NSW Newcastle Property 2017

Quick flip in Wickham

https://www.realestate.com.au/sold/....au/sold/property-house-nsw-wickham-125783166

63 Robert Street Wickham NSW 2293 - House for Sale #127224758 - realestate.com.au

 

Would appreciate feedback from experienced Newcastle/Maitland investors, have just bought First Home in East Maitland: 5 Day Street, East Maitland, NSW 2323 - Property Details

Planning to live in for next 2-3 years, then likely rent out. Based on previous experience growing up renovating (parents and I flipped 4 houses when I was a kid), my current thoughts are:

Quick cosmetic overhaul over a month, prior to moving in:
- Strip out carpets, remove old A/C units, curtains, strip out dated interior fittings etc.
- Mould treatment (it's old mould from overhanging tree that has been removed)
- Remove wall between dining and kitchen
- Repaint interior
- Polish Floorboards
- New carpet in bedrooms

Then cosmetic clean up over 12 months:
- Refresh kitchen (keep bones, just replace doors and benchtops)
- Refresh bathroom (repaint tiles, new vanity and tapwear, new shower glass)
- Some basic exterior work (remove front trees, new fencing, clean up exterior of shed, improved basic landscaping)

At end of 12 months, get revalued. At that point, I'm not sure:

Should we:

1. Use any increased equity from the cosmetic renovations to buy a second property or:
2. Use any increased equity to add a back renovation to change from 3 bed 1 bath to 4.5 bed 2 bath?

Would appreciate any feedback on plan - want to avoid overcapitalising.

Thanks!

 

@tomlemke ...how are markets like Tenambit going?

I know have moved but..but how hot are they?

 

Will be interesting to see what they get for 63 Turnbull Street Merewether. Looks like a Reno/Flip that was bought for $885K in May 2016.

 

Sounds like a good plan. Pretty good value as well. I m sure you will be improving ventilation too

 

Hey Sash,

Tenambit's 25km from where I'm based so I wouldn't say I'm exactly on the ground, I haven't sold anything in the area since September. I have spoken to plenty of people who are holding off until the new Greenhills shopping centre development is all finished before making a decision on what to do.

Just had a quick look at Tenambit for you, the market seems to be moving well still.

Median house price is 388k, up 8% in 2017.

59 Sales in 2017 which is up from 55 in 2016.

Average days on market is 29 days, it was 35 in 2016.

This 3bd sold for 390k in 25 days, it had last sold in 08 for $268k. Selling in 29 days.

Median rent is $370 per week. 5.18% yield.

https://www.realestate.com.au/sold/...au/sold/property-house-nsw-tenambit-127083698

This 4bd sold for $480k in 29 days and it had last sold for $411k in 2011. Selling in 25 days.

https://www.realestate.com.au/sold/...au/sold/property-house-nsw-tenambit-126241314

If anyone else needs a snapshot like this just let me know.

 

Hey Dave,

Nice buy! You won't go wrong buying something in East Maitland for mid 300's.

I think what your planning to do while living in it is perfect, I wouldn't be pulling equity out to extend unless your planning on living in it for the long term.

If your trying to grow your portfolio, I would just rent it out and repeat the process again with the next home.

 

thanks Tom. Merry Xmas tobyou.

I reached out to you because you are very thorough.

Thanks agian...much appreciated.

 

All good mate, hope you have had a great Chrissy with not too much rental maintance

 

No rental maintenance...thank god!

Cheers

 

Totally agree. It's all about return on capital. Not worth spending the dollars for that kind of return. 15% is just too far from 25-30%, which is both a lousy return in this business and does not compensate you for the risk of things go south.

 

Yes, I was surprised by that.

 

Everyone I look around, I see opportunity.

 

That's one swanky Reno!

Not sure how much of a return there will be in it though:

COSTS
Purchase: $585k
Stamp duty: 20k
Reno: $110k (109sqm x $1000)
Interest: $15k
Subtotal: $730k

REVENUE
Sale: $795k

Less
RE fees: $20k
Subtotal $775k

TOTAL PROFIT
$45k

ROI = 6%

A poor return based on those figures. Been a while since I did reno, thought $1000/sqm would be realistic if using tradies to do the work. Interested to hear from someone who has done a Reno recently to confirm those reno rates.

Is there any money in renovations anymore?

If not, is it because of the investor fever we have seen which means that even 'dumps' get bought at inflated prices as if they had already been renovated? This leaves little money on the table for renovators.

 

I think you are on the right track by doing only the basics. A 'tart up' is a good strategy if renting out or reselling in this market.

 

Bang on with your numbers @Doculus.

An 800k guide in this market is the new way of saying offers over. If it ends up around 850k which is what it's probably worth if it looks that good in person.

That works out to be about 90k if they can get 850k, that's a decent profit for 4 months of work.
Fingers crossed for them, as renovating is hard work.

 

Nooooooo.

DIY!!!!

You could do that reno yourself in 5 months for 50K-60K max.

 

Nooo!

You could do it yourself in 2 months with a labourer and most likely your still under 35k

The materials in that renno could be purchased for around the 20k mark - depends how much one decides to waste on the kitchen (could be anywhere from 5 to 20k!)
Other costs would be plumber and electrician 3 - 6k (depends how guttering is and stormwater etc)
Labourer/handyman 5 - 10k

Done 3 full internal and ext rennos and 1 half renno
Every house we have rennoed has been between 100 and 125sqm
Materials come in at around 20k all three times

I think you can make a lot of money in the materials purchasing stage. Its pretty easy to just rock up at bunnings and buy everything you need but you will be either throwing away 10 to 15k to get a quality look or end up buying cheap / generic materials which will crucify your re sale value

 

Strongy you have had a few too many beers over the chrissy break to come up with this response. Have another closer look and re do your sums. Beertank is on the money.

I would love to see a handyman tile this bathroom.

 

Yep i have had a few too many beers

Just sharing what we have done.

Had a closer look.and the kitchen is a fair bit bigger than i thought it was and there are a few fancy light fittings floating around that arnt cheap. So yeah 20k is light on but i still.think you could buy those materials for under 30k
It really depends what you spend on the big ticket items.
Some people could easuly spend 10k on benchtops and glass sliding doors.

Last reno we did the benchtops cost $1,200 and a 5.4metre slider was $2,500
Kitchen cabinets were $2,500
Deck / verandah timber was $2,000
Floorboards were recycled and cost nothing as we sold the balance left over
Carpet was $1,300 installed
Tiles were $200 in bathroom
Toilet was $70
Shower glass + base was $300
Cedar on the ceiling was $250
Vanity was $160
Side Fence was $1,700 (we subdivided)

Obviously theres a tonne of small expenses but those are the major ones


Maybe our renno wasnt as nice as the one above but its still possible to buy wisely.and save a bucket load
Our address was 59 teddy bear lane cowes vic 3922
Couldnt get link to work for some reason