Detective Senior Constable Wayne Ryan, of the Warrnambool police crime investigation unit, said a male youth aged between 16 and 18 years approached a unit in Shadforth Street, Terang at 4.30pm Monday.

"He is of solid build and medium height and was armed with a knife," he said.

"The offender has attempted to break in the unit where an 84-year-old woman lives. Fortunately the front security door was locked. The offender broke the handle in trying to gain entry."

Detective Senior Constable Ryan said the offender also tried to get in a front locked window.

"The elderly woman resident has yelled at him to leave while on the phone to police and that was enough to frighten the offender off," he said.

"He then attended next door at a home near the intersection of Grey and Shadforth streets where an 80-year-old man lives."

Detective Senior Constable Ryan said the offender entered the home, took possession of car keys and walked out the rear door where he confronted the resident with the knife.

"He told the elderly man he was going to steal his car and did so," he said.

"Police attended and the vehicle was recovered about 8.30pm Monday along a back road near Timboon-Curdies Road."

Detective Senior Constable Ryan appealed for anyone with information about the crimes, or anyone who was walking along the Timboon rail trail between 4.30pm and 6.30pm Monday, to contact the Warrnambool CIU or Crime Stoppers on 1800 333 000.

"These offences have had a massive impact on the two victims," he said.

"It is in the best interest of the person or persons involved to contact police or hand themselves in to the nearest police station before they are located and arrested by members of Victoria Police," he said.