Property $39,000 Under Land Value! Incredible Investment
Today we a looking at a property that the client was able to purchase for under land value that is in the middle of a minor cosmetic renovation. The numbers on this property look amazing. Such a great opportunity.
0:00 – Introduction
0:24 – Details of the investment – $39,000 under land value
2:37 – Mid-renovation walkthrough tour
4:13 – Kitchen
5:57 – Living space and massive potential for open lounge/dining
7:12 – This property has so many options for manufacturing value
8:38 – There is a time and a place for renovations
10:18 – This amazing bathroom
11:29 – The 3 bedrooms
13:37 – Looking at the backyard and granny flat potential
16:30 – Project managing the renovation from interstate
17:07 – The financial numbers and the potential for positive cash flow
Purchase Price: $376,000 (Land value: $415,000)
Estimated Rent: $420/week
Ryan M 0:00
Today we’re looking at a property that the client was actually able to purchase for under the value of the land. This is a property that has a renovation potential as well. Well, it’s mid renovation, as you’ll see when we walk through it, as well as granny flat potential out the back. So do you want to talk us through a little bit about why the client purchased this property and what they’re hoping to get out of it? And then we’ll do the walkthrough. Yeah, so every now and then we buy a property that I’m just you know, I love the work that we do. But sometimes I get super stoked on what we do. Because as I was saying, to Ryan, off camera, we bought the 600 plus square meter block close to the beach again, and we’ve been able to pick it up for $376,000, when the land alone without the house on it, were 415k. So I was asking you, how do you know it’s worth 415k. And it’s because I just sold a 600 square metre block in the same suburb myself, it was a subdivision I did for 415k. So I know where the land value is. And that was just land that was the land without this house on it. And as you’ve just had a bit of a walkthrough before the camera like it’s actually not in bad condition at all, in fact, a paint job a bit of floor coverings, and a bit of a fix out, which we’ll show you in a minute is actually going to be a really paint little paycheck. So I’m stoked on this one. It’s not every day that your time the market, right, you also buy below, effectively land value and get a house thrown in fray. And you know, the cool thing about Jared, the client that we picked this up for is he’s an electrician working in Sydney earning good money, and he’s got a great savings habit. He’s 28 years of age, it was his first property. And he’d been thinking about this for three years, was going to buy a one bedroom unit in the southern shore of Sydney is very happy, he didn’t know that prices have come back a bit. And, you know, it took him a while to get to get the confidence out to actually think about something like this. So yeah. And so his plan here, as Ben was telling me is to purchase the property, do the renovation on the property and get the property rented out this property does have granny flat potential, but he’s not looking to add the granny flat immediately to this property. Yeah, so he didn’t have enough savings to do the granny flat straightaway, which is you know, super common. You know, I’ve done it myself where I buy the home, I sort of land bank it and then come back and do the granny flat four or five years later when I can afford to. But it is an ideal site like completely drivable side access, you know, beautiful well positioned home, huge backyard as well. So it’s really cool. Yeah, there’s also a walkable side access as well, if you wanted to keep on the carport and stuff for the front house. So there’s that option there of doing either. So let’s head down and walk through this property and have a look at it. It is mid renovation. On on the detail sheet for today, it was like okay, renovations done, it’s ready to be tentative, not quite there yet. So it’d be really cool to show you something mid renovation, and then maybe one day we’ll get to walk through again, and to see it fully renovated. Now, I don’t know, you know, everyone’s got different opinion about what they like with property. But I actually, you know, the simple little details like, it’s really simple, like, you know, old school approach to housing, but when this sort of thing is freshly painted white, with like a light gray or light blue trim, or, you know, that’s like growing, this becomes white, like something like this can actually look really sick, like, especially with the polished floors, which unfortunately, they’re not polished today, but they will be in the next week. Like this is the sort of thing that I personally would like to live in myself and so many other people in the IRA will and you know, he bought it for three, just over 360 K, but we’ll be looking at renting this out after he’s done the work that he has for at least 400 possibly even 420 bucks away, so he will get a really good return on this one. Yeah. So as you’ll come through, you’re going to have to use your imagination a little bit with that what that is, that’s a speaking age that is this week of a caravan you know, man doors, as you can say, um, flooring is yet to be done. There have been a painting in here. So a lot of this is freshly painted. Not 100% sure what the plan is with the kitchen. We haven’t got the full details of the renovation. At the moment he’s planning on leaving the kitchen as is because it’s still in you know, moderate condition. If it was mine, I’d be definitely painting that is to just make it look a little bit fresher, maybe replacing the bench tops, but he’s on a limited budget. So the kitchens completely usable as it is. You know, over time the plan was to definitely renovate the kitchen as well. But for right now, I was in terms of obviously kitchen the bathrooms are quite expensive to renovate. So cosmetic renovations. Painting can be quite cheaper. So you can see in here, a lot of the painting has been done.
Yeah. And so he’s gone with like, sort of the creamy color palette again some people choose like a watt to make it a bit of fresh out but compared to what it was when i actually walked through when we bought it and now it is 1,000% better like there was a lot of damage in these walls because the property was purchased off an original line i like to build the property 50 years ago like that one person has been here forever and there’s still nice little details that you don’t see in modern houses around the hill and that’s like even here in this door opens locked at the bottom is you’ve got this little sunroom it’s just got fly springs in it but obviously being able to get the summer breezes and stuff like that being able to open this up is really cool and so if we walk through through here this is just like this so much living space in here as well you know for an old home it’s actually got a huge full plan like all of the bedrooms and good size but this is a big living area and one of the things that he could do in the future is yeah here’s the wall backing onto the kitchen again this is why we’re not touching the kitchen now because i want him to do it right and our thought process of he rips out this wall rips out that pitch and you know reshapes this potentially rips out that wall into that ceiling like the sun sunroom as well he might end up with a product that is beautiful open plane you can re design it so that it works better and flows better you know a bit more indoor outdoor living which i think long term rather than having a small door onto the outside deck you could have just a big hole in aggie beautiful yeah and so as you can see the kitchen it’s got like the walkthrough so the kitchens there so you can knock down that wall to make that open plan kitchen dining which is obviously way more desirable for both owner occupiers looking to purchase property we’re talking resale or for people renting they don’t want the kitchen separate from the lounge room but with these older houses sometimes you don’t have that choice you know one thing i love about this is just so many options because as we said if we live together this kitchen dining took out those walls over the back there onto that little sunroom that is all under existing roofline created a much bigger space here and then put some beautiful big bifold doors at the back and build a little deck out you know like that’s not a huge amount of investment to do that that’s probably a $50,000 renovation which might add you know in this current market 80 to 100 grand worth of value to the property it’s really cool and that’s a thing like buying a property where you can manufacture value and obviously jazz manufacturing some value right now through this cosmetic and cheapest dollar renovation that he’s doing but then also has potential to manufacture value in the future as well so that way if you’re in a market that is stagnant you can still make money and still get equity growth by creating that value you know over the market is going well you making more if it goes backwards you make up for your loss so there’s so many opportunities but also you don’t have to do it all at once so just because it has that potential doesn’t mean you have to utilize it especially if you don’t have the funds right now to do the renovation as has been said land bank it or buying the house rented out so that you’re not super negatively geared and then you know later down the track in three five who knows 10 years time that could be something that you want to do when the place needs a lift anyway needs to be repainted anyway it’s time to revise the kitchen okay let’s take this step then you know one thing i want to say as we walk on through to the next part of the home is just there’s a time and a place for runners and journeys during the perfect use of funds his painting which needed to be done he’s replacing blinds his polishing floors it’s all simple stuff the whole thing will come in under 10,000 bucks he’s replacing carpets but i think he rewired as well i hate he’s a sparky which is right why he rewired i wouldn’t have suggested that he needed to do that but it’s good practice if it hasn’t been done well that he doesn’t have to pay for the labor for it because obviously he’s doing it himself so
yes so some of them would have come up if he had done a major no so why not get on the front foot a bit now with his skill set but he could you know do what he’s done and that’s going to add 50 to maybe even $70 a week worth of extra rent which is a really smart use of his funds but then you know i only really do the major renovations the kitchens the opening up of things if i want to increase the rent further or i’m either looking to sell the property or revalue the property in the future a lot of people myself included in the past get carried away with wanting properties that look nice for them but the reality is the marketplace won’t value that product from a rental perspective so it’s a fine line between not spending enough like i’ve done and overspending like of all time and trying to find that balance for yourself and that’s the thing because people would like the open plan kitchen dining, but people will still rent this property without it. So and then the cost to do that, is it worth it? Are you going to get the rental return? No way. You got to weigh that up from that logical standpoint and say, but it’s also very important when investing especially if you’re going to be more active like Jared is you need to have an imagination for what this property can be. Because as we walk through here, have a look at this amazing camera and you love the color scheme.
Ryan M 10:32
Yeah, this caravan style.
I love that check out this shell. And this Bob. Like who wouldn’t feel like a million dollars just this is this is the good old days before there was even towels in bathrooms like this is when they used to shape the wall with a different. Yeah, so I used to rent a place like this. And we called it a Winnebago shower. I thought we actually painted it white. And so it actually just made a massive difference. Oh pantheist because I just I love life personally. Between stuff. No, that’s that’s
She does not retro.
Ryan M 11:17
Definitely just paint all that white, like white paint is just amazing. I’m gonna put that in your house. Lisa says about it. Yeah, it’s not gonna last. And so we have had the rooms. So you can see they’re very painted. You can see the new role blinds are up as well, which I believe are blackout blinds, and there’s been re carpeting in the bedroom. So this is a three bedroom property. With this being the largest bedroom in here. With the row and the cupboard there, I think they’re on the floor, the doors are on the floor out there. What I can feel is like he’s been actually really smart. Like this is more of an industrial mess, commercial style of carpet, which is a lot heavier duty, which means he’s thinking about not replacing this for 15 years, which I love the now it might be an extra 500 bucks to put this down with a better underlay and a better quality confident feel that underway.
but it’s kind of cool as well, like just saying him thinking about the future and investing in quality up front. Yeah. And then we’ve also got fans, new fans put into I think each of the rooms as well. And I guess one of the benefits of being a Sparky is he’s then able to do all of this sort of stuff himself, which just makes it so much cheaper. And so then we’ve got the third bedroom here, which is a good size as well, you downlights I can say that he’s also put smoke alarms in every single room, which is now a compliance thing in Queensland. So he’s again, just thinking about the bigger picture getting a tenant ready. Yeah, so obviously not finished yet. But you can see, especially being in the bedrooms, I can view once a shot in the door in this bedroom, this bedroom is effectively complete, you can start to see the finished product and how nice this is going to be. Especially once they do those four boards, like those four boards are going to come up absolutely beautiful. Like if you can see past the pain on them, when Ryan shows you know, like there’s, you know, that’s the sort of stuff I love. That’s where you’re going to use your imagination and see what it can be. Because as you can see right now with the floorboards, obviously the paint job has been done, and there’s been pain on the floors. But that is all going to be sanded back. And we’re going to be polish. And now what we’re going to do is actually have a look outside at the granny flat potential of this property. We’ll head out here onto this. I actually really liked this deck. This is cool. Having a cup of coffee out here, right. And then on to this backyard here, which obviously does have I think we’re just in the sun but it does have a bunch of plants and trees. Again, it’s about using your imagination that these would obviously need to be removed in order to put a granny flat in. But you can see that the back fence is actually a bit of a ways back there. So if we have a walk over here, you should be able to get a better idea of where the back fence is. So obviously with all this sort of stuff, you can look at getting that removed in order to build a granny flat but there’s just a lot of space and a lot of potential here in order to build a granny flat down the back where you’re still going to have a decent sized backyard for the front house. Not huge, not huge, but decent. And then have a granny flat with a little courtyard style backyard you know if this was my investment property like we talked about on previous videos, I’d love to put a fence to you know to have that nice backyard for the home. But you know with this house I’m not sure if you noticed that the front but I did. It is set back a little bit further from the street deeper on the blog, so I could equally fence that credit really nice front yard which the home could use and then just have this entire backyard for the granny flat it’s quite a versatile property there’s a lot of different options here yeah and then there’s also a shed there as well which i guess i don’t know the front house could use i don’t think it really warrants knocking down there’s enough space here we don’t need to do that there is drivable side access which you could use for the granny flat but also there’s this really decent side access walkable side access down here so as you can see lots of walkable side access down there so it really depends on what he wants to do i think i’d be like after your conversation previous property today definitely doing the walkable side access for this one and then keeping that awesome you know carport for the three bedroom home putting maybe an extra piece of roof there so that you can fit a couple of cars under it i really like what you’ve pointed out of the previous property is cool yeah so yeah there’s different options there with this property so this is one where we’re seeing the investor get really active with it which is really always really cool to see we love seeing people get active and actually manufacture some value manufacture some rental growth as well so getting a higher rent which obviously improves their cash flow and then obviously lucky in their property so that they can then build a granny flat in the future whether he decides to buy a second property first or do a granny flat first is up to him he’s got that flexibility you know what i love about these properties obviously jerry’s from sydney he didn’t have a team up here so we introduced him to the property manager paula and she’s actually a project manager this entire renovation it hasn’t been jared at all only came up and did the sparky work because that’s what he can do but she introduced him to a couple of painters couple of different carpet people flooring lines people and you know with a couple of clicks of a button few emails back and forth he’s been able to pull all of this together with her project managing it so if you’re feeling like being a bit more of an active investor might be a bit risky or or involve your time with the right team in place a lot of that stuff gets outsourced and it becomes very very easy to do yeah so looking at the numbers on this one purchase for what around 378
Ryan M 17:11
i think what was it 368 376 maybe 10 grand in the renovation there so about you know 386 in if you wanted to build a granny flat looking at around probably 120,000 for that maybe a little bit more down in the fencing and the side access so all up you’re looking at around about you know 500 maybe 510,000 pretty amazing when you think you’ve got to invest and then front house you’re saying with rent for what 420 bucks a week or 120 and then the granny flat granny flats in this area renting for each and every day of the week yeah so then you’re looking at you know 510 investment with a 730 return which is higher than you know some of the ones that we’ve looked at in our other walkthroughs but yeah could be a really good rental yield in the future and then obviously if you pay that off then you can live off that income and so you own a couple of properties giving you sort of 750 bucks a week in the future all of a sudden that’s 1500 bucks a week minus she costs you know it’s a pretty good lot of your basic expenses in your life covered is as you said you can go on to create future wealth and do more property or more something else or you can just sit on a beach for a year or you can do whatever is important to you you know domain gives you choices while the beach isn’t far from close so yeah really interesting investment and cool to see partially renovated and see what you see what you’re about to hear and hopefully you can use your imagination and see it and obviously with a granny flat potential as well could be a cash flow play in the future when jazz is ready to do that so if this is something that you’re interested in exploring this sounds like a strategy that might be suited to you but you want to get some more information on it then ben simon and the team over pumped on property are offering free strategy sessions so you can jump on the phone with them talk about where you’re at talking about what you want to achieve in your property investment journey and they can help design a strategy for you which you can then go and implement yourself or if you want you can hire them like jared did to help find something like this under land values is tricky to find guys don’t hold me accountable to this like it’s only a marketplace like we’re in at the moment 2019 where this has been possible there’s no other time in brisbane where we’ve been able to buy houses below land replacement value and i feel like the window is going to be very slim i think the markets smart enough to price houses what they’re worth not what they’re and i think rare gems like this come up from time to time but there’s also so many other you know good opportunities that have come up with we’ve done walkthroughs in as well so if you do want to check out that free strategy session go to onproperty com au forward slash session and there’s actually a calendar there where you can book in a time that suits you. That’s, you know, a really great thing that you offer to help people out. And so, absolutely recommend it. Go ahead, check that out. Otherwise until next time, stay positive