Brisbane - premium inner houses - value add / 'high end reno' strategy

Discussion in 'What to buy' started by Orion, 1st Apr, 2019.

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  1. Orion

    Orion Well-Known Member

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    Hello there,

    I've been discussing property strategy with an adviser and he proposed something interesting.

    That is, the idea of spending circa $800k on a solid, well located but run down house in a prime inner area on a decent block, and spending a good $200k or so on a 'high end' renovation, to end up with a very premium family / executive type home worth $1.1 - 1.2M + (i.e. an additional $100 - 200k equity due to this top end market prices).

    This is much more than the $600k I would normally want to spend in Brisbane.

    Lets call it a 'high end reno' strategy.

    I know someone who did this quiet well in Melbourne, renovating expensive houses in your Balwyns and Camberwells to Chinese buyers tastes. They made a fortune.

    Thoughts? Is this possible in Brisbane?
     
    Orion, 1st Apr, 2019
    #1
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  2. Brady

    Brady Well-Known Member

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    I don't know the specific market, so can't comment on that...
    Someone with some more knowledge will.

    But looking at purely the numbers...
    - I would be alright spending $200k with $200k return, thats 100% ROI. Based on $1M cost and $1.2M you're grossing 20% TDR
    - But wouldn't be so keen risking $200k to make $100k, Based on $1M cost with $100k gross return, that's to tight - 10% blow out could be pretty easy.
     
    Brady, 1st Apr, 2019
    #2
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  3. wylie

    wylie Moderator Staff Member

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    I'd say it is possible in Brisbane but I cannot help but look at the renovations we've just done and wonder if $200k is going to be enough?

    Let me explain a bit better, because there are so many different types of housing in inner Brisbane, but many in the inner ring are Queenslanders.

    With the Queenslanders we've just renovated, to lift and build under would have been $350/400k to a high spec. That would include total build under with three bedrooms, living room, new floors, internal stairs, new walls, windows, downstairs family bathroom.

    Upstairs would have been new kitchen and replace old small bathroom, make an ensuite to the main bedroom and adding a deck, polish floors (or replace).

    No way $200k would cover this (Edited to add... unless it is already legal height and you are not starting from scratch).

    For a different style house that is already two levels of living and just needs refurbishment and new kitchen and bathrooms, $200k would possibly be enough, but not for a typical battened in Queenslander where it is like a new build downstairs and total refurbishment upstairs.
     
    Last edited: 1st Apr, 2019
    wylie, 1st Apr, 2019
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  4. Marg4000

    Marg4000 Well-Known Member

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    Be very sure you know the market. A sudden drop when you are selling could wipe out any profit.

    Hard to see how you could do this profitably if you don’t live locally and can’t do some of the work yourself, even just the easier stuff.
    Marg
     
    Marg4000, 1st Apr, 2019
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  5. QldKoolies

    QldKoolies Well-Known Member

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    I look at this every day almost. Its a strategy that will work if you’re a builder or a one man band type. But have a look at what you get for $800k, there’s a lot more than $200k worth of work to do.

    Edit: It’s a solid strategy over time though but less as a ‘flip’
     
    QldKoolies, 1st Apr, 2019
    #5
  6. Angel

    Angel Well-Known Member

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    We know someone who tried this last year and after spending a huge chunk of cash just getting engineer's reports and more E's reports and other fees, they decided against it. In Ashgrove.
     
    Angel, 3rd Apr, 2019
    #6
  7. TMNT

    TMNT Well-Known Member

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    I think it's also important to consider weather this adviser is a salesperson or a builder or what
     
    TMNT, 3rd Apr, 2019
    #7
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