Vendor Advocate & Buyers Agent Project – Great Financial Strategy! and an inspiring read!
Back at the end of last year we were engaged by a client to assist her in purchasing an investment on the Sunshine Coast. To proceed she needed to sell her property in a great suburb of Brisbane.
To assist her in this project we became her Vendor Advocate and we arranged for the property to go to Auction and on our advice engaged an excellent auctioneer in Brisbane. There was some toing and throwing for us back and forth for open homes as the client decided to market it herself with no agency fees to consider. Naturally we were present on the day of the Auction. The property got passed in but with our assistance and knowledge of post auction contracts and settlement terms the property was sold within a couple of weeks to a cash buyer and the settlement was very quick.
Knowing that we needed to purchase on the Sunshine Coast asap once contracts were in place for Brisbane, throughout the VA period we were also acting as her Buyers Agent working on her brief. Originally, we were looking for commercial premises or commercial development land however, within a short time we agreed that this was not really the best way forward nor the best use of her money.
Changing the brief to purchasing a property that could be used as both an office and a residential letting was, in our opinion, the best way forward and our client agreed.
After viewing several potential properties both off market and on market there was one that absolutely shone out!
The property was an original Queenslander that had been lifted and restumped in the Glass House Mountains on a block of over 600m2 with views to the mountains. It had been completely renovated to an extremely high standard and the owners needed it sold. It ticked so many box’s that we arranged to meet the agent on the Sunday morning with our client, who immediately went to contracts.
So why was this property so perfect and what was the vision we were able to portray to our client?
The upper level has 3 bedrooms, 2 bathrooms, laundry, lounge diner, kitchen and stairs down to the garden and the lower level had a completely new studio which would facilitate an office. Well that was the original plan!
It was bought for $25,000 below market value. Thinking outside the box, the idea was floated to further renovate the lower level to turn it into a 2 bedroom, bathroom, laundry with a full kitchen and a lounge dining room becoming a totally independent unit and still left the remaining lower level for garaging or further developing. The choice to not use the lower level as an office proved to be the best possible financial strategy.
This is where having Simon as an award winning Building Designer really came into its own as he re-designed the new unit on the ground floor knowing that it would embrace and blend in with the original Queenslander features that the previous renovation had tastefully kept in place. It is now a seamless property with 2 units rented independently.
The purpose of the whole project was to release capital from the Brisbane property to allow for the development costs of a new business. By changing the brief, we created for our client investment development fund as well as income. Win! Win!
So, let us look at the figures!
Purchase price $465,000
Market value $485,000
Renovation costs $60,000
Total Cost $525,000
Top floor unit $390 pw
Ground floor unit $320 pw
Total income $710 pw!
Current market value
by Agents $560,000+
The real comparison to consider is that the Brisbane house was rented out for $500 pw. In real terms, our client is now receiving a staggering investment income rise of $210 pw!