Hi all
Today I hear the term ex comissioned home for the first time.
Is someone able to explain what it means? (tried to google, there are lots of “opinions” about if they are good/bad, but haven’t been able to find a proper definition).
Also, why are they good / bad?
Steven
I assume this is referring to a house that was formerly government owned, i.e. the old “housing commission“, thus the name “commision home”.
Really depends on the exact property I’d imagine, but the commission homes I’m familiar with in regional Vic are often small, basic, and in areas that are less desireable. That said, in my local area, the former commission areas have been largely sold off over the past couple of decades and now privately owned, and therefore the areas, in general, are becoming more presentable and appealing than they once were. But still tend to be cheaper, and in less desireable locations.
What areas are you looking in? Examples of houses/listings might help. For my area, in really broad terms the pro’s would be price (cheap, and often solid rental returns), and the con’s would be desirability of the location they tend to be in, the type of tenant you’re likely to attract etc.
Damien
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This reply was modified 3 years ago by
Damien.
I was looking in Horsham.
It appears there were a few sold in North Eastern direction of Horsham and they were sold for low 200K or below 200K. But then there are also a few sold for over 300K in that general direction as well. (A few sold at Dooen Road for well over 300K).
Speaking with agent, I was told the places near Mary St / Winifred St, etc… are places where there are a number of ex-commissioned home, and even though they are not that far away from Dooen Road, the agent believes houses won’t sell for over 250K just “because they are ex-commissioned home”. But the particular one I inquired about (it is under contract now unfortunately), agent said has been lived in by elderly (apparently their children are selling on their behalf since they have now moved to a nursing home) and from what I can see, it has been pretty well looked after, in the sense that it is neat and tidy and without any major issues that can be identified, save for some minor adjustments that can be done in a few places.
Which part of Vic are you familiar with?
I’m in Latrobe Valley. Ex-commission homes can be bought here from around the low $200k’s still too, so possibly not too dissimilar to Horsham in that regard.
I’m a fan of the “grandma” house. I.e. a house that is structurally solid, and generally well looked after but generally dated. I think they often represent a good opportunity to add value, as many people overlook them due to cosmetic factors that are generally some of the cheapest things to address, particularly if you’re capable and prepared to put in a little sweat equity (things like paint and floor coverings can have a huge immediate impact for little more than a couple of grand and a few weekends work).
When you say Latrobe Valley, do you mean area like Traralgon?
I haven’t seen anything popping up that is below 200K in Traralgon recently. In fact, it appears the cheapest properties that show up now days in that area are now at least 250K or more.
I bought a house in Traralgon for low 200K sometime last year, and recently I see a well renovated one which is located just a few metres on the same street, and that one got sold for high 300K just a week or two ago. So makes me think I can do a renovation and aim for perhaps low – mid 300K. I don’t believe it is an ex-comissioned home though.
My strategy involves looking for similar “grandma” properties as well. Basically properties that I can improve and add value. Ideally my aim is to be able to add $2 value for every $1 I spend.
The Horsham one was listed for high 100K, but agent thinks even with a good renovation, it won’t reach 250K. Agent thinks a tenant will be found quite easily on that area but at the other hand, that area of Horsham is considered as a “somewhat rough area”, so whoever buys that property is better of just rent as is or do a very basic renovation rather than do a thorough renovation.
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This reply was modified 3 years ago by Steven.
My investment property is in Moe. Not ex-commission, but a smallish, 50+ year old basic home. Had been in the family since new, and owners went into independent living units. Super dated, offensively strong patterned wallpaper and carpets, but clearly well cared for. I bought it in December 2019 for $155k. Looking at what similar is being listed for today, it’s no stretch to say it would sell for $250k+. Possibly even list it at $280k+. But at the lower end there are still some in the low 2’s in Moe/Morwell. A little higher in Traralgon, as you say.
I spent less than $5k on it – ceiling plaster in the lounge room needed replacing as it was sagging, but otherwise a full internal repaint, and fresh neutral carpets throughout. A different house!
Traralgon has historically been priced a bit higher, but hasn’t quite seen the sharp price surge the I’ve seen occur in Moe over the past 12 months. I’ve watched Warragul and Drouin perform well over the past decade, and it’s finally hit Moe & Morwell during covid. So I certainly think there’s more room for short term growth in Traralgon off the back of that.
OK. Interesting story you have with your Moe property. Was it a property located on King St by any chance?
One of the things that always tends to get me is most people (agents, tenants, property managers) tend to think “a better kitchen / bathroom” adds more value than “better carpet / wall paint”.
It seems there is a general perception that “a property with GOOD kitchen and bathroom but functional bedroom is worth more than a property with good bedroom but only functional kitchen and bathroom”. So was it a case where you got a real bargain that you bought it at a below market price even though the property had “good (not just functional) bathrooms and kitchens”?
The way I feel is a renovation itself may take a few weeks. 1 months of we can do it quick, but otherwise it may go beyond that and last up to 2-3 months.
So if I were to spend $5k on renovation, I would prefer to be able to add $10 value straight away (that is, without waiting for another 6-12 months after renovation).
eg:
1. Settle the property at $155K in Dec 2019
2. Spend $5k and 4 weeks, and renovation finishes in Jan 2020
3. Property already value at $165 in Jan 2020
4. Any increase after Jan 2020 becomes a bonus to me. The reason is because how fast the value increases after Jan 2020 is beyond my control. It can be a very good market and an $100K increase takes place between 2020 and 2021, or it can potentially stagnate. But the point is I have no control o what will happen after Jan 2020, which is why if I were to spend $5k in Dec 2019, then I want to make damn sure that $5k will add $10 as soon as renovation finishes.
No, not King Street. A bit closer into town in a nice quiet little spot near the Ted Summerton reserve (Moe football ground).
At the time I felt pretty confident that it was under-valued. I got through it the day it went to market, and by that afternoon there was another full asking price offer on the table. I ended up paying above asking ($155k vs $150k asking), but feel if it had’ve gone on the market at $175k it would have got a lot of attention.
Despite it being cosmetically tired, it was neat, in a nice quiet spot in relatively close proximity to the CBD, really close to sporting facilities, new early learning centre, primary school etc. And it’s on a corner block with side laneway access and potential scope to subdivide down the track. My thinking at the time was that it was under-valued, would rent well at an amount that meant it would cost nothing to hold, and the potential to subdivide was the cherry on top.
It actually settled a little earlier than I was remembering. December was around when we got it listed for rent. My feeling at the time, after taking a month or so to spruce it up (just a day here and there around work), I think it would have had a market value nudging $200k… perhaps that $185k to $195k range. Now, anything that’s 3 bedroom in a reasonable location and is neat and tidy is nudging $300k. Perhaps a little less for this property just based on the fact that the kitchen and bathroom are on the small side.
In terms of kitchen vs bathroom vs bedrooms, and what impacts value more, I think if all three are neat and tidy, it probably isn’t critical in these price-points. This property had an updated (albeit) small bathroom. The kitchen was original, but very, very clean. I just gave the old timber fronts a coat of fresh white paint, and this made it fresh and unoffensive. A brand new kitchen and/or bathroom is great, and a really poor one of either will put a buyer off, no doubt, but the lower the price point, the less return you’re likely to get on an expensive update. I’d be included to look at paint, fresh door fronts, new benchtops etc as a middle ground.
The biggest difference for this property though was removing the wallpaper (strong, dark patterns, and different in each room) and existing worn and equally strong carpets. I painted in a light grey and white, with new carpet bought from Fowles carpet auctions (around $650 for a house lot from memory) and sourced a local carpet layer who provided underlay and fitted the whole house for a bit under $1k.
I’ll see if I can find some before and after photos!
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This reply was modified 3 years ago by
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