Join Australia's most dynamic and respected property investment community

Latest Purchase - Cowes

Discussion in 'Renovation & Home Improvement' started by Brendon, 25th Jul, 2016.

Tags:
  1. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
    Have learnt a lot reading through everyone's stories of their IPs so I thought it would only be fair that I share the story of mine as it happens.

    I'll try to keep it as short and sweet as possible. I wasn't looking to buy in Cowes (already have an IP there) but this popped and it seemed to good to pass up.

    The house is 13 Yarramundi way cowes
    House Sold Cowes, VIC 13 Yarramundi Way

    It was advertised for $299k, a mortagees sale, I looked at it on the Saturday and was told there was already 2 offers on the table and it would sell by Wednesday (they had to wait for a valuation before they could sell)
    After some serious consideration I offered $300,000 and was successfull I have since found out that there was 4 other offers and I was the highest offer by only $900.

    The Good:
    4 bed, 2 bath, 2 kitchens, 2 laundries.
    Slight water views from the decking
    North facing
    620sqm block (I think)
    1km to beach
    500m to Main Street.

    The Bad:
    The old owners decided to put the plugs in the sink and turn the taps on then they walked out... (No major damage accept for all floor coverings)
    All the external decking rotted
    Yard needs a good tidy up (a bit of tree lopping $$)
    Outside needs a paint
    Gutters need replacing
    Only one north facing window

    The plan:
    Seperate the back self contained room to rent the 2 areas seperately.

    Full paint, inside and out (excluding cladding)
    Decking replaced including and additional carport put in underneath deck
    New electrical metre (to seperate the two)
    Down lights throughout
    New vinyl floorboards throughout
    Major yard work to clearly seperate the two areas and supply each with carport
    New sliding glass door/window to highlight the north facing aspect and waterviews
    2 new split system units.

    The numbers:
    Bought $300k
    Stamp duty 15k
    Renos 25k
    Potential rent $440-480 per week ($260-280 front half, 180-200 back half)
    Conservative Valuation after renos $350k (hoping for $380s but good to be conservative)

    That's my basic rundown at the moment, I'm not a spreadsheet analyse every detail type of person, more of a have a crack and see what happens type but I have down my DD and the numbers are good so guess I'll see how I go!
     
    Bran, MTR and Chrispy like this.
  2. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    901
    Location:
    Melbourne
    Are you going to milk them..... ;)

    The Y-man
     
  3. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
  4. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    392
    Location:
    Sydney
    Hi @Brendon

    Is Cowes an area that you see doing well in the future or is it mainly the opportunity to add some immediate value and get good cash flow that drove the decision.

    Have you done well out of your other investment in Cowes ?

    I'd don't really have much to add but like the approach of getting a good buy on something that needs a lot of work but then goes well. Providing there is good potential for growth then you have done well.
     
  5. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    883
    Location:
    Melbourne
    thanks for sharing. I bought an onsite van near Philip island last year, so we are spending a fair bit of time there. I've just finished helping an acquaintance get a loan to build in Vetnor (suburb adjacent to Cowes) land $124 build $190, a couple of blocks from the beach. Big new 3 bed single story from a major builder. I was really impressed you could buy a new property for that sort of money.

    Looking at the val on the land, their vendor is taking a bath, they bought for $139 a couple of years ago.
     
  6. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
    The original reason I bought in cowes was because I just wanted the house/land, I bought it as a first home buyer and basically used it as a weekender for myself friends and family for the first 18 months as I did some very slow renos (didn't spend much cash just time)
    Probably wasn't the best IP decision but I didn't have much money and was still an apprentice so low income. Bought for $270k in late 2012 I think and recently was valued (by an agent so grain of salt) for $320-350k. The main advantage is its on 850 sqm and would/will be a very easy subdivision and the front house would still be worth more than I originally paid.

    In my opinion the new developments in cowes have kept prices quite steady for a while but they are increasing.
    Every new development is getting further and further away from the beach and Main Street so I think good position is critical for long term growth.
    I definitely think the area is going to get sustained growth (especially as all the new pakenham, Cranbourne, officer type areas mature) but getting roughly a 7% yeild initially I can't really see how I can lose. I have always got the added option of going for holiday rental, which I've been told could increase my yield by quite a bit, I just like the consistency of long term rental initially.

    From a personal point of view, as much as we all want to make money if I'm spending a lot of my time and energy working on a house I want it to be something I'm enjoying and can be proud of, not something purely based off numbers. I know a lot of people will disagree with this but I work during the week to make money, if I choose to do extra work I want it to be enjoyable. Life's too short to spend your spare time purely chasing cash.
     
    Joynz likes this.
  7. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,387
    Location:
    Melbourne
    poor real estate agent....

    what a name........
     
  8. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
    Haven't posted for a while, been busy renovating.

    The house has just been advertised for rent $350pw for the front half and $240pw for the rear, this does include electricity though due to not separating the meters due to the expense and time of doing so, still well over the estimated $450pw of my initial numbers.

    https://www.realestate.com.au/prope...ate.com.au/property-house-vic-cowes-419748954

    13A Yarramundi Way, Cowes, VIC - Rental House for Rent

    I ended up spending more than the initial 25k I'd hoped on the renovations, as soon as I started doing the numbers I realised this was going to be the case and wasn't an issue at all.

    The (basic) final numbers should look something like this:
    $300k purchase
    $15k stamps etc
    $35k renos

    Rent 590pw (minus electricity) so somewhere around $540-$550.

    House val - $380-400k by realestate will be less by bank so just waiting to see on that.

    Everyone seems to work yield out slightly differently but for me $350k investment - 550 pw rent looks like a yield of 8.1% and will keep me in a position to buy again when I'm ready
     
    hanskyut, Chrispy and Beelzebub like this.