All Topics / Help Needed! / Just purchased a property and need advise please!!

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  • Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    [grad] … hi everyone,

    I finally purchased my first property!! YAY! [biggrin]

    It is a block of units and a house all on the one block and one title in Albury. They are close to CF+ but need some work to get them over the line – they are tired and “old” and we need to renovate the kitchens and bathrooms – we took this into account and made our offer accordingly – it was accepted which stunned us so we have the $ to put in new kitchens and bathrooms – even if cheaply!!

    Does anyone here know someone that could install a flat pack and is maybe capable of plumbing or even an electrician or joiner? Maybe a handyman? Must be in Albury or willing to tavel there. We settle in 30 days but wont do this work until after that. Any referrals welcome!

    We would also like to find a designer that could tell us what we could do to these to improve them. We really want to modernise them and we know there is a market for this type of property in the area – and the rent we want is achieveable – it is 2 blocks from a new shopping centre!

    Secondly I need some advise. The current owner just signed someone up for a 12 month lease at a silly low rental amount. Our accountant seems to think that as new owners, we may be able to renegotiate this lease after 3 months -he says there was some law a while back but he is unsure if it still exists – does anyone know the answer to this or tell us how we could raise the rent or what our options are?

    Currently – all of the units/house are being let way below market rent as the previous owner was a negative gearer who managed the place herself and did not increase rents for years – now she is leaving us a legacy – low rents from people on tenancy agreements! HELP !!! [blush2]

    Cheers

    Lee

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Just renovate the empty ones and then get the higher rent. Renovate the others as they come empty then get higher rent.

    Offer the tenants on low rent the opportunity to move into a renovated unit at market rent or stay where they are. If they take it good – if not renovate after they leave.

    In NSW you must honour the existing lease as far as I am aware.

    You are probably better to lease them one by one than have them all come available at once.

    Cheers,

    Cheers,

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of CeliviaCelivia
    Participant
    @celivia
    Join Date: 2003
    Post Count: 886
    Originally posted by leebee1:

    [grad] … hi everyone,

    I finally purchased my first property!! YAY! [biggrin]

    Does anyone here know someone that could install a flat pack and is maybe capable of plumbing or even an electrician or joiner? Maybe a handyman? Must be in Albury or willing to tavel there. We settle in 30 days but wont do this work until after that. Any referrals welcome!
    Cheers
    Lee

    Congratulations, Lee!
    I just want to say that as far as I know the plumbing and electrical work will require licenced tradespersons- rather than a handyman.

    Celivia

    Profile photo of DazzlingDazzling
    Member
    @dazzling
    Join Date: 2005
    Post Count: 1,150

    Excellent Lee – congratulations on your recent purchase.

    Care to share some numbers so we can all learn from your recent experience….after all this is a numbers game.

    Well done.

    Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    Hi All

    Your right – it is all about the figures so I hope this helps. Lessons to be learnt from this – dont discount possibilities before you work out the potential!

    Our story:

    Well – the owner originally wanted $530,000 and we offered $500,000 – she asked for $515,000 abut we met her 1/2 way at $507,000 – she accepted!!

    We need to renovate the kitchens and bathrooms of the units – the house can pretty much stay as is – just replacing the curtains and kitchen upgrade a little there and maybe a fresh coat of paint to brighten it up a bit.

    Rents are currently returning $600 week. Now that does not sound very cash flow positive I know but that is where our detective work comes in. On questioning the agent, we were able to uncover that the owner has not increased the rents for some time now and and the market rent without doing a thing should be $685 a week. Still doesnt look good though does it!!

    Now, this property is on one title and only 2 blocks from a major shopping centre that has just been overhauled and is quite a modern place with major retailers now there – and we spent a considerable time in the centre and it is a thriving place now more shops are there.

    Rentals have gone up for nice places around the area and the owner has not increased rent for some time as she is not interested in making money – just saving tax. One guy has been there for 21 years – he pays $30 a week less than anyone else and has for years – for no apparent reason as his unit is possibly the nicest of them all with new carpet and paint.

    The properties need some work to make them modern but we have done the sums and if we can get away with spending $10,000 on 3 of them and $15,000 on the house then the rents are going up considerably.

    They have been appraised to receive $250 for the house – an increase of $65 per week and the units will bring in $185.00 per week each when we are finished – although one of them is likely to bring in around $230 as it has a spare room attached that we are going to make into a 3rd bedroom.

    With the increase – taking into account all outgoings including rates, management fees etc we will be around $140 a week CF+. Not a bad result we think.

    We are going to purchase all the items we need ourselves and we can do it quite cheaply at auctions here in Canberra and that way we will only need tradesmen and a handyman to fit it all. We will do a lot of the clearing work and painting but we plan on leaving the rest to the professionals!

    It pays to look into things as when we first looked at these we nearly dismissed them immediately as they did not meet the criteria for CF+. I asked the real estate agent a few questions and found out that the owner had not increased rents as she was negatively gearing and she had not increased rents for nearly 2 years and in one case – 4 years.

    She also told us that the lady was in a hurry to sell as she had just retired and had no income to pay the shortfall. We also realised that by modernising the places we could ask for quite a bit of an increase and asked around and did some research – and found out that the current rent was extremely low but more so the demand for modern living was good in this area with a shortage of places that offered this – most of the units in this area are from the 70’s with no renovations to bring them up to a better standard…….bonus!

    Hope this helps a bit – my advise to anyone looking is to drill the agent for further information – such as the market rent and potential – ask them what you would need to do to achieve that then work it out from there – you may be surprised.

    Lee [grad]

    Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    oops everyone – I did not mean to say $140 a week CF+ – that was suppose to be annually!! sorry – this makes it nearly cash flow neutral but hey – thats cool with me – its slightly positive!!

    Another thing I should have mentioned was that if we want we can strata the property and sell off the house as it has a seperate yard and fenced off from the units…..having paid around $126,750 (if you divide the cost to purchase by 4 as there are 4 properties on the title I am sure we could sell for around $200,000 – now that is worth the trouble.

    Lee

    Profile photo of fernfurnfernfurn
    Member
    @fernfurn
    Join Date: 2005
    Post Count: 139

    Congratulations, well done. How exciting for you, I would be very interested from others with experience on how to get long term tenants out. I have a vague memory you can justify their rent is way below the norm for the area, but I dont know whether you have to go to a tribunal or something. I wonder if you can just put it up to normal when they renew their lease

    Fern

    Profile photo of Brenda IrwinBrenda Irwin
    Participant
    @brenda-irwin
    Join Date: 2003
    Post Count: 119

    What a good find, congratulations. For the tenants sakes, do not leave it until their leases are up to notify them that rents and renos are on the agenda. Formally notify them of your intentions asap so they have lots of time to get used to the idea, and make future plans of their own.
    Cheers Brenda.[biggrin]

    If you want to get out of a hole, first stop digging.

    Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    Thanks heaps everyone – we will notify the tenants as soon as we can of our plans so they have time to decide what they should do……we are going down after easter so we can pick a great property manager and to make sure our rental increases are in line with market rents!! Thanks so much for your input!! It is an exciting time for us!! [upsidedown]

    Lee

    Profile photo of dtooveydtoovey
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    @dtoovey
    Join Date: 2006
    Post Count: 8

    Hi Lee

    I just got back to Canberra after spending the weekend in Albury. How are the untis going a few months on and what attracted you to Albury, all the way from Canberra?

    Did you go to Albury with the intention of finding the units or did the numbers just come out that way?

    Ta

    Dean

    Profile photo of leebee1leebee1
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    @leebee1
    Join Date: 2006
    Post Count: 31

    Hi dtoovey, the numbers just added up after talking to the agent. I wrote an email in the beginning and the reply indicated further investigation was required. We had no pre conceived notion on Albury at all…….it just worked out that these units were there. After due dilligence we were able to seee the potential.

    What I did was to look on the internet and ask questions to any property agent that had a place for sale that looked like it may be yielding around 4-5% then set about finding out about the current owner, the rental demand and the last time rent was increased and if there was a possibility of increasing…..thank goodness we found out news that made up happy – we could increase and make it positive.

    My suggestion to anyone looking is to not limit yourself to an area – look at what is on offer all around places with at least 30,000 people – then start asking, whats the current rent and the potential, and when was the last increase and finally, if it is not achieving market rent, what would need to be done to achieve this and how much is it likely to cost you. Even if it is at market rent, you may be able to add something that will increase it a little! Then add it all up!!

    Good luck with your search…….

    Lee

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    hey there,
    Did you find the kitchen supplies etc you needed? I can get prefabricated units etc …. however you would have to organise travel from Sydney to Albury….. 40-50% off retail.

    Cheers,
    Kiwi

    Why Rent? Rent 2 own!
    http://www.rent2ownaus.com

    Profile photo of Ol PaintingOl Painting
    Member
    @ol-painting
    Join Date: 2003
    Post Count: 123

    Hi,
    I know a free lancing architect in Sydney. He’s very organised and work efficiently. If you can send him photos/plans I’m sure he can advised you an updrading solution at reasonable cost.

    Would you like me to introduse yu to him?

    Congrats on your new property!!!

    Lesia

    Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    thanks heaps for the offers everyone, we had a hiccup with the finance but just found out today that all is good and going ahead for settlement in a couple of weeks. We already have all the renos organised now so thanks for your offers – that is nice of you all!!

    Originally posted by maxolau15067:

    Hi,
    I know a free lancing architect in Sydney. He’s very organised and work efficiently. If you can send him photos/plans I’m sure he can advised you an updrading solution at reasonable cost.

    Would you like me to introduse yu to him?

    Congrats on your new property!!!

    Lesia

    Profile photo of connor1connor1
    Participant
    @connor1
    Join Date: 2006
    Post Count: 3

    Hi, Have you heard about the website for private Landlords, http://www.thelandlord.com.au?
    It’s awesome for beginers and pro’s alike!

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