Your worst IP purchase

@larrylarry, Thanks for the reply. Sorry I have a typo in my previous post. I was trying to ask when did you buy and sell the Rockdale unit. If it was around 2013 and if you held it for a year, it should still have some growth.

 

Have you checked out the rental market recently? Rents for houses in Cairns are up strongly in the last couple of years. I think Edgehill has shown solid growth in the last 2 years and I would be suprised if it hasn't increased in value now.

 

We sold in 2003/4.

 

I only have a couple to choose from, but the first IP I bought was 50/50 with my Dad in Yeerongpilly in 2007.

At the time I had zero idea about what made a good IP (and to be honest, neither did my Dad). It was the top of the market, and the following years saw floods and a poor Brisbane market mean that it is now worth the same value as we bought it for eight years ago .

The worst thing though was that I didn't understand the impact of joint and several liability on my borrowing capacity at the time. I'll be offloading my 50% in this shortly to look at other Brisbane options.

 

My lemon is in the Logan area. Bought in 2010 with a view that the stigma would eventually go away. After the 2012 flood, the flood zone crept up several houses to include part of my block. Building insurance then went up 3 fold. Lots of repairs thrown in as well. Hoping to offload this one when the Brissy market has moved a little more. Aiming to lose just my buying/selling costs so I can put my borrowing capacity to better use elsewhere.

Lessons learnt - stay a very good distance away from a flood zone. Fine tune a strategy rather than just buying 'anything'.

 

It had always been a decent rent, but its due for a rise now. Unfortunately it was looking shabby after the last tenants axed it to pieces, but now all repaired.

I paid 415k
Valued 3 months ago - 370k
Valued last week - 400k
Agent reckoned 450 (about 4 months ago)

If I could see at least an on paper increase, I'd be happy enough to keep it. I won't sell in a rising market, but its given me a whole lot of anguish over the decade. I'd be 100k ahead if I'd never bought it, especially if i consider exit costs.

 

Desk top val or only a very rough estimate based onthehouse etc?

 

Too much NRAS stock in the area and bad timing. Should have known better as we were hardly green investors at the time.

 

The latter was a detailed walkthrough val (HTW I think).
On the house is all over the shop, jumps from 400-450, to 450-500, now its 430-480ish.
Im peeved at my PM. I knew the market had moved but the house was trashed literally, and I was desperate to get tenants back in - we secured a lease whilst it was still in pieces (I mean, literally with an axe). But she signed up a 12 month instead of a 6 month.

 

Ouch... The rental market is quite strong atm

 

Mornington, Mt Eliza, Dromana, new Marina on one side and Blairgowrie, Sorrento, Portsea on the other. Buy in the next cheapest neighbourhood - Rosebud. Wrong choice in location.Buy close to the beach - yes but this other house is prettier has 3 beds instead of 2 and a nice bakery around the corner! Wrong choice in location. the Paid too much! Didn't even think about the demographic, where people would work, transport etc. Then wrong tenant. We have a suitable applicant says pm, he has a bit of stuff though. No worries - there is a double garage he can use for storage. The pm should have said the tenant is a Hoarder! Moving forward do we sell the lemon or extract the juice?

 

My worst purchase is only now, after 5 years of ownership, earning the title of 'worst'.

I have a unit in Sydney's Alexandria, that only now is being ripped through with remedial works due to the developers shoddy work years ago.

Sucks for so many reasons:

1) tenant balcony use diminished meaning I have had to reduce rent rate by $30 a week to compensate (for the entirety of the 6 months remedial works...)

2) hard to envisage 5 years ago at purchase, but the impending glut of Green Square/Alexandria stock impending on the market in the next 18 months will likely further diminish rents on existing stock like mine

3) Bought into a big block of 200 units. Never again. Strata is pretty high. Started 5 years ago at $850pq, is now $1,150pq. Ouch.

On the positive I have a great long term tenant and post remedial works, rent has been agreed to go up in line with market rent. Oh and up until 2015 anyway, I've had some mean CG.

 

I warned my friends about ovo project but they went ahead. I hope they will be able to get finance post APRA changes.

 

Yeah Larry, it's a bit of a tailspin for some of those OTP buyers out there in this suburb.

 

What other stock do you have? I would like to hear details of areas and deals if $400k growth in 5 years was your worst one.

 

I didn't say worst one, I said probably one lagging. How I determine this is because I like to add value to my acquisitions. When I compare money invested, time it takes for return on some of my other deals then compare to the my coogee place, I think that's the one not as good as some of my other deals, when you compare my turn around time to create equity in them. Time factor is important to me, eg make 500k in 12 years or 250k in 3 years, which one do you feel performed better?

But having said that if we are talking about pure growth and no added value then the coogee deal is not bad in my mind. But then when compared to another place I got in Blacktown that doubled in value in 3 years, you can see why its not right at the top of the pack for me.

 

Sorry Leo, I was under the impression the thread was "Your worst IP purchase" my mistake. Sounds like you did well in Blacktown was that a house? What did you do to add value to the property?

 

No its all good, your right that's what the thread says mate. Yes bought in western sydney perfect time. The blacktown one was an old 3bedroom home. Good bones. The growth in western sydney last 2-3 years is insane. That property did a very basic cosmetic reno that's all.

 

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HI @The Y-man man

Im not trying to be smart here mate, just wondering why did you buy into a complex that large with massive strata? You must have of had some plan behind the buy. I'm just curious.

But good to know you offloaded it before it became a bottomless money bucket. Hopefully with some profit or break even? Well done .