I asked a while back about your thoughts on a property that I was considering buying that was next to my mums place.
A 4 bedroom BV at $376,000 , thoughts were to hold on to the property for future development a long way down the track.
I have taken your advice and just looked at the property as a stand alone and still think it might be a good deal.
The Median Prices in the area are around $420,000. This property needs a fair bit of work especially the bathroom, it would need to be completley replaced, there is no heating (none) and there is lino on the floors not to mention huge trees all around it.
The Vendor has not bought anywhere yet and I though of making an offer of around $345,000 with a 120 day settlement and option for rent back to make it more attractive.
I always hesitate when it comes to price and making an offer.
Is there any advice you can give me as to make sure I am not making mistakes ??
Just got a call from the agent and they have dropped the price again down from $390.000 to $367,000 now $359,500.
The Vendor has not purchased yet and it seems like he wants to sell.
We would need to renovate the property as mentioned in my previous post, would you get an inspection done ? The gutters would need replacing and the roof restored (a guess) , there are also lots of trees around the property that I would want to remove.
I really would nto to pay more than $350,000 for it, I spoke to another agent in the area and she said that you would not be able to get another 4 bedroom home in the area for under $400,000 although there is another newer property up the road at around $370,000
Its a 70's brick veneer and in your opinion if the median price for the area is between 400-420 then what else shoudl I be looking for, the area is relatively close to schools , shops transport , it is however on a main road with lovely views.
I have been told to check out the area and property prices, I have done that ,so what am I missing, what am I not thinking about ?
It would still be a buy and hold for quite some time , renovations to the point of making it livable and comfortable but not through the roof until the time comes to either fully renovate and sell or knock down and devewlop with next door, The rent would only be around $350 pw.
I would be careful buying on a main road because you limit your market when re-selling – many folks will not buy on a main road. Also be careful of median prices as they only give an indication (a starting point). Medians tend to provide more information about what’s been selling rather than what a particular area’s property is worth.
Ask the Sales Agent to provide you with a report identifying recent sales in the area OR you could order an online report that will give you suburb, street and specific property data. Once you get your report(s) check out comparable properties nearby in terms of where they are and what they sold for. It’s always wise to go see those properties to gain an understanding as to how they compare to the one you’re looking at. The fact that the property you’re looking at is on a main road means it is not worth as much as comparable properties that are not (on a main road). Good luck!
Hi Simone, It sounds like you have been contemplating this purchase for a while now and have not made an offer or any progress. Consider the following: – Are there many properties for sale that you can somewhat compare or under offer in this price range. – Have they been sitting for sale for a long time (I can check this for you) – What is your budget (high and low) – eg. $280-370k – Is your absolute priority this one, as it needs work. Will you really want to purchase this property knowing the immediate or short term work required. If so, thats great
The rest it sounds as if you have done your due-deligence. Remember you can only do due-diligence on the past. Projections, forecast etc are really just educated opinions. If this is long term for you 3+ years, which it should be, the marketplace looks after itself. What matters is that you can comfortably service this property if unforeseen circumstances arise. eg. rental return (is their a strong rental market).
Remember, you have to be in it to win it. As a serious buyer you must be ready to pounce at a moments notice. – Have your finances sorted (pre-approved as a minimum) – Know your terms and conditions (finance, b & P, settlement time frame) – Know how to negotiatie (or know someone who does) – Remember it is not only the price that is negotiable, terms and conditions are as well
<moderator: delete advertising> At the end of the day, if this property does not meet your criteria in terms of needs, price, figures etc. do not ponder. Move onto the next one as this really is a buyers market and an exceptional opportunity to build wealth.
Absolutely! This is money well spent. If possible – try to be present during the inspection so you can have a quick chat with the inspector. If you can't be present, give them a buzz afterwards to quickly discuss the report.
Hi Simone, Whether you think you are right or wrong… your right. Although the prospect of purchasing next door to your mothers sounds great, investing requires no emotion. Have you read Steve McKnights books? Great concept. Talk about bullet proofing or recession proofing your portfolio. Great read.
Thank you for your kind words. As stated the arrangement would not be under a buyer’s agent authority. This gives the opportunity for people who are not in the financial position to employ the services of a premium buyers agent, to seek assistance.