
why
the numbers just don't work
yes I think there is value in the area but the problem is that
bankwest suncorp and nab stuffed the area and you will not get a lender close to this area
use cash
yes but would I no
bankwest I think have 12 to 13 sites still on their books
the post says bargain
the entrance and bargains are not to be used in the same sentance for me
I can give you 7ook property with a val at 400k
and thats finished product with no lenders
oh and you next question is have you been on site
yes about 4 months ago
there is another site on the corner and the kfc is still trying to find a buyer
the one behind sold for 2 mil and was in debt for 9 mil I think
the movie site is still trying to be sold
and the new rest on the water is in recievership last time I looked but could be wrong.
hope this helps
I have five people with big loses in the entrance so know a bit about the market

 

[Piston Broke]

But for you to say then why they cant find a buyer if there is money to be made is very very naive (no disrespect).

Non taken, but your dealing with "peanuts" and posting "not many people have approx 400K$" when it's far from reality as i know at least 50 people who could if they wanted to.
The players looking at properties like the one you posted ( and needing major work) are generally not interested in a 200k apartment.
I never said there's no money to be made sub 200k bracket and/or renting to people who live on gov handouts, I specifically posted about the property on this thread.

And the obvious answers came from Nathan & HandyAndy.
My point being if the deal is good, risk low and there's money to be made, there's plenty takers.