Crazy Idea

OK I’ve had a nice evening with a best buddy and we have demolished 2 bottles of great red, and that always gets the creative juices going so thought I would put down in words my crazy idea (or one of them) for you all to comment on.

When conducting my research on numerous suburbs, I find there is often a pocket, or distinct estate, or defined area, that somehow lost out in the “underlying valuable attributes” stakes i.e. they forgot to build a school, a transport hub, shops or some other key factor which gives an IP or even a PPOR some value score when you weigh it up on your investment template for comparing properties. Sometimes the result is a lack of investment in renovations etc and the whole area is dated.

Sometimes I will see a defined geographical area of housing, all built within a short space of time, but no shops or school or something and so the whole area suffers from low or nil capital gains and as an investor, any property in that area scores low on the evaluation whilst adjoining estates rate higher because they have schools etc.

So that leads me to thinking – how could I buy one of these and create the value factor via the necessary infrastructure that underpins value? Sure I could buy the worst house in one of the (generally mundane and unremarkable 1970’s brown brick 3 bed) streets, but unless there is a milk bar, school or bus station its capital value is always going to be constrained. Do I also buy some land and build a couple of shops, but what if the rest of the street is still drab?

WHAT IF – let’s say a street has 20 houses in it, a group of 20 (or less) investors gradually bought the whole street by approaching the owners one by one, and then all the homes were renovated to lift the whole streetscape at once, AND you built and leased a few basic shops within a few hundred metres? Surely the value of all the homes would lift?

Then you could move on to the next street. Alot of these areas never attracted families due to the lack of schools etc or those families have grown up and moved on so the older parents are left. I’ve often thought if I could get a hold of those houses in street-lots and provide a group of trendy shops, cafes etc then the family or household units that do not have children might pay for the value created in renovating the properties.

Would it be feasible to get a group of people to buy a whole street of houses by approaching the owners and acquiring them over 1-2 years, and then renovating them and creating the necessary (minor) infrastructure to make them even more valuable? Or maybe better still obtain options over several houses, build a new group of shops and a child care centre and then exercise the options?

Cheers

skippygirl