[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 29, 2012 - 3:17 am

Thanks Jac!  All goods points again. Once again, I am saying to hubby, "Jac suggested", lol. Well I may not to get to put into practice what I have learned just yet. The owner rejected our first offer, which is not a big surprise. But they seem insistent on not moving on price. The unit went to auction and was passed in, that was 2 months ago. We went to the open house and the only people there was us and the next door neighbor!  They think it is the tenant is making the place look bad. Nothing to do with the 1000 other problems with the place, lol.  

[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 28, 2012 - 1:26 pm

Hello Derek,

I have looked at post value and set targets realistically. So for every $1 invested the value will increase by $2.  It is certainly quite achievable for the area. The unit value would sit within the average range.   We are not trying to renovate and make the unit the most expensive around.  I also have taken a conservative approach to potential improved rental rates. 

The hard part is trying to get the owner to be realistic. He was asking the same price as what you would pay for a brand new unit.  So I have negotiate a good price. But I haven't put al my eggs in one basket. I am still looking for another property in case he thinks his unit is magical. 

How about you paint my house first so I can learn. One day that line is going to work, lol. 

Thanks!

[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 28, 2012 - 1:26 am

Hello,

Yes, Nathan I have picked up a lot of info and I am very grateful to everyone!  Yes, we have to get it assessed to determine if it is load bearing.  We have a reno "Must do" list and "Nice to do".

Derek,  thanks for posing some great questions.

I will start with saying my research started at state level and drilled down to suburb.  The suburb is within 15km of the CBD, the less expensive step sister to a more highly priced suburb.  The suburb has seen good capital growth in the past 10 years.  With rising demand, the suburb has also seen more houses knocked down and units built on the blocks.  There is also a train station which gets you into the city in short time as well as numerous bus services.  Vacancy rates below 2% and rental returns above 5%.  The suburb is gentrifying.

This property is in a nice pocket of the suburb.  But the property is not in good condition.  If bought at the right price and renovated, the value would increase quite nicely.  I have reviewed area property prices, inspected area units and compared this unit to others in the area.  I know my budget for reno and I know my limit of what I am what pay for the unit based on its current and future value. 

Admittedly renovating skills are low with only painting.  But there are some things that don't require skills that we can do and I have gotten rough estimates for getting other things done.  I know my budget is nowhere near being perfect and I have allowed for a margin of error. 

Improvements are new kitchen, new bathroom, painting, carpets removed and floor boards sanded, 1 door changed.  I would like to remove a wall to open the kitchen up but that is not a deal breaker.  I have estimated the increased value based on comparable units but have taken a more conservative estimate. 

I have put together a timeline how how long it would take and the holding the costs.  I have not nailed it all down because I haven't got the property yet 

But it all comes down to the price that we can negotiate on the property.  If the numbers don't stack up we will walk away.  No sense in over paying for the property. 

Derek your questions have helped me feel a bit better about the putting in an offer because I just realized that I have done a quite a bit of due diligence.  Still scared but I know if it doesn't work out at least I have given it my best effort. 

Now when I can expect you Derek to make a trip to Melbourne for my exciting and extremely fun painting party.  (If I get the property) It will be a BYOP (Bring your own paintbrush) affair. 

Thanks all!

[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 27, 2012 - 1:12 pm

I feel like a kid in a candy shop!  Everyone has given such great advice. 

I want to get this reno under my belt to see if it something that I like doing.  If it I think I want to do more renos then I will spend the money because it would be worth it in the long run.

Sorry for any confusion,concerning the rent.  The rent would go up if renovated but I was taking into account the money that I spend on reno and adding that to the purchase price and calculating the new yield on the increased cost and increased rent.  The place needs a new kitchen, new bathroom, painting, and all of the floor coverings removed and the floorboards sanded and polished.  I was thinking of removing the wall between the kitchen and lounge, but that depends on costs!

I will check eBay for bargains, thanks for the reminder Catalyst.  I am a bargain hunter. 

Nathan, I ordered the book today and can't wait to get stuck into it.

Jamie, thanks for the heads up about looking to keen.  I want to appear cool as a cucumber even though my knees are knocking together.  Thanks for the recommendation on accountant.  I don't know if I can afford anyone called House of Wealth, is there anyone out there called House of Poverty or House of Poor?    I will even take House of Installment Payments.

[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 27, 2012 - 6:40 am

Thanks DWolfe!  I have been looking at auctions and bargain shops to get a feel for prices.  Everything costs more than I initially thought!  But by poking around I have been able to get a better grip on prices. 

I have been looking at prices of renovated houses.  After renovating, our new rental price would put us back at the same yield as it was before the pre-reno investment.  But the value of the property is where I hope to win with the reno.  There is room to reno and push the value up quite a bit but not out of the market for the area.

Dean and Elise reno pack is still available.  I will jump in the end and hope I don't drown!

[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

November 27, 2012 - 5:10 am

Hello again

Thanks for the quick responses!  Just to clarify, I thought you could get a clause in the contract that the purchase was subject to a satisfactory building and pest report. So if that is part of contract and I have the report done and then decide to pull out, do I still lost the part of my deposit?

Nathan, thanks for recommending the book!  I will definitely get it as I can use all of the help I can help.  You sound like a very handy person.  My reno experience is less than nil.  Putting up drywall is a bit to ambitious for a person who has never even painted, lol.  Maybe you can make a trip to Melbourne and show me how it is done.  I am a bit of a slow learner so you better do the bedrooms, kitchen, dining room, laundry and lounge just to get me started

Thanks,

Greener than Kermit