Hi guys,
I've been striving to meet my goal of buying my second IP by the end of 2011 but I haven't yet been successful as I aim to buy 15-20k (or more) below the market comparatives at least so I am able to move to my next purchase quicker. This is what I did with my first purchase that I bought for $190k (a villa in the Blacktown region) in 2010, did a $5k reno and got a re-val done for $235k in less than a year of signing the contract for that one.
Today I went to see a deceased estate - a 2 bed villa. It's 40 years old. Seems better than the "other" 2 bed villas around in the area in terms of size. The complex is small with around 9 villas in there. The size appears to be big.
Now a bit about the property...It stunk! Seems the deceased owner was a chain smoker and I was about to throw up the moment I entered that property. It needs a paint, a new carpet, floor boards in the kitchen (prefer that over tiling as the kitchen is dated), new light globe covers, door/kitchen/BIR handles changing, laundry tub needs changing, new blinds. The kitchen is original and with one of those "teak" covers on doors which I'd rather get painted white. I estimated the costs of upto $6000-$7000 all up roughly...The good thing was the bathroom had a new vanity, tub and seat and was tidy (probably the only place that was tidy in the whole villa!)
The listing price is around $219k. The agent told me the "other" offer is $210k which has been "accepted" and if I can offer around that mark that may be accepted - WHILE he also mentioned the other buyer hasn't really come back yet. I told him that I will be offering no where near that and I will be doing my numbers before I make any offers.
Comparatives show there was a sale in the complex for $195k in August and another sale last year for $229k. There are a few other villas in the area as I mentioned (in better condition) for $205k, $199k - but smaller in size and seems no body wants to buy them even though some are renovated. Newer 2 bed villas in the area seem to be selling for $245k mark. While RP data says the property is worth around $221k and $257k (although we all know that RP data can be wrong) - but just an indicator.
After I came back home in the morning, I did my numbers and emailed the agent an offer of $185k stating that by law I would expect that my offer is presented to the trustee of the property....If the property is even worth $225k after the reno, I'd be able to take most of my outlay back (perhaps short of $5,500)...
Just wondering what are your thoughts? At first I was going to offer $182,500. But then I thought $185,000 may be more convincing? Just new to this negotiating game...But wonder how often do these trustees knock back the offers? Especially this sort of a property which stinks and not many would want to walk through it.
The only downside I thought was lack of sunlight but paint etc should lift it up. The upside was the rental potential of between $310-$320 per week and not so negatively geared either....
If I do get it and I go ahead with it, I'd also like a settlement in the last week of Feb as I am overseas between 23rd Jan and 23rd Feb. Hope I'm not asking for too much...
Just looking out for me
What are your thoughts?
I've been striving to meet my goal of buying my second IP by the end of 2011 but I haven't yet been successful as I aim to buy 15-20k (or more) below the market comparatives at least so I am able to move to my next purchase quicker. This is what I did with my first purchase that I bought for $190k (a villa in the Blacktown region) in 2010, did a $5k reno and got a re-val done for $235k in less than a year of signing the contract for that one.
Today I went to see a deceased estate - a 2 bed villa. It's 40 years old. Seems better than the "other" 2 bed villas around in the area in terms of size. The complex is small with around 9 villas in there. The size appears to be big.
Now a bit about the property...It stunk! Seems the deceased owner was a chain smoker and I was about to throw up the moment I entered that property. It needs a paint, a new carpet, floor boards in the kitchen (prefer that over tiling as the kitchen is dated), new light globe covers, door/kitchen/BIR handles changing, laundry tub needs changing, new blinds. The kitchen is original and with one of those "teak" covers on doors which I'd rather get painted white. I estimated the costs of upto $6000-$7000 all up roughly...The good thing was the bathroom had a new vanity, tub and seat and was tidy (probably the only place that was tidy in the whole villa!)
The listing price is around $219k. The agent told me the "other" offer is $210k which has been "accepted" and if I can offer around that mark that may be accepted - WHILE he also mentioned the other buyer hasn't really come back yet. I told him that I will be offering no where near that and I will be doing my numbers before I make any offers.
Comparatives show there was a sale in the complex for $195k in August and another sale last year for $229k. There are a few other villas in the area as I mentioned (in better condition) for $205k, $199k - but smaller in size and seems no body wants to buy them even though some are renovated. Newer 2 bed villas in the area seem to be selling for $245k mark. While RP data says the property is worth around $221k and $257k (although we all know that RP data can be wrong) - but just an indicator.
After I came back home in the morning, I did my numbers and emailed the agent an offer of $185k stating that by law I would expect that my offer is presented to the trustee of the property....If the property is even worth $225k after the reno, I'd be able to take most of my outlay back (perhaps short of $5,500)...
Just wondering what are your thoughts? At first I was going to offer $182,500. But then I thought $185,000 may be more convincing? Just new to this negotiating game...But wonder how often do these trustees knock back the offers? Especially this sort of a property which stinks and not many would want to walk through it.
The only downside I thought was lack of sunlight but paint etc should lift it up. The upside was the rental potential of between $310-$320 per week and not so negatively geared either....
If I do get it and I go ahead with it, I'd also like a settlement in the last week of Feb as I am overseas between 23rd Jan and 23rd Feb. Hope I'm not asking for too much...
Just looking out for me What are your thoughts?
