Forum Replies Created
oh, and for the outside we just got some cheap plants and stones and transformed the dirt into a tropical garden = looks great!
crashy wrote:leebee, thats awesome increases in rent. can you tell us more?Hey there crashy
I looked all over for IP's and came across a pretty run down block of 3x 2br and 1x 3br unit the size of a house with ensuite. They were quite dirty to look at inside and the same tenants there for so long that the landlady didnt have the heart to increase rents. We could see the potential and set about buying up replacement items on eBay and also the local Queanbeyan auctions where they offered to come down to Albury to install the kitchens we got from them – with granite bance tops included. We got new blinds and all other items including tiles from eBay at a fraction of the cost.
We then used a local semi retired builder to do most of the other work and used local tradies to install all other products. We replaced the lot. We did the painting ourselves – and I would never do it again let me tell you and fully remodelled 3 of the units. We got ourselves a fantastic property manager and from $100 a week to $185 as soon as they were completed for the 2br and $305 for the 3br. We also used a little bar area and turned it into a study!! Now we have a 3br plus ensuite plus study home!!
The trick was buying all the items ourself – taking out the cut from the middle man. We replaced everything and did it for so little and have transformed the place. We have just finished the strata of the house and will sell that off soon to give us more capital but will keep the units as they are worth holding for now.
Im happy to answer questions anyone has
Cheers, Lee
Hi nicknovember
The property is in Albury – Lavington – close to the shopping centre
Im with Crashy – the only way to reno cheaply is to buy off eBay – buy all the items you need to replace then hire a handyman, local trades people to install it all. We did our reno's so cheap using quality applicances. They look fantastic. The units were renting for $100pw before the renos and were renting for $185 after. The house was bringing in $190pw and after the reno it was bringing in $305. The best thing about buying from eBay is you can pick up brand names for a song and they look great.
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
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
[jerry] … congratulations and the best of luck to you peter-reebok ….. I hope you power ahead now – the first one is suppose to be the hardest – so it should be easier for you from here on in …. well done and keep up the great work!! [specool]
…. it really can happen but you have to be vigilant and see the opportunities – they are not always there for you to see in the beginning.
Sometimes it means looking further into the deal to see if you can make it better – sometimes it is just plain hard to see how that can happen. A few weeks ago we finally found a block of units and after some due diligence and a lot of question asking we found out that the owner had not increased rent for a very long time and the flats are tired and in need of some renovations……we had to do some serious leg work to make this deal into a CF+ but it was worth all the field trips and research…..and the many hours seeing what our options would be and what it would cost. We will hopefully settle in around 30 days then start the renos – then put the rents up in line with market rents and what do you know – CF+ properties!! On first sight these were negatively geared properties but we are turning them in to CF+ – as the opportunity was there all along for that but the owner was not interested! It pays to do your research – you may be surprised what you find out.
…. it didnt just happen – we made it happen and you can too, so – never give up hope – if your awake to making it happen then it just may be around the corner for you too……even when it looks unliekly – do your sums and research as it may be that your find is valuable after all – good luck! [exhappy]
Lee
mmmm – interesting – I like something with the word link in it – maybe propertylink, investmentlink, realestatexchange, managementlink, managementxchange……not right but I think it needs the word link in there somewhere to tell people you are linking services. maybe even propertyinc or something similar…hope it helps! and good luck with your business.
Lee [strum]
[cowboy2] … sounds like a plan! 35k would surely help out I am sure for your next venture – especially if you are buying around the same $ mark.
Maybe the unit you have just purchased could do with some extras that people may pay nicely for? It never hurts to look at what may add value and research if the demand would be there for it in that area!
My suggestion would be to look at all rentals in your area, go inspect them to get ideas then try to increase your property worth by adding a few of the extras – as long as it does not cost too much. Otherwise – just sit and accumulate Capital Growth……not a bad alternative!
Lee [headphone]
[strum] …. hi aleta, it sounds like you did OK….. is there a chance you could do some minor cosmetic updates and increase the rent – that may push it closer to CF+? Not to worry if that is not possible – as it sounds like you may get some capital growth anyway! good luck with it all [exhappy]
Lee
[exhappy] …. I too am about to use Scott aka Depreciator for my new investment properties as he is highly talked about on this site……cant do better than to have that many recommendations I think …. so give him a go!
He is very helpful – I do know that – and yet I have yet to use his services – but I have asked him many questions and he always answers with helpful solutions. I am certainly going to use Scott shortly. Still not sure what I need from him – but hope the heck he can sort it out for me!! hehehe [blush2]
Lee
[exhappy] … thanks heaps for this Troy and to all others for their feedback – we have decided we will ask for the discount and see how it pans out – we have nothing to lose, so fingers crossed!![strum]
Lee
…. can I just offer a comment on this – and it can be ignored if you feel it does not add value!!
I was also feeling that there are no CF+ deals around and had been looking for a long time…..then I realised I had not been doing my research hard enough. Some properties that seem to be negative were in fact so close to CF+ that I nearly let them go.
The lesson I learnt was that it pays to talk to the real estate agent and ask the question – is this property currently receiving market rent and if not, what would it take to increase it. You often find stories like mine – the owner was a negative gearer who had no interest in putting the rent up and did not for years. One tenant has been there 21 years and he is still paying around $50 a week below market rent with the others not far behind.
The current owner put in air conditioning and a garage and put up a fence as has wanted to spend money for tax reasons – so spent it on the peoperty without raising rents!
We did the sums and what do you know – we could come close to CF+ with just increasing rents but with renovations then major rent increases – this property will be CF+. We did some DD and found the area will support the rent we want to achieve from these properties!
I only found this out after drilling the agent, but boy – was it worth it. If all goes well, we will exchange contracts after Easter then await the banks valuation and should be in there in 30 days with renos starting soon after.
My advice to anyone is that on first look it may not seem like the right property but I ask that you look further into it to see if you cant make it CF+……you dont always find these out there already CF+ – you make the deal into CF+ so you need to do your research and crunch the numbers to see if it could be CF+ at all…..dont walk away until you find out. You may be surprised how easy it is to make the mark.
I hope this helps some …… I did not find a CF+ property – I made it into one! It is not easy in the current climate but dont give up too easily – they are still out there – just harder to find….
Good luck – and dont give up! [blush2]
Lee
… thanks heaps for this advice – sounds reasonable to me – I just wanted to know where we stood so I knew what I could/couldnt do. I dont think we will walk from the deal as apart from this there is nothing to be fixed – but we shall speak to our property advisor on Tuesday and see what they say!!
Cheers everyone!
Lee
Hi there,
We are purchasing the whole block of units so there is no body corp involved here to fix anything – they are all on the one title as well along with a 3br house.
Cheers
Lee
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
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
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]
evo] Hi Tamtam
I also looked into these types of properties and quickly left them alone. When you are dealing with retirement facilities the Government insists you maintain the standard of the unit and this can mean thousands of dollars in unwanted upgrades to the unit – even to things you think look ok – you dont get to have much of a say. The management fees can be a little high as well and it is the manager and not you that decides what needs to be done to the units.
It can be expensive! Also – most are under 50sq so most lenders wont lend on them and they can be vacant for long periods – no rent – no positive cash flow. I did the calculations and must say that they did look attractive first up but after applying due diligence – can say they are far too dicey – my suggestion to you is to leave them alone……..just my opinion though! good luck whatever you decide to do!!
Lee[biggrin
