my not so great investment experience: Cheapie strategy

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I bought in 2012 - peak - H&L took 15 months to build!!! Then had to fight legally with builder to finish job.

It's a 4 and 2 BDR house and unit. Purchased 476K probably lucky to get high 3 s and rent only 325 a week. Disaster. Got spruiked!! Looking to objectively number crunch to look at actual vs opportunity losses in terms of holding/selling.

 

Its crap that happened to you mate...... that's why I highly advocate to all newbies to spend a little time to learn the basics so you can avoid this from happening. I bet you know much better now mate.

 

Thanks mate. My issue was I wasnt a newbie but delegated/ entrusted a spruiker to source some properties due to my new onset of being extremely time poor due to starting a new business. This was my 9 th property. Even more embarrassing. But YES lesson learnt - expensive lessons teach you well!!!!

Thanks for the support.

Cheers PC

 

That must have been so annoying for you, but well done on your portfolio mate. I had some expensive lessons too, one costing me 10k so your not alone there that's for sure mate.

 

Sorry to hear you've had a hard time of it @TMNT.

Before you sell, have a really good look at the problems and what, if anything, could have been done to avoid them. I think you may find that PM selection could be the key issue. In saying that, though, you can get a good PM who then moves on & the Agency hires a complete ***** to take their place.

In the past, we've had some major issues which were solved by changing PMs. In one area we had some properties that were vacant for around four months, as the PM refused to show our property. Of course, we didn't know that at the time. Changed agents & they rented the next week. We also had a PM that embezzled over $25k.

Some properties just seem to attract problems too. We sold a lovely home because each new tenant that moved in started off good & over the next few months deteriorated into pure scum. This didn't have anything to do with the PM because they had several other of ours with no issues, so just cut our losses & sold it.

 

oh yeah exactly, to be honest, the ones that I really want to sell, other agents wont touch it , due to the area, some ive already used them before and moved on amicably and some not,

im not willing to go down the private management side as I couldnt handle the workload and legislation, and plus im interstate so thats another thing to consider.

my current ones are the best of a difficult bunch, admittedly, in the past, I was quite strict with them and had a certain level of expectation which I thought was reasonable, however unfortunately, now it is a stage where ive realised that I now have to impress them by not ******* them off

damn, that sux, what about your CG?

im not in negative CG but its still quite tough,

also, buying HL package in a regional mining dependant town is quite a risky move, unless you did it in such an early stage. and to be honest, I bought mine in 2012 or 13 if I recall and I also too didnt expect the market to collapse like it did.......lesson learnt,

what are your plans for this one??

 

My plans are to crunch the numbers and see whether I offload it at large loss but it will give me room to move for an investment grade property. Got to chat with my broker in terms of scenarios given the new macro prudential control.

Cheers

 

Great point @skater

 

Yes, managing the managers is part of what you have to do & when you have areas where there are few managers, it can be a test of patience, I think the managers also know when they have an advantage.

 

I don't think the managers are difficult because they think they have an advantage. I think it's more along the lines of inexperience and poor role models. It is completely different to Sydney Lower Socio areas, where you have a lot of choice for your PM. Yes, there's still incompetents, but there are also brilliant PM's. The challenge then is to find the good ones.

 

I feel they do have an advantage and some use it, they know where else you can go is very limited. Also fees - they all seem to have higher fees yet business cost is likely to be lower, and if they know your not close to the area, they can use that too.

Then you have the ones you speak of, which makes it hard if you used them, not intentionally, but due to reasons you point out and more.

I think were on the same page though, the PM matters, you need the right one/s.

 

We had a couple of issues with some of our initial properties in Logan but solved this in Rocky by buying slightly nicer properties a couple of steps up the food chain .

We're buying close to the bottom at the moment , but they're all neat , clean and tidy ( at the moment ...)

One trick we do now ( if we can ) is use a PM where the PM is a principle in the agency .

Both the PM's were going with at the moment are in this catagory and with our manly /wynnum properties the agent we're using only does PM's , no sales . We've had good results with that as well in Townsville.

This sort of problem is one of the reasons why most of our long term holds are in nicer areas . We're currently buying cheapies as I'm expecting that segment of the market in brisbane to move well ,similar to 2770.

Cliff

 

Goood luck with that.
I dont envy your situation.
I personally dont think muswllbrook will recover or will get back to average growth projections from before the boom......

But thats probably me being pessimistic due to my experiences......plus i wouldnt trust my track record at this point in time; )

 

I see myself as a customer of a business. As a customer. I feel that i am their bread and butter (not insinuating that i can be a prick or unreasonable or be rude in anyway). I am therefore entitled to a reasonable level of professionalism.

Thats how i would normally thibk. However if the current agency is the last one in the area thats willling to take me on whether its my fault, their fault or no ones fault. I feel that i must tread carefully or suck up to them so that they dont turn around and no longer continue a relationship.

This goes against my personal and professional beliefs however, beggars cant be choosers. I need to get the best outcome for the situation which is to keep the agent happy.

It sux but this is the reality in my opinion

 

TMNT

It is possible to do well in cheap areas . We've done in on more than one occasion.

When we've bought in cheap areas we've bought several properties in the same area . This way you get to know the area better .

I wouldn't have invested in Davoren park and Trashmont just due to the negativity I've seen on the forum . Don't know the other places .

If you're going to invest in really bottom areas ( Davoren Park , Ashmont , Gagebrook spring to mind ) I think you need to know the areas really well and have very hands on , good managers , but I'd wonder how many good PM's would want to work in these areas.... )

We've passed on lots of properties in the cheap areas . Some properties just look like trouble.

Most times we've kept the selling agent as the pm initially , but if we found one is better or worse we consolidated . We asked other people who were investing in the area their experiences with property managers

Cliff

 

hope it will go well for ur next move whether holding or moving on

I just sold my unit in melbourne north thats in a poor suburb and poor st mainroad.. I know first property bought 5 yrs ago bad choice...anyway I went through VCAT twice in 3 yrs......probably just my own wrong judgemental skill in property but not gonna touch northern suburbs anymore hmm

 

Ouch...sorry to hear.. Did you have a Property Manager?

 

Where abouts in the north?

 

Definitely agree that you can do well with cheap areas. However, you're definitely not missing anything in Davoren Park. Prices haven't moved around the area since 2008. Meanwhile across the road in Elizabeth. http://www.abc.net.au/news/2015-09-...at-elizabeth-downs/6791520?WT.ac=statenews_sa

 

I'm sure Dave would disagree , but he knows that area very well , and is on top of the property managing angle . We thought about investing there , but as we already know Brisbane reasonably well , we went there . Multiple properties in a cheap area .

As said before , we normally use the buying agent as the pm initially . This time we also dropped in unannounced on a couple of PM's to check them out as we had some spare time . Chalk and cheese , one was ontop of everything , very efficiently organised , gave honest and open answers .

The other one who has 800 on their roll was like a 1950's time warp , didn't seem to have a good knowledge of how many vacancies . When I asked how often did they have to go to the tribunal she said never ...... Lower socio economic area , 800 properties and they've never been to the tribunal ...... Seriously ..... That made them even the most efficient luckiest or most incompetent PM in existence .Didn't believe anything they said after that

Cliff