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Cleaning up in Cleveland Street; Or not...
Topic Started: 19 May 2012, 02:18 PM (1,436 Views)
Sunder
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Okay, I know this is a very bearish thing to post, despite the fact that I'm not that bearish on property (Still thinking flatish to small falls in the Sydney market for a couple years yet). But I'm posting this because I'm rather disgusted at the quality of journalism.

Quote:
 
A family approach yields dividends with an ambitious facelift of adjoining terraces.

Two unrenovated terraces, two brothers and a two-part plan. Jonathan and Chris Pearce picked up adjoining Chippendale terraces in late 2010 for $675,000 each. Between them they needed only one, and they wanted a nice one at that. Jonathan, who works in corporate finance, and Chris, who heads a small building company, put their heads together and set about an ambitious renovation, one terrace at a time. Now, about 18 months later, they have sold the first one through BresicWhitney Darlinghurst for $940,000, $5000 short of the Cleveland Street record.

Full story: http://smh.domain.com.au/real-estate-news/cleaning-up-in-cleveland-street-20120518-1yu3x.html


Let me summarise the basic maths for you once you've read the story:

Purchase price: $675,000
Renovation price: $215,000
Sale price: $940,000
= $50,000 Gross "Profit"

Add to this:

Stamp Duty: $24,000
Interest or opportunity cost @ 7% for 18 months = $93,000
Agent's fees @ 2%: $18,000

Or, they lost about $85,000

Exactly who is cleaning up?
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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genX
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Sunder
19 May 2012, 02:18 PM
Exactly who is cleaning up?
Newspaper owners selling shitty property advertising space in their shitty newspapers.

Won't it be good to see these scum go to the wall?
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zaph
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It looks like it appears to be very difficult to make money out of renovating, particularly at the middle to top end. When property prices were rising strongly it looked like it was a profitable game, but those profits were just price appreciation.

The craze of renovation, spurred on by tv shows means it's probably better to buy a renovated place over a renovator.
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Trojan
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Sunder
19 May 2012, 02:18 PM
Exactly who is cleaning up?
Yeah, similar to the Marrickville one I posted up earlier, I have no idea how these renovators are making money.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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zaph
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Trojan
20 May 2012, 01:05 PM
Yeah, similar to the Marrickville one I posted up earlier, I have no idea how these renovators are making money.
It may be the stiff upper lip. we are making money. we are making money. we are making money. we are making money.

Or perhaps through depreciation, still hard to see how they are making money.
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themoops
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genX
20 May 2012, 09:26 AM
Newspaper owners selling shitty property advertising space in their shitty newspapers.

Won't it be good to see these scum go to the wall?
And tradies, it'll be good to see them go to the wall too. Why should it cost $215k just for a basic makeover?

Posted Image

Derrrrrr, it's the "free market".
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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newjez
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The basic rules are - avoid any structural damage, avoid moving plumbing, avoid anything with planning issues - go for something where there is an easy angle, ie getting an extra bedroom without sacrafice, and get a cut down price, and walk away if you can't.

For too long many would be renovators have made the same money they would have made by sitting on the house and doing nothing. You can't do this anymore. You need to add greater value than the costs. Also, as the renovator living behind me will testify - don't forget to pay your taxes. :)
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Pig Iron
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Bogan scum

yeah renovating for profit is a massive fail usually.
the problem i've seen is that the seller ALWAYS wants the renovated value prior to you putting all the capital into it.
"renovators delight, will be worth 1 million once you spend 200k on it. asking price 1 million."

really you have to ask yourself if the property can be renovated and sold for profit, why isn't the seller doing so to maximise their own profit?
I am the love child of Tony Abbott and Pauline Hanson
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miw
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timmy
21 May 2012, 04:20 PM

really you have to ask yourself if the property can be renovated and sold for profit, why isn't the seller doing so to maximise their own profit?
The seller may not have the expertise or the time or the motivation to renovate profitably.

Of course if you are the buyer and you don't have the expertise and the time and the motivation, you will fail also. Doesn't mean everybody will fail, though.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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stinkbug
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miw
21 May 2012, 04:48 PM
The seller may not have the expertise or the time or the motivation to renovate profitably.

This is definitely my experience. I've done a few buy/reno/holds now, and most of the time such properties can be bought for a great price because many people simply don't want the hassle of renovating. I think lots of people are scared of being ripped off, or because they don't understand the risks and how to manage them.
Edited by stinkbug, 21 May 2012, 05:20 PM.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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