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MW: The house is about 30 years old and is quite dated. The
single bathroom is distant from the bedrooms, as is the toilet.
While popular in their time, the arched single garage and
windows across the front emphasise its age. The interior of the
house appears to be covered with wallpaper and its Tasmanian
oak floors are hidden with carpet. The stylish-for-its-time bar
would have to go. Air conditioning is limited to the living area
and would need upgrading. It could easily cost $20,000 or more
to make it an attractive rental in today’s market.
¿ WHAT ADDITIONAL QUESTIONS WOULD YOU ASK
PS: No additional questions really, apart from the usual due
diligence questions, and questions about the circumstances of
the vendors, their motivation, and their reasons for selling.
MW: The vendors are evidently strongly motivated. Might they
accept a price that allows for the $20,000-plus fix-up estimate, so
I’d ask, ‘Is there a good deal here?’
¿ WHAT IS THE MARKET OUTLOOK IN THIS SUBURB
AND FOR THIS PROPERTY TYPE?
PS: Single-storey detached family homes on good sized blocks
of land are by far the most frequent type of property in Flagstaff
Hill. The suburb is landlocked between the Sturt River gorge,
the Happy Valley reservoir and the hills, with very little vacant
land available. This coupled with quality lifestyle factors and the
relative proximity to facilities and even to the CBD will, in my
opinion, ensure above average long-term capital growth.
MW: Proximity to tertiary institutions, major healthcare centre
and lifestyle amenities suggest this area will enjoy good demand
from both homeowners and renters. I’d be inclined to expect
prices to revert toward Adelaide’s overall pricing trend, after
the recent rather flat performance. Properties like this one
make good rental investments, because of demand from young
families in the area.
¿ WHAT SORT OF INVESTOR WOULD THIS PROPERTY
PS: In its current condition, the rental yield would be relatively
low and repairs and maintenance costs probably quite high,
with very limited depreciation available. Consequently, the
property wouldn’t suit the majority of investors, such as buy-
and-hold, self-managed super funds etc. It might suit renovators
though, providing the purchase price is low enough, as the
location is good and there seems to be good scope to add value
and increase the rental income. Renovated, I think the property
would achieve weekly rent in the low to mid $400s range,
particularly if a second bathroom could be added, and even more
as a four-bedroom house.
MW: This property would suit a buy and hold investor, who’s
willing to handle some basic fix-up and minor upgrades to
make it more competitive and attractive to potential renters.
Depreciation would be minimal, probably limited to the initial
upgrades. Capital gains will likely keep pace over time with
Adelaide’s general market increments. The gross rental yield
should be at least 4.5 per cent.
¿ AT ITS PRICE RANGE, WOULD YOU TALK WITH THE
AGENT OR WALK AWAY?
PS: In its current condition the property’s market value is
around $380,000, assuming an owner-occupier purchaser. For
renovators, the numbers would dictate the walk away price.
The property needs a fair bit of work so you need to know your
costs well. However, the property has good potential, providing
the price is right. If it suits your strategy then there’s no harm
in talking to the agent to find out more information and then
making a written offer at your calculated walk away price.
MW: I’ll always talk to the agent when a property is worth
investigating, unless my initial desk-based evaluation reveals
serious shortcomings or problems etc. I’d want to ask the agent
how much the vendors might be willing to discount the asking
price and whether they’d perhaps include the cost of the fix-up
in the price. It’s an older property with limited capital growth
potential beyond the suburb average, so I’d want to be confident
of getting both strong rental yield and high occupancy. I don’t
think it’s worth more than about $350,000, so if the vendors are
already at their lower limit I’d walk.
¿ BLACKTOWN, NSW
$440,000 - $480,000
Blacktown has historically been
a working class centre, situated
30 kilometres west of Sydney. Its
affordable real estate status has taken
a hammering of late as property
prices continue rising. The gross
rental yield in Blacktown often reflects a better return than
suburbs closer to the big smoke.
The selected listing is a detached dwelling on a block
less than 600 square metres. The home has three-bedroom
accommodation plus a single garage, and is in mostly original
condition. Ancillary improvements to the site are tidy but basic.
The property is listed for sale at $440,000 to $480,000 and no
rental estimate has been supplied.
Buyers’ agent, BuyRight
¿ WHAT WOULD BE A REASONABLE WEEKLY RENT FOR
FH: $380 per week to $400 per week.
CR: This old fibro home is in original condition and located on
æIt’s an older property with
limited capital growth potential
beyond the suburb average,
so I’d want to be confident of
getting both strong rental yield
and high occupancy.Æ
\\ OPEN FOR INSPECTION
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