Why I wouldn't buy an old home Sydney's western suburbs

We know property in the western suburbs of Sydney has reached an all-time high.

Many of my family and friends, as well as clients, are selling their old home investments. They all know that their investments have reached an all-time high and think now the wisest move is to sell.

Renovation works are becoming too costly and older homes in Sydney's western suburbs are also becoming more and more untenantable. They can also see mandatory changes looming due to the dangers around asbestos and old led paint, therefore feel it is time to sell out. Frankly I don't blame them, most property managers found in these areas aren't aware of the dangers and possible claims against the landlord.

Investing is all about numbers and frankly, the numbers just don’t add up presently in terms of rents v cost to purchase.

This however is not the premise for this article. This article is about the future costs I strongly believe will be incurred by many property investors in these suburbs and in the near future.

Watch this space, because what the average real estate agent doesn’t know is alarming. Or maybe they do know, but just don’t tell you, since they just want to keep your management. Whatever the case, in my humble opinion, it will cost you a lot of money.

As I wrote in Property Observer recently:

“You can just imagine a tour guide calling out through the loudspeaker, ladies and gentlemen, please put your masks on as we are about to enter the asbestos belt of Sydney. To our right we see 40 year old/plus homes riddled with asbestos and to our left…more homes riddled with the same and led paint."

For now, if investors that own properties in the “asbestos belt” of Sydney, believe that we are far removed from what is taking place in the US. Well let me once again say; it is only a matter of time before we follow suit.

I am one to believe there will be civil action against many landlords within three to five years. I further believe the “asbestos belt” will undergo a major possibly mandatory transformation within five to 10 years.

This may not only happen in Sydney alone, as a matter of fact, the ACT have already commenced a similar program to what I have been writing about for years. The worst case scenario for the owner is; for the value of the property to decrease to land value only and a further cost to demolish the old home made of fibrous sheeting. Or for the landlord to be caught up in a legal suit due to health issues, claimed by the tenants.

My stance on this matter, as once again written in Property Observer:

I can envisage a couple of scenarios occurring soon. One which will place real estate agencies in the firing line when tenants take action against the landlord for health issues, a dangerous position to be in. The second which can occur, is where agents fall short of their regulatory requirements to disclose possible hazards due to ignorance and/or neglect.

Can I say, ignorance from agents is no defence against any claim made by the tenant. Furthermore, blatant neglect to disclose hazards in the homes also by agents and all because they want to keep the management and don’t want to lose the landlord, is in my opinion criminal.

Further to this I see that the smarter agencies will soon be offloading managements belonging to greedy landlords that simply do not have an ounce of care nor intentions to rectify these hazards. To these agencies I say well done in advance.

What to look for when buying a home as an investment in Sydney Australia:

• If it’s a fibro home and built pre 1986, you can be assured it has asbestos.
  
  
• If it has been cladded, then it only shields the outer skin: what about the inside where tenants and trades people drill holes, affix nails and have exposed wall lining? Secure yourself on all sides.
  
  
• Check the roof sheeting. Older homes generally have asbestos roof sheeting, again if affixed prior to 1986.
  
  
• Ask the agent or agency that is selling the home to confirm when the home was built even if it is a brick home. Asbestos is found in the lining of the wet areas, bathrooms, kitchens and laundries.
  
  
• Make sure you obtain a pest and building inspection report before you commit to a purchase. An outlay of a few hundred dollars may save you tens of thousands of dollars.
  
  
• If you have or if you are considering purchasing an old home in Sydney's Western suburbs, be sure you have a strong property management team on your side. This should be a team that can protect you and the tenant from future issues, and can establish clear tenancy guidelines; to protect you from legal action and to protect the tenants from injury and harm.

EDWIN ALMEIDA is licensee in charge of Just Think Real Estate.

He is also the creator of Oz Real Estate.TV and a presenter for propertyinvestingvault.com.