December 07, 2009 16:41
in Early Renovations by Coralie
Commercially Zoned Quarter Acre Block .. Little Green houses ready for the Red hotel one day!
Setting the scene
I bought a little 2 bedroom run down house with transportable 3 bedroom house side by side both facing the main street of the town in 2003. The 3 bedroom house had previous tenants that had spray painted the roof and walls in vulgar words and drawings and had kicked in most of the doors.
The real estate agent apologised to me for inviting me into such a disgusting mess. Little did he know I was jumping for joy inside. All it needed was a lick of paint & some new doors. I was then taken into the 2 bedroom home, which was the owners home and that one was much worst. However, the key in property development is being able to look past the mess and assess the true value of the property.
In this case I could see past the dirty misleading exterior and focussed on the fantastic renovation opportunity ahead to turn it into a cute little cottage that would make an ideal home for the right family one day. So I was getting excited inside for this property was meeting my investment requirements. 
The deal
I found out the owner was selling up because he had met a lady over in Thailand and wanted to move as soon as the sale went through. He had, had enough with the tenants next door that he was managing himself. This meant I had one very motivated seller.
Cutting a long story short, I ended up buying this little gem for $70,000 (half the asking price at the time). I spent $40,000 on renovations and both houses were rented out 3 months later with a return of 13% creating an nice little cash flow.
The return
This property with 2 income streams cost $115,000 all up with renovations and had a valuation of $175,000 once completed. Today this property is worth around $400,000 and producing a 27% return. It is just sitting and waiting to be transformed into the little red hotel one day.
Before
After
