QLD Brisbane - House w/2 rentals potential - what am I missing?

I inspected a house today that has me asking what am I missing as it seems too good a deal. Fully renovated upper unit with 3bed / 2 bath but on a small block of <300 sqm, another house was built on the rear and they share a driveway but no body corp.

It also has a fully renovated separate unit with kitchenette and bathroom on the ground floor of a Queenslander. I was told that the ceilings were standard height in some parts, but other parts were too low and the two "bedrooms" can't be classified as bedrooms. The living area is small, but suitable for a single person. It also has a separate entrance but would have to share the laundry space and likely 1 of the two garage spaces. They did a rental appraisal on it and said it could be rented as is.

Renting out both units gives a rental yield of over 6%, though I'd consider living in the upper unit. It does need ceiling fans, which I find strange given it was fully renoed - why not spend the money to put in ceiling fans? The ceilings are quite high on the main floor - maybe 12 feet - so it made me wonder if it was a matter of difficulty. No fans/cooling in the bottom unit either.

The location isn't ideal - 100m from a major road and close to a few restaurants. I understand that those are big detractors, but it doesn't feel like that should be driving the price that low. It has been on the market a couple months and had finance fall through once. Location is ~5km S/SE of Brisbane.

Now that I write it all out I'm starting to see the flaws and I know I'm giving up the CG of a house on a solid block of land, but my house on ~320sqm in Melbourne has done very well and it falls in the similar grey zone of not a house but not a townhouse (no shared walls).

 

Is it approved for dual occupancy?

 

If the council has not approved it as "habitable" (which they obviously haven't or you would not have been told the bedrooms were not bedrooms) you will certainly have difficulty finding Landlord insurance and others here are better qualified to list the other risks eg Council finds out and issues a notice to cease renting it out?

 

I'm wondering if they redeveloped it and then later realised that it wouldn't be approved for dual occupancy. We might eventually use it for one of our parents, but I'd want to rent it out in the meantime. If it can't rent, then it certainly loses some of its shine.

The agent said it could still be rented, but they couldn't be called bedrooms. I'll have to see what I can find for occupancy laws.

 

Why is this a good deal again? Does the price seem low only if you assume its dual occupancy?

 

Can you tell us what Council area it's in?

 

Appears to be Brisbane, but councils here look confusing compared to Melbourne.

 

Without the dual occupancy it'd still be a reasonable deal, but certainly a bit cheaper. Looked at a comparable place and the biggest difference was the location being better.

 

Bingo - I'm guessing this is it. It's a brand new renovation, so they couldn't have applied for the dual occupancy permit. I've gone back to the agent for more detail. If this turns out to be the case, it feels like negligence on the part of the agent.

I still may be interested, but it certainly isn't the slam dunk it appeared to be at first.

 

It wont be negligence on the part of the agent but look carefully at the marketing strategy. Any agent with a quarter of a brain can tell if a property is legit, it is a different matter in how you interpret their comments.

 

Not necessarily negligence. The property sounds as if it can be used by two related parties/families, just can’t be rented separately. Several generations of the one family living together is becoming more popular.
Marg

 

@wylie gets the gold star!

The selling agent had the property management company that did the rental appraisal call me. He confirmed that there is no legal way to rent the top and bottom separately. No property management company would take it on to rent out.

I called it negligence because the selling agent told me they had appraised the bottom "unit" at $280/wk and they would send me the appraisal. I was told that it could be rented out separately while we lived in the top floor. To be fair, the agent probably didn't know. Once I raised the question of legality he did the right thing trying to find the answer quickly for me. However, if I had not posted this thread, I may have purchased the property without finding out until after the purchase.

The main use cases for the lower level is as a home office, ageing parents or older children that want their own space.

Here is the house in question - I do still think it's a nice renovation, but the location isn't great (next to two fast food restaurants, across from a high school and close to a busy road): 18A Chester Road, Annerley QLD 4103 - House For Sale | Domain

Note that the advertisement itself is correct, and notes it as 3 bed (not 5) and makes no mention of the rental appraisal.

I also still wonder why A/C and fans weren't installed during such a nice reno.

 

Opposite a school, next to a KFC, with units looking into backyard and next to what looks to me like a block potentially coming up. Yeah nah.

 

Its not negligence. Its withholding information. Agent works for the seller. Once you asked, though, they had to tell you. Notice how fast they got back to you? They knew. The ad shows those two things arent even bedrooms. You buying thinking it could be rented out separately is exactly what they wanted. Again they work for the seller.

 

Which is why it's been on the market for 2-3 months. I'm going to have a look at some of the town houses in the area this weekend - but unit prices have been flat in Annerley for 10 years! Makes me a little nervous but I'd like access to the train and the area feels quite nice. It's either that or rent in the area and invest elsewhere in Brisbane for low 600s.

 

I get who they work for, but that's a blatant lie if they knew. Glad I asked you all!

 

The ad has not changed - I see nothing wrong with the ad. The agent telling me that the lower portion has appraised at $280/wk to rent out is the problem. He did offer to send the appraisal through - which I imagine could cause them issues. I said as much to the agent. If it's an honest mistake, they'll stop offering that info. The house probably does have a stronger rental price than other houses in the area - maybe ~$650/wk instead of ~$550/wk. That would be fair info to provide.