Avondale Road Armadale Auction Review
Well we were back again, this time to bid on a fantastic 2 bedroom apartment in leafy Armadale.
This property ticked many of the criteria we look for in an investment grade property. After the auction Bill, our client, described me as always looking for properties “with an X factor”. We had now spent some three months together trying to find the right one so I guess he is right, you see buying something unique in the area always helps when it comes to selling and renting. If you are buying something that has little or no distinguishing difference then, come renting or selling, it will be difficult to command a premium price, won’t it?
Although completely original this two bedroom 70’s apartment had a lot going for it, firstly and most importantly the street. Located in one of the nicest tree-lined streets in Armadale, the property was still close to trams, Armadale train station, primary schools and parks and surrounded by multimillion dollar homes.
The next important thing we noticed was the limited number of units blocks in the street and availability of parking, also important in the inner city. Then there was the limited number of apartments in the complex, only nine and the bigger than usual size car park with storage, something really hard to find.
I’m not sure you’ve noticed but I’ve hardly mentioned the interior of the unit except its size. My philosophy is you can always update and add value to a property but you cannot change its location, size and the amount of land component it shares with other units in the complex, the fewer the better!
When we conducted our due diligence, which usually takes us a good 10 hours, we found a number of pleasing things. Previous sales in the complex were strong and the complex was tightly held. A three bedroom in the block sold for $760,000 in 2010 and more recently in 2013 a 2 bedroom fetched $655,000 both renovated.
Interestingly what we discovered was that the type of title on the property was Stratum which had just recently been changed to Strata. This has a significant bearing on how much the banks will lend against the property (usually lower) and in my opinion posed a fantastic opportunity to buy a property in a complex where most inexperienced buyers may not be comparing apples with apples on price.
The auction started with a $500,000 bid, well below the quoted range of mid to high $500,000. We had done our due diligence and all indicators pointed to a very conservative figure of $630-$650,000.
We sat tight and waited for the right time to start bidding. The auctioneer called a vendor bid at $545,000 at which point other buyers began to push the price beyond $580,000. Although I thought the crowd was small, a mere 20 people or so, there were four or five interested parties involved.
We took the price to $600,000, once on the market at $580,000. Being a state trustee property we knew there would be a sale, but at what price? The bidding was fast and furious, our strategy was to put as much pressure as possible on the opposition and in the end we managed to win the property for $651,000. Our buyer was thrilled with the result and looks forward to many years of good tenants and capital growth.
Congratulations Bill, looking forward to the next one!