The "Funky Flats"

A 31% increase in rent in only 3 weeks.

 
These flats are ugly! Even a professional photographer, utilising all the tricks of the trade like complimentary angle and a soft foreground can't hide that fact!

Less than 12 months ago, we spoke with Sonya Matthews, a dedicated property investor who was well on her way to building a prosperous property portfolio. Having honed her property investment skills considerably since undertaking a Reno Kings education, Sonya details how her latest property project is a text book Case Study on property investment, renovation and development the Reno Kings’ way.
 

Just A Drab Dwelling!

A lot of renovators dream of a house full of character: ornate ceilings, wide breezy verandahs, beautiful timber floors, large kitchen areas and potential for great street appeal. Unfortunately this property lucked out in all those departments. In an earlier life, many, many years ago, this would have been a large and graceful Queenslander, but not anymore. It is now four flats, somewhat randomly pieced together and done so by an Italian family with an appetite for concrete. Basically, the property stands out like a sore thumb!

After an imaginative renovation, a single-bedroom/sitting room ‘studio’ flat went from being filthy to funky in a short time, so the property has become known affectionately as "the funky flats" – it’s a lot kinder than "ugly", even if a bit deluded! But appearance only counts for a little as the numbers speak a lot. Also, the ugly appearance is likely to help generate great profits!

Do the twist with the Reno Kings.

The Reno Kings like to purchase properties with a twist – otherwise known as ‘multiple strategies’. Sonya's Funky Flats pass that test with flying colours. Here’s how:

The property is zoned for units. It also consists of two lots totalling 809m². Based on the Government assessed land value of the neighbouring properties that are 405m² (which is always low), each block here is worth about $480k+, so a total of $960k or more.

The purchase price was $923k, so less than land value, but this alone isn’t enough to warrant purchase, though it is a big step in the right direction. Sonya received advice from a town planner during a conditional contract period that the chances of demolition were very high. Hence development could be possible.   

The property was also desirable based on its location. It is located in an upmarket and high growth suburb less than 4.5km’s from Brisbane’s CBD and 400m to a train station. Predicted growth from Residex at the time of purchase was 9%pa for the next 3 years and the suburb had consistently shown 11%+ growth per year.

The property was also purchased as it had considerable add value potential. Externally not a lot could be done, but there are a few techniques that could be applied.

So to count up Reno Kings Twists, we have 1- zoned for units; 2- two lots; 3- purchase at land value; 4- close to city/transport/good growth; 5- four streams of income; 6- renovation potential. Paul and Geoff would have to be proud of that!

Maximise the value of the Property - How to sleep with a Million Dollar Purchase

Could anyone imagine that a simple, partial and entirely internal renovation, carried out over only three weeks, could produce the following results :

Here’s how to increase your rents by 31% in 3 weeks :

Paint - Obviously! But not everything was painted as there wasn’t time. Due to the rental market conditions at the time of purchase, tenants were lining up to move in, so only the very shabbiest of paint jobs were refreshed (Reno Kings Tip 1 of 99 : light, neutral colour)

Before Painting	After Painting

Floors – fortunately, the two downstairs flats have good quality floor tiles, in good condition, and even in reasonably good taste! Upstairs is the old timber-flooring of the original house – so tempting to polish. But no time, and too noisy for downstairs tenants to live with upstairs tenants clomping about, so budget-priced, but tasteful carpet was laid instead – same price, but 1 day instead of 3 to 4 days (Reno Kings Tip 2 of 99 : if you can’t polish the floors, carpet them)

Tiles – paint them. If they’re securely attached to the wall, but are ugly, just paint them. (Reno Kings Tip 3 of 99 : we love tile paint!).

Before Tiles Painted	After Tiles Painted

Kitchens – refresh or replace as necessary. One kitchen was solid and neat enough, just unpainted timber and dull with bright blue plastic handles. The timber was painted, handles replaced, splashback repaired and painted and all of it cleaned, cleaned, cleaned. Another kitchen was too awful and impractical to even consider leaving, so it was easily broken into small pieces and deposited in the wheelie bin and replaced with a smart but simple and economical flatpack at a minimal cost. Even the plumbing didn’t have to be touched, as can be seen below.

Kitchen Before	Kitchen After

Provide furnishings – One flat is fully furnished, two are partially furnished, with the resulting weekly rental charged reflecting the added value to the tenant. An upstairs, small, single bedroom flat is fully furnished, down to cutlery, crockery, whitegoods and coordinating bed-coverings. As it is near impossible to move fridges and washing machines up into this dwelling without a crane, it was decided that this was a good option, if for no other reason than the personal safety of the tenants moving in and out!

Work with what you have and can’t change - change only what you can and need to. (Reno Kings Tip 4 of 99 : Out with curtains, in with PVC venetians.) Personal taste and tidiness habits aside : light, bright and airy, but with the ability to provide privacy, the photos below show that simple, inexpensive PVC venetians add much appeal to the small dining room. The room was small enough that the blue walls could be painted quickly, as the colour clashed with the floor tiles which couldn’t be changed. A trick here was that the dominating floor tiles were actually used as skirting around three-quarters of this tiny room, with a very off-putting result.  What do you do? Paint them wall colour. They no longer exist!

Before	After

This flat was filthy and ugly and very smelly, renting for $140/week. It now rents for $250/wk and will be $260/wk in a couple of months. Paint, carpet, elbow grease and a few simple ‘know-how’s’ are all that was  needed.

What’s in it for me?

Whether a property investor is purchasing their first million dollar property and potential development site, or their very first entry-level renovator to buy and hold, the principles of research and purchasing and adding value are just the same.

Sonya says “ I am an avid reader of property journals and quality property investment books by successful Australian property investors. I am all for motivation and practice and preach written-down-goal-setting and I love networking. However, when it all comes down to it, successful property investing is about learning what to do, why to do it and how to do it, then purchasing the right property and doing it.”