my not so great investment experience: Cheapie strategy

Don't forget the dodge areas gave you CF+
This is just part of the package.
Nathan and his clients will snatch them very quickly if you offload them now.
Might consider to do a deal with him.

 

There's a difference between maintenance and improvements/ changes. The former pretty much always do so that the house is in good nick and no injuries happen. The latter only do if it comes with capital growth / yield increase. Having an investment savvy PM will help determine this.

 

I think a lot of people under estimate the maintenance aspect of buying cheap properties (myself included). A HWS will last the same amount of time on a cheap place versus an expensive one. However for a cheapie, the new HWS might be equivilent to 1.5 months rent - while on a regular property that cost may be only 2 weeks. Obviously as a percentage it hits a lot deeper.

 

Thanks for sharing your pain @TMNT.

There is always pro and cons on every strategy, so what your plan for future? Will you repair and do more selective tenant? Or sell and do asset swap with better quality but lower yield?

So at the end, you will have combination between both world.

 

A sincere thanks for sharing @TMNT. Brave and insightful post.

It would be interesting to see your current equity position and portfolio cashflow if you're willing to share.

When you offload 25%, what are your plans with the profits?

 

No need to be sheepish mate, no such thing as being a racist to white people.

 

The current plan is to shed the most problematic ones that have in my opinion no or little chance of average growth.

Becauze of these problems these cashflow positive properties are severly negative so that screws up a lot of things.

And then see if there is any cash left and possibly go in to shares as the share market seems pretty battered

 

I've a lot of luck with single mums with decent references, in my cheaper properties. Single mums seem to get the short end of the stick in a lot of areas, and so try to do the right thing with housing (at least the ones I've had).

As a general policy, I try not to rent cheapies to anyone under 30, and not to blokes under 50. Immigrant families seem to be a good choice too. Bogans need not apply.

 

If you decide to offload any of the SA ones can you please send me an email? [email protected]

 

Someone wants benefit from other's pain .....

 

I think you'll find its called win-win situations. Why pay agent fees unless you need to - I think its pretty obvious that TMNT isn't about to fire sale his properties & I'm fairly confident he has a good idea of what the properties are worth.

 

Haha yes. No firesale needed. I might sell as many as 8!

I do keep an eye on the market. The good thing is eveb though on paper they are pretty much all positive. I neeve rely on it becausse one bad tenant and poof younare in the red

I almost considee an eventless year as a bonus

But maybe im too pessismistic

 

I personally, like another poster has said, would rather have a small/minimal portfolio of high quality assets (and thus higher quality tenants) rather than a large one with properties in low socio-economic areas. Not discouraging the strategy. Just my risk profile -Not sure if I can sleep at night knowing some fool is smoking ice whilst 'looking after' his baby in my property.

 

TMNT,

How is your Muswellbrook property going in terms of yield and capital growth. I have a property there in the new estate that has been smashed by the closure/cessation of expansion of the Drayton mines and over supply.

I'd be very interested in your thoughts.

Cheers

Pipeclay

 

Even still

 

That is a bummer, I do not think it matters where you have property, it can often be hard and a pain in the backside.....

I do not know many of the other areas, but what price did you go for in Bathurst ? is it in or ex housing ?

The PM is an important part, I have seen first hand many that would easily bring grief & some have been recommended on the prior site as good PMs !, if only those people knew that some agents do not give a rats about your place, i.e tenants smashing holes in walls is ok & even something to chuckle about.

Things also do go wrong it seems in bursts.

If you kept the better ones & debt was not large on them, they should be good for income ?

 

In terms of cg its gone up and come back down signifcslty

The rent has dropped from 350 to 240 pw
Ive had the tenant do a runner last week with no arrears

If i sold now id probsbly break even. But only becuasr i bought well at the time

In hindsight i should have expected a signflificsnt drop in cg and rent. Thats the lesson learnt. I was half expecting prices to grow at average rates after the mini boom

If you dont mind me asking what sort of figures inc cg and rent its changed

 

Sorry to hear its been a difficult time, and its brave of you to share it openly.

If it were me, I would be reassessing my plan, strategies and goals moving forward.

 

Thanks for brave and honest post @TMNT !

Just goes to show how some cheapies can put a dent on a pocket and give headaches over all.

As some one mentioned, small maintance bill can wipe.of entire month of rent.(something most investors should take in to account)

Before, you consider offloading 8 or so properties, worth while looking at worthy PM in respective area. Change of PM/Agency who manages such properties in area could worth its weight in a gold!

 

Sorry to hear about that @TMNT

The cost of those issues goes way beyond the impact on cash and profitability.

So much wasted time, stress and uncertainty.

Something to steer well clear of.