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A cost-effective renovation in Sydney’s West has proved lucrative investment opportunities still exist, despite the current flat market mantra.
Blogger: Phillip Tarrant, editor, Smart Property Investment
Last issue we were all about inner-city investing. Our inaugural Inner City Steals report uncovered 20 inner city suburbs across Australia where investors can crack the market for $300,000 or less.
While this is certainly an attractive investment strategy, there are also opportunities at the very other end of the spectrum – in the very affordable outer ‘burbs’ of our capital cities.
As part of Smart Property Investment’s decision to put its money where its mouth is and build its very own property portfolio, we recently purchased a property in Cambridge Park, a small suburb in Sydney’s West.
A four bedroom home, best described as derelict, the property was undeniably a mess – but our buyer’s agent, Right Property Group, saw potential buried beneath the filth.
The project objective was to buy under market value and undertake a cost-effective renovation to boost capital value as well as rental returns – a goal that was achieved.
All up we spent $49,000 renovating our property at 84 Barry Street – a little more than originally budgeted, but with reason.
Considering we purchased the property for just $236,000, and agent appraisals have come in at between $340,000 and $360,000, it’s a fantastic result and one we’re very proud of!
In May, we held an ‘Investment in Action’ Open House, in order to showcase our investment strategy and results.
The Open House drew close to 200 attendees, revealing a pool of investors eager to try their hand at this very investment strategy.
The best thing about our Cambridge Park investment and what makes it so attractive is that it proves money can still be made in what is often considered a tepid or ‘flat’ property market.
While you may need to be more creative with your property investment strategy, equity can still be created in quite a short amount of time – for us, in this instance, less than six months.
Of course, there are a heap of invaluable lessons which we can take away from our latest property project – and that was always the point for us; to invest in property and track it throughout our pages, providing insights our readers can draw on when building their own portfolios.
One particularly noteworthy message to come out of this project is that renovation is, without a doubt, an incredibly effective way to manufacture capital growth and accelerate your returns.
In just a few months we saw our property’s value increase by 50 per cent. You’d have to wait a long time to see that kind of capital growth if you just sat and waited.
Of course, renovation is no walk in the park and our experience did not come without challenges.
Securing finance, for example, for our ‘renovator’s delight’ proved problematic after the bank deemed the property ‘uninhabitable’.
With the help of our Aussie mortgage broker Ross Le Quesne however, we eventually found a creative finance solution.
Ensuring your renovation is cost-effective is also crucial to ensuring you make money – rather than lose it.
Another key lesson to be drawn from the experience is that property investment needn’t break the bank. You don’t need to take out a $600,000 mortgage to purchase a property in the best part of town in order to build wealth.
Our Cambridge Park property cost us just $236,000. On a 90 per cent borrow, that equates to a deposit of just $23,600. Admittedly it’s no small sum, but it is a realistic amount for even a first timer to save, or an established home owner to withdraw from their existing equity.
Without a doubt, investors who can pick the right property, buy it at the appropriate price and complete a focused renovation can secure some great returns in Sydney’s west, and, more than likely, across many Australian markets.
About Phillip Tarrant
Phillip is a media professional as well as an active property investor. He has over 10 years’ experience reporting on the mortgage and property markets and has worked extensively with Australia’s leading mortgage lenders and brokers as a corporate communications and public relations consultant. As a property investor Phillip advocates the principals of research, due diligence and surrounding yourself with the right team to make informed and educated property investment decisions. As well as being editor of Smart Property Investment, Phillip sits on the Board of the Property Investment Professionals of Australia (PIPA), the peak industry body for the property investment industry. He also sits on the Board of Publishers Australia, which represents best practice, innovation and professionalism in publishing. These two positions offer Phillip insights and awareness to the latest issues, activities, techniques and best practice principals across both industry sectors and ensure Smart Property Investment remains focused on delivering quality content to its readers.