My client this week is looking for a property in the Westdale area where he can add value. We selected two properties which needed updating and set appointments for both. The first one has been on the market since the beginning of the year and is vacant and is currently priced at $229,000. The second one was on the market for $249,000 and just dropped down to $199,000.
We viewed the first property and it had great hardwood floors and large rooms. The basement was as they say “high and dry” but was unfinished. They added a back room on the house but they used cheap materials and it showed. My client and I love the location and the potential for the property is there. So why is it still on the market? Price! The agent selling the property is related to the seller and they did a small price reduction of five grand. This indicates they believe the property is worth the asking of $229,000. Based on location the property would be worth $265,000 when updated. The update would include a new kitchen and bath upstairs that would cost about $20,000. The basement can be converted into a new two bedroom apartment that would bring in a minimum of $900 a month and it would take about $30,000 to complete. Plus all the windows would have to be replaced, so the house is really worth $200,000 for my client to move forward with the project.
The second home just dropped $50,000 dollars and is located in a prime rental area also. The problem is the owner has lived in the house for nearly 40 years and has not done any updates to the property. The roof has four sets of shingles; the floors are sagging, knob and tube electricity etc. The agent is aware of all the issues and is trying to convince the seller to drop the price again. This property will need in excess of $80,000 dollars to bring it up to today’s standards and will be worth $260 to $275 thousand dollars when completed.
There is potential in both properties but an investor will need a down payment and a line of credit to do all the fixups and there are not a lot of people out there with this kind of money. You have to also include the “unknown cost” plus you would like to make a profit for doing all the work. There is a lot of potential in both properties due to the area and income potential. The only issue is getting the properties at the right price. We are going to keep our eyes on these properties and wait till the timing is right to make an offer. This is where you make your profit. It is not how much you can sell the property for; it is how much you pay for the property. V
Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.
| 
No comments:
Post a Comment