The house next door

Hi,
My neighbour is selling his house.It is immaculate.
Would you buy it because its next door?
The land mass of both properties is 1500sqm.
Excellent location- opposite a shopping centre in a quiet street,close to Uni.[Jesmond Newcastle,NSW 2299]
Mum says go for it.It could be worth alot to the right buyer down the line.
I see her point but Im not convinced ,I like it but dont love it.
Its blue and I think i could find a bigger house with better land,maybe for less.
Its been on the market since dec 1st,changed agents and dropped 30k.
Hes asking 339k.[He has bought a unit for 330k and moves in a month.]
I could rent the house for approx $630 wk as fully furnished student accomodation.Next door my place rents $830 wk.
I haven't expressed interest to neighbour or agent
but if I do Id like to buy directly from neighbour.
My question is would you buy next door because it might be of value to someone down the track like a developer or buy some thing you could get a bigger rental return on now.
Thank you.
Tania

 

what?
It will rent for $630/w and you are still thinking about it?
I would say go for it just because of the location.

Buying the house next door has the obvious development advantages
but there are others, such as you can keep an eye on things, you can manage the IP yourself, you can easily go around with a ladder and fix a roof tile etc etc.

I don't have any adjoining propertis yet but I've read somewhere that there is a small issue with buying the house next door.
It's been a while and I don't remember what it was, perhaps adjoing properties are considered as 1 for land tax purposes?
Check it out.

Cheers

 

Thank you for your tips BV.
Convenience is the big draw card for me.I had a look inside today,spoke to Mum and lm going to get the ball rolling tomorrow.
I will look into land tax/adjoining properties also.
Kind regards
T

 

Hi Tania

I can't help you with the Newcastle area, but what's the zoning on the land? Is it possible that the land could be zoned for medium density dwellings such as villas or townhouses? Always worth checking out, just in case you decided to make the highest usage of the land further down the track....

That rent is a fantastic return and would no doubt, even after costs, put you well into cashflow positive territory. What you need to consider is future growth prospects of the property, likely rental demand (which sounds high, given the proxmity to students?) position and condition. It sounds as though you're in a position to buy, and so a friendly chat to the neighbour might be the way to go here. Are you on good terms?
Just be careful trying to broker a deal with the house already listed with an agent. If you only found out the property was for sale through the agent (or an agency ad) then the vendor has a legal obligation to pay the fee regardless of whether or not you negotiate directly with him or the agent. As long as the agent can show effective cause that he/she was involved with the sale, they are entitled to their sales commission.

Keep us posted as to your decision - exciting stuff!

 

Hi Tania

We have a rental that adjoins our previous PPOR (which also became a rental ) ... and its our best IP ever. It was new, well presented and tenants loved, and continue to love, it

All that aside, in this market, if you can get $630 per week return on a purchase price below $400K, and that's a reliable continual demand from students, you hit paydirt (all else being equal )

From the little I know of student accommodation it needs a little more commitment and hands-on organisation than a 'set and forget' rental, but for those returns, and with your own system in place to make sure your student accom offering is a good one, should be fun There's plenty of student accom articles in the API Magazine (including the current issue which is churches in Newcastle, from memory )

Best of luck !
Carl

 

Similar thing happened to us recently Tania, ..... We own an IP in Melton and the property next door came on the market which was a corner block. We bought it (settled last monday 17/3/08) and it now gives us 1200m2 of combined land.

I spoke to the council town planner who said we could put at least 4 units on the combined blocks now or in the future if we wanted to. We may never take this option up, but by holding both properties it gives us opportunities for future development.

We are keeping an eye out for the property that runs behind our 2 as this would give us a huge corner development site of around 2000m2 if we could get it. I have a feeling its a housing commission property, so we may be waiting a while ....

Martin

 

follow up

Hi, I just wanted to let you know I got the house.
It took awhile and has been a nail biting few days.
3 buyers racing to the end..
It is zoned in the district centre and I can build 3 and 2 beddas up to certain sizes.Thanks for your comments, it gave me the confidence to make it happen.
Kind Regards
Tania

 

Congrats Tania!! It sounds as though you're the type of person who makes things happen so I'm sure all will progress well. Keep us posted as to the outcome of the site and what you end up doing- great stuff