What do you think?

[LouiseMc]

Well after lurking here for months, we have finally decided to begin! We refinanced our home and have $180,000 available to invest. We have found a one bedroom apartment studio in Glendalough Perth and put an offer in on it. The vendor wont go below $190,000 so we have offered to pay that, if he will give us $10,000 vendor finance for 3 months. I am pretty sure they will take it.

Our plan is to renovate immediately. It is in original condition, so we are going to rip out the kitchen and put a flat pack one in, and include a laundry behind bifold doors. Put down a wood alminate floor, gyprock the walls, add downlights etc (hubby is an electrician) and rent it out.

Currently the next unit, also shabby is rented at $180.00 so we are hoping with a stylish reno to get $220 to $240 as it is close to the train station, and the city. Then get it valued and borrow against it, repay the vendor and use the balance to buy another.

We took an interest only loan for the $180,000. Do you think this is value? We are hoping that it will be worth around $240,000 minimum when renovated. We have allowed $13,000 for the reno. I figured that it wasnt exactly cash flow positive but by factoring in the depreciation, it may be.

What do you lot think?

Louise

 

[Lucyinthesky]

Sounds great Louise. Is the unit off the ground? If so, Midland Brick have a wood laminate flooring called Prime a-loc plus which has extra rubber layer that reduces sound when you walk on it. I would definately have it revalued when reno is complete. Good luck with everything. Renovating is great, especially when you see the end result.

 

[LouiseMc]

Hi Lucy,
It is on the ground floor. The body corporate are arranging to get the whole block rendered and made into a secure block with key access. I was looking at the annual report and saw it in the minutes of the agm. The owner lives in london. I figured that would increase its value.

Thanks for the t ip. Who would have thought Midland brick would do laminate flooring?

 

[gooram]

Sounds like a pretty good deal for an inner city Perth suburb. The rent sounds high for an old bedsit, even renovated, I would suggest 240 is too high, but it's worth a shot definately. Good luck sounds like you've got a good plan regardless of the rent you get. How many units in the complex? Maybe one day you will own them all. Now there's an investment!

 

[wylie]

How much is in the body corporate sinking fund, and will you have to tip in some funds for the rendering?

A friend bought into a 7 storey (21 units) block in St Lucia and soon after buying, was told that all unit owners had to tip in $4K or $5K on top of the usual body corporate fees to fix concrete cancer, renovate the common areas and for painting. The body corporate fees were already quite high as the complex has a sauna, pool and two lifts. This was about 15 years ago, and was a lot of money, so maybe check out that it is not for sale because of this upcoming expense.

Wylie

 

[suzieq]

Hi Wylie,

I am also looking to by a unit and was wondering what body corporate checks should be done and how to go about it. If the complex has an on-site manager can you request certain records from them or is there a specific government body you need to go to.....or a solicitor???

thanks

sq

 

[wylie]

I would love to help you but I have only ever bought one unit and that was about 26 years ago, but someone else will no doubt be able to point you in the right direction.

Wylie

 

[dcarr]

$50k gain for a $13k reno? Sounds good.. almost too good!

Time for a little devil's advocate... try those numbers again with say a $20k reno, and a $30k gain.. does it still stack up for you in the long run?

 

[sailor]

Hi Wylie,

I am also looking to by a unit and was wondering what body corporate checks should be done and how to go about it. If the complex has an on-site manager can you request certain records from them or is there a specific government body you need to go to.....or a solicitor???

thanks

sq

The solicitor should request all the body corp docs as part of their conveyancing searches.

 

[sailor]

Louise, I think you'll find as a rule of thumb, every $1 spent on a reno, should add about $2 to the value of the property...at least that's what the experts tell me, and what I try to aim for myself as a minimum.

Sounds like a nice place with which to kick off your PI portfolio.

 

[Glucose]

Sounds great. Have you checked the size though? I notice you say it is a studio, and some studios are under 50sqm which is the minimum size a lot of lenders will consider.