Up along the Murray River in the riverside town of Mildura we located a great little three bedroom house for sale. This Department of Housing property was un-occupied due fire damage in the roof and subsequently boarded up.
This created a perfect opportunity for a small, quick investment opportunity while the market was tight and the banks even tighter. Rural real estate is a great option to look at during these market conditions. We purchased a derelict property from the Department of Housing to flip and sell, which in turn would create a fantastic home, much needed during a time of housing shortages.
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 (The Department of Housing) 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, site 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
To encourage a quick sale we had the property back on the market after two months and listed it at an attractive price of $175K. This was substantially lower than the banks valuation of $226K. Rural properties can take longer to sell and we didn’t want this property on the market for long. The property was quickly purchased for $172,000 by a young couple from a small nearby town of Oh Yen giving them a stake in the larger Mildura market. This netted Ryve a property of just over $100,00 and in addition, the young couple went on to resell the property themselves just over 12 months later for 28% profit.
A win-win situation for all!
