Within 48 hrs of this coming to market 2 close friends had emailed me plus my reliable google alerts had brought it to my attention. The face value was a big block, old home with some character ready for a reno, close to a popular main street full of character, schools, rail, a nearby CBD with all the services.
Personally, I normally resist these types of properties that seem hot up front. I certainly don’t like bidding wars but sometimes I do wonder if it’s just that I enjoy the trial, the harder to solve puzzles or even just the process itself. Ok getting too deep here maybe I need a couch to resolve this issue….
My resistance though is in the fact that it is always good to purchase properties subject to conditions that allow you to de-risk a project. Most often these clauses are finance plus building & pest and sometimes due diligence to make development investigations on the property. The later can be hard to get agreement on when a property shows lots of interest and unconditional offers are being thrown about. A bit like the dating scene in your youth perhaps LOL.
An often-repeated golden adage of property investment is “you make your money when you buy not sell”.
The standard interruption is, if to buy cheap or well under the market price and make your money. Many use the benchmark median price of a suburb to asses this. Personally, I don’t see it that way. To me “it depends’ What are you buying? Some may see a big block with an old house capable of renovation while others see a subdivision opportunity….?
The expectation was that this property wouldn’t be on the market very long. The Woombye area had been on my radar for a while. It’s a great little country town that has easy access to facilities and neighbours the larger town of Nambour. It’s an increasingly popular location with a good track record of price growth. From a rental vacancy perspective, it’s less than 1%, which is always promising ???? plus its an older street that’s commenced gentrification with a number of older homes being renovated or rebuilt. As a bonus – the blocks of land are quite large which allows us to pursue the strategy of value adding through more dwellings.
The reason I like to subdivide or create duplexes is simple – it’s like a ‘2 for 1’ purchase. You can get 2+ houses for the price of one block of land, plus costs, while if held cashflow is increased from additional homes on one original block of land.
I got to understand the seller’s circumstances from talking to the agent and made an offer quickly. I felt it reflected their desires but also allowed me to obtain a development condition that made the purchase subject to a development approval to subdivide a rear lot of 1200m2 from the main parcel. This was so a secondary dwelling could be built (Duplex) behind the existing home on an >800m2 block. 1 home could become 3 or 4.
Why did the sellers agree to the offer?
Easy I paid more than anyone else. Why? Well I saw that with a Development approval condition there were 3 potential homes not 1 and hence I could justify paying more (project de-risked). Other offers perhaps were received looking at it in other ways. So, if I paid more than others, did I buy under market value or not….? I’ll leave you to decide.
As to planned outcome, the existing home will also undergo a cosmetic renovation of which we will go into the specifics in some bit of detail in the videos, but essentially – the house will be transformed into something a little more this century.
When the site was evaluated, one of the first observations was the sewer was in an inconvenient location. I had plans to relocate it – and then those those plans fell through because of an upstream connection. Therefore, I had to redesign which caused us to lose one dwelling from four to three. However, I was happy to make that sacrifice so that I could have three higher quality dwellings.
Progress is still underway with the project and you can stay up-to-date with how it’s all going over on the Property Surfer YouTube channel: https://www.youtube.com/channel/UCC93rH6QHpg6Ju0LB2hv9tQ