What you can buy at $450k - talking value

[TheAnalyst]

Hi, All,

I thought this would be an interesting thread given that the median price in Australia is reading $450k.

My question is what kind property you can buy at $450k, location, condition, material, view, so on.

I start with Perth.

For $450k, you can buy a very nice modern renovated 4x2 on 683m2 block. 3km to beach, west of freeway, 3 minutes drive to freeway, 5minutes drive to two large shopping centers (Wesfield and Joondalup), 20km to Perth CBD. Brick and Tile, airconditioning, Pool, new carpets, new tiling, lights about 30years old.

Thank you for your contribution

 

[TheAnalyst]

Sorry the surburbs are Beldon or Craigie

 

[wylie]

December 2006 we bought a two bedroom cottage which had the front verandah closed in to make a third bedroom and a sunroom in Coorparoo for $460K. It is on 36 perches and could be developed down the track. It had original everything..... need I say more.

Rental appraisal was $240pw as is. We spent about $17K plus lots of sweat and late nights renovating. Rented straight away for $310 on boxing day, so could have got more had we waited a few weeks, but we needed some cashflow. Just increased rent to $330 and it still has room to go up next lease.

At $460K it was about its money, but was worth more to us because it backs onto another IP also on 36 perches, giving us a total 72 perches with two street access (but downside is we cannot remove either house). Plenty of room in the middle to do things with though.

It always amazes me that for the same money as a small house in the inner ring, we could go to an outer suburb and get four bedrooms, ensuite, plus study, pool etc.

Wylie

 

[Dazz]

Great work wylie....well done to both you and hubby.

Can I ask....17K for a $ 70 p.w. rise in rent.....that's 4.7 years payback time assuming your time / effort / sweat is worth nothing. Seems a long payback time ??

Was the $ 240 p.w. a realistic figure un-renovated, or would it have been hard to tenant out ??

 

[twobobsworth]

2004 Lambo Murcielago with only 5800kms.

Asking price $450,000.

Oh did you mean houses?

 

[alexlee]

In Sydney I can get an old two bedroom on the lower North Shore or a big 4-bed house out West. How is this line of thought meaningful unless you set some parameters like how far from the CBD and the general type of property?
Alex

 

[karina]

I paid 490k for a block of 3 x 2 bedroom units on the sunshine coast brick , walk to the beach 20 years old, rents around 660, hope to increase to 700 by the end of the year. also looking at strata titling to create instant equity.

 

[BayView]

A $450k median house value across Aus is extremely broad, and not really relevant to anything.

The median price is worked out on total number of sales for a particular period (usually a quarter), then they take the sale that is exactly halfway and whatever the price is then that's the median.

All it takes is for a spike in sales either side of the median to alter the price; eg; there are an extra 20,000 new cheaper homes built and sold for under $300k. The total number of sales for the year is still the same, but the halfway sale price has dropped to maybe $375k due to the new houses.

A better lot of stats to look at is total sales, average price, average income, rental homes percentage for the micro market you are interested in.

 

[lizzie]

currently looking at a development block for 6 townhouses (technically can take 7, but not physically). 2 street access. 5 minutes walk to train. one block back from main shopping strip. 15 minutes drive from cbd. not super trendy location, but not bad.

around $400k.

 

[wylie]

In reply to Dazzling. I think the condition this house was in was too "original" to rent for any higher than $240 at the time or purchase. Green fake grass carpet in the front rooms, matching frog green walls, pink lacy curtains, original kitchen painted bright blue, bathroom renovated in the 50's with lino tiles glued on the walls as well as the floor, horrible.

To be honest, I didn't do any figures on how long it would take to return the money. It would not have altered what we did anyway. We just wanted to get the most rent we could with the smallest outlay without it looking cheap. It came up a gorgeous silk purse.

Renting a house around Christmas is not the best, but we renovated for two weeks, flew to the US for two weeks, came back to finish the final touches, so you can imagine the bad timing of this purchase meant we needed to get some cashflow. We got a call on Christmas Day, they looked at it Boxing Day and took it. I am fairly confident that had we waited a week or two we would have been able to get $330 per week but better $310 in our pocket for two weeks than empty. It is now up to $330 and we have been told we could probably get $375, so we will keep creeping it up.

The original tenants moved out mid lease under a slight cloud(but amicably) and our current tenant moved in next day. Current tenant has it looking great, and is a friend of a family member. It does make it slightly harder to raise the rent, but she knows she went in paying slightly under rent and knows it needs to creep up, particularly with the recent rent increases everywhere.

We were lucky that her willingness to move straight in saved us probably two weeks empty house and no rent, so I am happy to "pay it forward" for a while and give her some breathing time before we increase again.

I am no hard nosed business woman (nor do I want to be), and I believe what goes around, comes around. So sometimes, you have to throw the figures out the window and just go with the gut.

Wylie

 

[ianp]

I paid 490k for a block of 3 x 2 bedroom units on the sunshine coast brick , walk to the beach 20 years old, rents around 660, hope to increase to 700 by the end of the year. also looking at strata titling to create instant equity.

Hi Karina,

that sounds like good buying to me.

I live on the coast where they in Marcoola by any chance ?

Ian

 

[TheAnalyst]

Nice to hear all the stories. Keep coming on the other cities.

 

[Les]

G'day wylie,

When I first read Dazz's words, I said "No way" !! But, after reading the numbers, he's right.

But then, I thought how I would approach the situation (and therein lies the difference).

In short, you have generated $70 per week by what you did. Now, if I was doing this, I'd have borrowed to do it (did you?) And this puts a whole different perspective on things:-

So, let's say you spent $17k to create $70 per week. If borrowed, this $17k would cost you (IO) $26 per week. So, I'd say you are well ahead.

And if you haven't borrowed? Well. why not? Think about it (do the numbers), (BTW, I allowed 8% as a reasonable Interest Rate),

Regards,