Has anyone else bought a property that no one else wants?
I have been watching a property that has no appeal infact it is just plain ugly. But what people don’t see is the potential to be turned into something that will be grand.
After watching the price go down and change real estate agencies, and numerous exhibitions I put forward an offer that was alot lower than advertised and it was accepted.
I will clean it up, rent it out for a year already comes with tenant wanting to stay on, then build another 2 propertie on it.
UV was recently done which makes the house a gift.
Has anyone had there own diamond in the rough story?
Jenny1
Hey Jenny….long time no hear,
Posted something this morning that fits perfectly into this category, fleshed it out a bit since then…see below ;
One of our recent acquisitions was a basket case block value jobby on 1-1/2 acres with six dodgy 35 yr old sheds.
The place had been advertised for over 9 months on the internet only with absolutely no takers. This was a huge mistake we later found out on the vendors behalf, as the people trolling the internet sites were put off by the photos, and the people who were interested in the block obviously never went on the net…some can’t even read. The vendors were pretty sloppy and didn’t push the issue to get it sold, and their agent was also pretty sloppy (on my inspection of the property accompanied by both the agent and the vendor, he sheepishly asked if she had a copy of the title deed, as he’d asked for it over 9 months ago…I’m standing there as she searched through 4 full and scrappy filing cabinets to no avail). The agent turned around and said I was the only one who had ever shown any interest in the property and he’d try and get some details…it was a non event.
There was no sign on the property that it was for sale..another big mistake on their part. Two days after settlement, when I first went back to the property, I was approached by the next door neighbour who ran a bus company on the two blocks either side of ours…he’d been waiting for the block in the middle (ours) to come up for sale for over 4 years to consolidate his position and had no idea it was for sale. He was prepared to pay $ 150K more than what we bought it for, to have the triple block. The man was slightly [angry2] when he found out we’d bought it. Never underestimate the power of a sign out the front, or the next door neighbour who intrinsically perceives more value in the place than any other buyer out there.
Cleaning up 55 tonnes worth of trucking rubbish and garbage off the property (8 years worth of dross kindly left by vendor) was daunting but worth it…messy people never clean up their mess…
We had lots of trouble with clowns who thought the property was theirs to do as they pleased, with nothing written down. All but one tenant were not prepared to either pay rent or sign a lease and they either left or had a meeting with the forklift…beautiful…[biggrin]
Three months down the track it’s cleaned up and now 70% leased out and signed up. When 100% leased, it’ll be making 15.5% gross yield (12.7% nett). This was definitely one of those distressed properties that needed some elbow grease. You simply can’t buy them like that.
If we applied Eastern States logic of 7 or 8% yields on the cap rate method, the prop would of increased value by ~ 600K over 3 months for about 10K worth of costs and some confrontation with illiterate trogoldites who refused to pay rent and refused to move or clean up their mess. Well worth the hassle.
Our biggest dilemma is deciding whether to sit back and collect the 15% yield, or cash out, pay CGT and transfer equity into classy CBD CIP’s.
Our biggest lesson from this whole exercise is not to be put off from ugly and disgusting looking properties. They can be both capital growth shooting stars and great yielders. To look at though initially, you wouldn’t let your dog set foot in it. We’ve now moved away from “pretty” properties.
Go the ugly duckling every time I reckon. Don’t go buying these tarted up cosmetic reno’s that someone else has done…all image no value…you’re paying top dollar for someone elses fluff.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Jenny1,
I bought a property in 98′ in Vermont Vic. It was an ugly duckling. It was on the market due to a marriage breakup and had been unoccupied for a few months – the grass in the back yard was 5 feet long(I’m not exagerating). It was 860m2 in a court with a 11sq weatherboard that had some interesting renos but wasn’t finished. The base boards and half the weatherboards were stuffed(husband had removed aircon from bedoroom and nailed a crate base over the hole!), but it had nice polished floors thoughout and gas hydronic central heating. We offered $117 for it(wanted $139) and the bank was a week of foreclosing. Got it and spent about 12K on it including stamp duty, fix all the weatherboards/baseboards/repointed the roof/painted inside and out. Rented it for $195 per week for 2 yrs to the tenants from heaven(garden was in better nick than when they moved in). Sold it in 2001 for $240K, even gave the tenants the last two weeks rent free they were so helpful in allowing potential buyers through and keeping it clean.
Lessons learnt:
Look at return from rent before deciding who owns it(cost me a bit in CGT as I just put it in my name rather than my wifes thinking it would be negative geared). Hey I was a novice back then, but at least it helped fund my 2nd PPOR which we built.
Don’t go to auction unless their are several seriously intersted prospective buyers, cost me 2K in adveertising on to pass in on vendor bids and sell 3 weeks later.
Agree with Dazzling, don’t buy the tarted up ones, much better gains to be had with the ugly duckling, much less competition too.Hi Jenny,
What a great story.. Yes always buy the worst house in the street or the diamond in the rough as we have a few times and it has paid off. My wife and I brought a property off as private sale because she was going though marriage breakup. She wanted to sell for $70,OOO and house was a dump, no tenants for 12months as they shot through and trashed the place, He hubby started doing a home reno job including structual (opening up a wall between dining and lounge for more space) there was no laundry and the entire kitchen was ripped out. I studied the area and the price of 1/2 alone in the area was about 75,000. I knew that the house was free if I went ahead. I offered her $65,000 but her ex would not agree but she came to me later and said that we can do $70,000 as sale price and she would give me $5000 cash towards reno costs…(not bad). In the end we spend 2 months fully renovated the place and spend 15000 on expenses. new carpets, polish floor boards, new inside paint job. gardens etc. house came up looking a million dollars. we rented it out for $200 per week and sold 18 months later for $175,000… all because no-one wanted the ugly duck!!! go for it my friend … cheers John
Thank you John,Myoung and Dazzling for your stories it gives you alot of satisfaction to turn an ugly duckling into a swan.
I still pinch myself when I think of the bargain I got, 2km to shopping centre 3km to Uni, schools and high school .05km away.
Also I talked to the council and found they allowed it will allow dual occupancy on it as well. [biggrin]
So in future I will look for further ugly ducklings!
Good luck all
Jenny1
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