So today I’m going to share details on my most recent purchase as I’ve had a few people asking me and now that I’ve got all the quotes too so can demonstrate what you could get as a deal in Geelong last year!
My first trip to Geelong in March 2017 was after months of reading up various threads on Property Chat – in particular all the Geelong related thread. At that time I was looking deep into two main areas:
1. Corio & Norlane (about 9km North to Geelong CBD)
2. Newcomb (about 3km east of Geelong CBD)
Given the cheap price point I was initially geared more towards Corio/Norlane as I was able to get closer to 5.5% or even 6% yield so my inspection list was full of Corio/Norlane properties. I wasn’t really attracted to Newcomb until Ithis property caught my eye due to it’s cheap purchase price:
So I started looking a bit further into Newcomb and given proximity to Geelong CBD, I thought if I could pick up a bargain way below median price then that could also be a goer! So I added a couple more open homes on the day in Necomb.
First up was 56 Portalington. Boy oh boy, I knew it was going to be a major reno…but not until I see asbestos literally throughout the place! And location is just terrible as it’s on a main road. So I walked out after checking the place out in about 5 mins and ruled the place out straight away.
Thanks to 56 Portarlington though I was able to encounter property 7 on the day. It was advertised online for $269K to $296K so my initial thoughts was “that’s a relatively expensive price for a 2 bedder”. But since I was around the area I thought I might as well check it out and gain some local knowledge from the agent too.
It was a relatively old house – built around the 60s and nothing really stood out on the first sight. Then I noticed on the brochure it had a floor plan which they didn’t include online – and lounge has been exceptionally big in size and in a rectangular shape, and then I realized the potential of adding a third bedroom… and that certainly got me really excited!!
So I went back to the lounge, and noticed it still at the top beam which showed previously there must be a wall here, and all I needed to do now is to restore the wall and add a new door then bang! I’ll have a third bedroom
That was deal of the day, so I took the opportunity and started the low ball process and in the meantime organized for a building report to be done. The report came back with a number of defects so I’ve walked through the report with the builder, item by item, in order to get an estimate on the total repair cost required. That came out with a total of approx. 15K where 10K is for repairs and 5K for getting the third bedroom done up.
It’s been a while since I was able to get all the quotes from Geelong tradies (they’re really busy!!) and now that I’ve got all the quotes I was very happy the total came down to about 10K, including new carpets for bedrooms and also getting the third bedroom done up! The builder will confirm how much additional to knock down the wall between lounge and kitchen, but otherwise I’m happy to leave that to be done till a later stage.
The only challenge now is that PM is trying to set my expectation for a lower rent. My original rental estimate was about $300/week after turning into 3 bedder given a nearby place rented around $310 recently. From what I see now the nearby places are advertising for $270 to $280 instead, so the yield may not be as stellar as I initially thought out to be. Though I have to admit I’m very happy with this deal given how the prices in Newcomb is going in last couple of months and I was able to manufacture some equity by simple transformation of 2 bedder back to 3 bedder by adding a wall and a new door
The plan is to hold long term (10+ years) and one day I might be able to knock down the house and do some subdivision myself given it’s sitting on a corner block!
A couple more photos of the house:
Suburb: Newcomb, VIC
Advertised Price: $269,000 – $296,000
Purchase Price: $272,000 (March 2017)
Total cost (purchase price + repair/improvement): $282,000
Bed/Bath/Garage: 2/1/1 -> 3/1/1
Land size: 527SQM corner block
Exterior: Brick/Concrete Tile
Built around: 1960
Estimated rent: $270 – $280/week
Gross yield: ~5%
As usual – if you like to know more or have any questions feel free to reach out to me