Case Study: Bought at 30% less than market value

bedrooms5 Bedrooms bathroom2.5 Bathrooms reception rooms3 Reception reception roomsDouble gardenGarden

7.12%The Returns

Our investor earned a 7.12% return on an investment of $187,500.
The project took just under 6 and a half months.

 

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Purchase price $171,000
Renovation cost $16,500
Sales price $239,800
Investor equity $197,434
Investor profit $14,052
Investor ROE 7.12%
Project duration (months) 5.7
Annualised investor ROE 13.6%

This property was bought at auction for $171,000, at around 30% less than its market value. It was built in 1954 in a solid blue-collar neighbourhood and has 5 beds and 2.5 bathrooms. The property was in a very good condition.

As it required mainly cosmetic repairs and improvements, we only spent $16,500 on the rehab, and sold it for $239,800. Our investor wanted to do this deal on a cash basis, so we did not supplement his equity with loan finance. This resulted in a return of 7.12% (13.60% annualised). But, had he decided to gear the transaction, his return on equity would have been significantly higher.