To buy or not to buy

Hello

I am a novice at residential investment property and am looking to purchase an investment property with the intent to do a renovation and then resell or renovate and rent if it is cash flow positive. the following property is available in our local town.

(from real estate advert)
Take hold of this rare opportunity to buy a home in Ceduna's town centre, only a street back from the foreshore. A unique property with dual zoning, plus it is actually recognised as 2 lots within the title offering many options & potential opportunities. (Subject to Council approval)

- Gorgeous Homestead style character home
- 3 large bedrooms
- High Ceilings, claw foot bath, & pot belly stove feature along with other charming features from the 40's
- Kitchen has original stove & a new freestanding oven
- Formal lounge with brand new split system & fireplace
- Only a few hundred metres to shops & 1 street back from the beach
- Large corner block zoned Residential & Regional Town Centre
- Known as Lots 1 & 2 of 61 Poynton Street (as floor plan shows)
- Huge shed for all the toys with an industrial cool room & fridge previously used for storage of oysters
- Great condition for it's age but equity & rent return would be greatly improved upon if you do decide to update
- Western red cedar external cladding
- Appealing street frontage with side access to the back yard & shed
- Paved undercover entertainment area
- Maybe rent the house & use the shed for your business or run your business from home?
- Current tenant paying $250 a week
- Rent in today's rental climate should fetch $300-$330 a week as is
- Perfect location to live or invest in[/I]Priced at [/I]$308,000

I am seriously keen on this with my idea being to do some work on the house to tidy it up, ie repaint, put in a low maintenance garden, repair some work that has never been built properly etc, probably spend 3 weeks of my time and around $10 -15k and then re rent it at the $330 figure.

I would also section of the second section which has the shed on it and rent out the shed as storage space or for a small business.

I would then get it revalued and consider selling the house section, which hopefully would still sell for nearly as much as the original purchase price.

Would appreciate any ideas or thoughts and particularly any advice on how I could go about putting a plan together for presentation to a financier. Also anything to watch out for.

Would also appreciate hearing from any professionals who do due diligence work on situations such as the above.

Many thanks
 
Even if you got it for $300000 and rented it for $330/week, that would be a return of less than 6%.

I think decide what you want to do. If you want to do a buy and hold, look for a high yielding property. If you want something to renovate and flip, keep an eye out for something with a good substance that needs work. If you want to do a subdivision, this might potentially be good.

Don't go in wanting A, B and C, formalise your strategy and stick to it.
 
thanks for the replies

Aaron, I will be looking to put together a plan/proposal for presentation to a bank for finance on the purchase/renovation. If you wish to discuss I can be contacted on [email protected]
 
thanks for the replies

Aaron, I will be looking to put together a plan/proposal for presentation to a bank for finance on the purchase/renovation. If you wish to discuss I can be contacted on [email protected]

Unfortunately lenders require a building contract in order to asses a construction loan. It's a bit of a catch-22. You need the plans drawn up so that the builder can accurately quote you and provide you with the building contract- then the bank can do it's assesment.

With my business, I tell people that they must pay for the full set of plans and then we get our builders to quote them and draw up a contract that they can approach the bank with; otherwise the bank won't asses the application. Catch-22.

Most lenders should of course give you an indication that you will get loan approval if you present them with a contract which works with the LVR etc.

Cheers,

Brazen.
 
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