Would you Buy in REDFERN?

R

RyanB

I have been browsing the furum and the internet quietly for some time now, and am considering buying a PPOR in redfern. (terrace)

I have noticed an immense CG in redfern in the last 5-10 years,

I plan to buy the worst condition in a reasonable street and renovate. (I am a builder with a keen interest in Property investment and this will be my first!)

I missed this one on the weekend,
http://www.realestate.com.au/property-house-nsw-redfern-116314451

My budget is an 800 Purchase price. Sinking approx 300K cash in to minimise holding costs and afford renovation.

There is very little left in the kitty once a purchase comes along, so renovatons will be slow. But hopefully with 18 months to 2 years depending on scope of works.

Redfern? Has it been done? Do you see any CG left?

Thanks
 
I almost bought a 3 bedroom unit on the second top floor of the Lawson Building in Redfern during FHOG in 2009....it was under $500k and I thought it was too expensive.....


Hindsight is a terrible thing
 
Hard to imagine even the worst streets in Redfern won't get dragged along by what's happening in the area. You're a builder and can live in the place while you do the work yourself? Sounds like a good plan. Don't limit yourself to just Redfern, though.
 
RyanB said:
My budget is an 800 Purchase price. Sinking approx 300K cash in to minimise holding costs and afford renovation.

There is very little left in the kitty once a purchase comes along, so renovatons will be slow. But hopefully with 18 months to 2 years depending on scope of works.
Click to expand...

Tactically, wouldn't it make more sense to maximise the borrowing, and keep more of your cash for the renovations? Say you borrow 600k instead of 500k. The interest on the 100k extra is 5k a year, but it gives you an extra 100k to fund renovations. It's usually easier to borrow for the purchase itself than to borrow for renos.
 
Thanks for the replies.

Alex lee- Point taken!

Depreciator - I'm feeling i can sort of hedge my bests on a turn in the market against the investment of the labour that i put in my self which comes at a nil monetry cost. (slightly more mentally and physically!)

I'm open to anywhere inner city, although the likes or darlo, surry, are well out of my reach now. PPOL so i need somewhere to park the ute :mad:

saiman- I had/have this feeling when i didnt jump at a 2 bedder one street from the beach in cronulla for $320 when i wasn 19. Preferred to rent. Ouch!

Thanks again,

Just waiting for the right one to rear its ugly unrenovated head!
 
Would I buy in Redfern?

F'n oath!

As others have said though don't just limit yourself to Redfern. Alexandria, Zetland, Chippendale and Darlington are other places you should look at too. Bargains are not going to happen in the inner city so be prepared to pay up.

If I may also suggest something, even though you are a builder, I have noticed that often the original unrenovated ones don't represent the best value. Better off to go for something in good condition that might just need a few cosmetic additions. So it will cost you more up front but less later on. Don't forget DA's are a pain in the city, stuff can get tied up for years, so if you can avoid it all the better.
 
Tactically, wouldn't it make more sense to maximise the borrowing, and keep more of your cash for the renovations? Say you borrow 600k instead of 500k. The interest on the 100k extra is 5k a year, but it gives you an extra 100k to fund renovations. It's usually easier to borrow for the purchase itself than to borrow for renos.
Click to expand...

Also, if you end up turning the place into a rental property you would want as much debt as possible against it.
 
Redfern is already so expensive, but they've been saying the same thing in 2008/2009.

In the longer run, it'll only get more expensive.
 
It's very easy to rent out to students.

Very close to uni. you can do a very basic reno, rent out room by room to increase the cashflow.

I used to live nearby the area, I know there is no shortage of student tenants. Even during winter and summer holiday, rooms are renting out in no time !
 
As others have mentioned I think the issue is begin able to find anything you can buy at a decent price. I believe banks are being very conservative on the valuations as well. Are yields in Redfern/Darlington any good on current prices?
 
I know Sydney pretty well. Redfern has no doubt gone up over the past 5-10 years with the obvious being so close to the city. There has been what they call a gentrification of the suburb about 5 - 10 years ago which looks a lot more decent but it has remained the same over the past 4 years. Not much has changed apart from that high rise going up across the road from the station. That is probably the only pretty thing to look at. I would imagine a lot of students would be living in the new units.

I use to work at Australian Technology Park and walked through the main st and where the post office and banks are, still a lot of low class centre link bums hanging around. The main street going down towards botany is pretty depressing. If you buy for investment, no dramas. However, I would never live there. It's dull, old and dirty.

Just my two cents worth.
 
alexlee said:
Tactically, wouldn't it make more sense to maximise the borrowing, and keep more of your cash for the renovations? Say you borrow 600k instead of 500k. The interest on the 100k extra is 5k a year, but it gives you an extra 100k to fund renovations. It's usually easier to borrow for the purchase itself than to borrow for renos.
Click to expand...

Bang on... and to go a step further..

Put all the excess funds into an offset account, which would reduce all the holding the costs in the same way as borrowing less, but would give you the flexibility of having the funds available; this is always a huge key when completing any renovation or development... Infact a key at any point in time.

It's always easier to borrow money when you don't need it.
 
I have a 2 bed apartment in R for last 14 years. 8min walk to central station, 6 min walk to redfern station.
while there's good growth in redfern, alot of the growth occurred in the last 5 years.
I listed for Auction in end of 2011 (Agent said 'was the best time to sell'), it was past in at $515K. This month, a comparable unit in the same floor sold for $690k. This average to be about 15% growth per year. This sort of growth is only seen in the last few years.
 
RyanB said:
..Redfern? Has it been done? Do you see any CG left?...
Click to expand...
3 kms from the city, long term hold, CG may have been immense before. 15-20 years from now, untouchable !

depreciator said:
..Hard to imagine even the worst streets in Redfern won't get dragged along by what's happening in the area. You're a builder and can live in the place while you do the work yourself? Sounds like a good plan. Don't limit yourself to just Redfern, though...
Click to expand...
+1

Don't know much about other suburbs, but what I've seen done (online) with those terraces in Redfern, not only the CG's and RR has vastly increased, there was a write up somewhere I saw with before and after images, and it looks like a different city even though they are the same houses (terraces) in the same street. Amazing turnaround.

You being a builder, and as long as you don't overcapitalise...you will be set.
 
I wish I was a builder. I bought a small unrenovated 3 bedroom terrace in Redfern 21 years ago (at end of the recession) for 155k. It is still pretty basic inside. I've done some things like new bathroom, toilet inside, polished floorboards, fixed up garden and fences, painted house inside and out. I lived here from 1993-1996 and again from 1998 to 1999.

I woud expect continous capital gains for the suburb of about 9% pa (due to its proximity to the city). It has averaged 9% p.a. capitall gain over the time I have held.

It is a good rental property even though over 100 years old. Tenants currently paying $750/week. Room count is an important factor in rental properties here.

There is quite a good restaurant at the Redfern Club (upstairs in new building at the station). The owner is the same guy who runs Pinnochio's restauarant at the Spot (Randwick) and the Boatshed at La Perouse. The food is very good and quite reasonably priced. I never thought I'd be driving to Redfern to eat at a club near the station.

http://www.clubredfern.com.au/dining

Have seen dilipadated (uninhabitable) terraces close to the station selling for $1m (one in George Street comes to mind)
 
RyanB said:
I have been browsing the furum and the internet quietly for some time now, and am considering buying a PPOR in redfern. (terrace)

I have noticed an immense CG in redfern in the last 5-10 years,

I plan to buy the worst condition in a reasonable street and renovate. (I am a builder with a keen interest in Property investment and this will be my first!)
Click to expand...


I have a 2 bedroom unit in chippendale that i bought in 2007 on regents street and the new fraser building ( Central Park) 18 month ago made an offer to buy our car space out for $120,000 a pop! just for the car space!!!! so if your buying around this area the car space is definitely worth the $$!!

very high growth area- so if you can find something around redfern that's closer to the chippendale side/central side it should do well.

I reckon redfern has still a lot more growth to go!! there's plenty of new development happening in the area.

Also consider using less cash for the deposit, just enough for the 20% and leave the rest as buffer and for renovations.
 
Last edited:
I was told I could get South Sydney Council approval for a carspace at front of Redfern terrace back in 1993 if I handed someone $7k in a brown paper bag. Didn't take them up on the offer. Was also thinking if I hand the $ over what redress do I have if no carspace is approved. ICAC had just been through Council and I had little idea at the time how active the local residents action group was.
 
Wow, I ducked away for the weekend and just have come across the great advice and 1st had experience from everyone.

Firstly, Thank you all for sharing your opinions and knowledge, as a rookie it is invaluable. I really appreciate it.

I met with the money man late last week and I'm going to need to knock out a tax return (13/14) to enable the banks to come to the party with out going Low doc. (self employed :()

IMPALA67, The shopfront screams extra income with a parking space, well worth a look! and Cleveland st may be getting north of my budget and George st sold at auction for 750 on Saturday, But exactly the projects i am after, its always hard to gauge whether an addition to the property is possible without scouting out the neighbours and other properties.

Ajax, I'll let you know if i come across the paper bag crew, on second thoughts maybe i shouldn't :cool: I'll try your dining recommendation!

Brady, Great call. The moneyman suggested the same, offset with an extra 100k use it as a line of credit.

Will, Thanks for the info, Its not my 1st choice, i'd prefer a deep waterfront on pittwater, I'm gonna have to wade through the crap to get there but! If it means making a few $$$ I'll put up with it!

Once again, Thanks for the advice,

As i mentioned, i'll be unable to bid/offer untill mid june at the earliest, so for now its research, research, research..

For anyone intrested, i will track down this thread and post after the financial year when i lock one in!

RyanB
 
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