The three-bedroom home on 650m² was boarded up and had been damaged in a small kitchen fire. The property had also been on the market for some time (which can often be the case in rural towns) and had gathered little interest.
We decided to make an offer to the vendor at land value only and site unseen. My offer of $46,000 was accepted. We travelled up to see the property after settlement to inspect and meet with the trades who would renovate the house over the next two months.
The renovation included:
- Replacing damaged roof tiles above the Kitchen and Living area
- New paint in Kitchen & Lounge
- New Vinyl Flooring in Kitchen & Lounge
- New blinds throughout
- New Kitchen upright cooker
- New Kitchen benchtops
- New Air Conditioner
- A thorough Clean
We returned to Mildura on completion of the renovation to check the work off with all trades. Of course, during the renovation I was kept up-to-date via phone and email.
Where did I get the confidence to buy a rural property, eight hours drive away from Melbourne, sight unseen? I based my decision entirely on the figures and my previous experience. I researched the land value, property values and sales of comparable properties in the area. I also considered my ‘worst case scenario’ which would be if the property had to be demolished and another property relocated to this site. This is something I have done before, so I knew that I’d still be able to come out in front even if our worst-case scenario did play out. Luckily, it didn’t and the inspection with my builder confirmed that the damage appeared worse than it appeared, so we were able to fix it up to a great standard.
Here is a summary of our figures for this project:
- Purchase: $46,000
- Renovation costs: $12,500.00 (I originally budgeted $10,000.00)
- Appliances: $4,700
- SD and Legal fees: $5,200
- Agents Fee: $4,000
- Total Costs: $72,400
- Sale Price: $172,500
- PROFIT: $100,100
For a quick sale, we decided to list the property substantially lower than the banks valuation of $226k. Rural properties can take longer to turn over and my goal for this project was a quick flip. The local agent’s advice was to aim for around $175k for a quick sale.
In doing so, a purchase price of $172,500 leaves the new owner with a great family home at a fantastic price or a great rental investment which would have given them an equity profit on settlement and be positively geared. The result is a great investment success for both us and the new owners.