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'I doubled my money on Australia's cheapest house'

Sep 3rd, 2012
Sep 3rd, 2012

Buying, renovating and more than doubling your money by selling on is a fantasy for most investors. Unless the option to buy for less than the average credit card debt comes along.

An Australian property investor who landed a place for just $15,000 in rural NSW is proof of what can be done when outlay is so low.

After renovating the run-down Moree home for just $15,000 more he has the property back on the market for $80,000.

View the gallery here

So how did he do it?

The initial sale was down to persistence and a little luck, says owner Engelo Rumora.

"Originally I saw it on the market advertised for $80,000 and it needed a bit of work but I made some enquiries anyway. Turned out the owner planned to renovate and do some work.

"A few months later it had dropped to $60,000 so I checked in with the agent again and made an offer to buy the renovated property for $35,000 and we started negotiations."

Do you have an interesting renovation story to share? Email homes.projects@ninemsn.com.au

During negotiations the house was broken into and vandalised, at which point insurance money became involved. However, Rumora says the final sale really just came down to persistence.

"I checked in again after a few weeks and the vendor was supposed to be getting an insurance payout … but the agent said he was having problems with the insurance company.

"That day I offered to take it off his hands for $15,000 cash. And he agreed."

The place had been attacked by vandals (as you can see in the slideshow) and was suffering from some major plumbing problems, but according to Rumora, $15,000 was enough to get it back into shape.

"I don't install $10,000 kitchens and granite benchtops — this isn't Vaucluse. I stuck an $800 Bunnings kitchen in there and went down the budget route."

Rumora also opted for interior all-over spray-paint to slash the budget.

"Normally painting a home is expensive because of the labour. You've got a different colour on the ceiling, the walls and the woodwork and that takes time. We covered the windows and floors and sprayed the lot," he said.

Even by taking an economical approach, he believes he'll get the $80,000 asking price.

"I've already had an offer for $70,000. I don't know anywhere in the world you can get that kind of return for your investment."

It might sound like he lucky break, but Rumora insists the same is possible for anyone who is serious about renovating bargain properties, and lists other success stories on his website.

"I also bought a four-bedroom home in Coonamble for $22,000 and sold it for $35,000 without so much as a lick of paint," he said.

"It's something I learned in the industry that determination and passion really pays off."

But Kevin Young, president of The Investors Club, said buyers with $30,000 to spend should take out a loan to buy new property close to the city.

"You're better off spending more and having a better investment than buying 10 toilet blocks and having problems down the track," he said.

"The problem with areas like Moree is finding good, long-term tenants. Your house might be sitting vacant for long periods paying you nothing."

He said renovating was also a risk for any home buyer.

"With renovating it can be really hard to know what you're getting yourself into … If you have major electrical problems you might be looking at $25,000 to rewire the house."



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