Your worst IP purchase

Discussion in 'Investor Stories & Showcase' started by meme plecko, 23rd Jul, 2015.

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  1. The Y-man

    The Y-man Moderator Staff Member

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    Sorry to hear. Sounds like pretty "standard" (unfortunately) OTP marketers.... there are going to be thousands in a similar boat to (and some a lot worse) than your daughter in the coming years.

    You daughter is lucky in a way because she got a loan. Many more will not be able to get a loan as the values fall off, and they will lose their deposits and get sued for costs.... tough lesson, and we've been through it too (we were very very lucky in a rising market). Moral of the story - unlike any other product - safer to buy a used, pre-loved property.

    The Y-man
     
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  2. who?

    who? Member

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    Buying pre mining boom in WA (2011) and not selling at the peak of the boom (2014-2015).
    Advise from many sources was to hold. Long story short, purchased 310k and now valued at sub-240k in area with very low socioeconomic rating.
     
  3. TAJ

    TAJ Well-Known Member

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    Ouch!
     
  4. spludgey

    spludgey Well-Known Member

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    What did it get up to at its peak?
     
  5. who?

    who? Member

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    It got up to about 360k. :(
     
  6. Kelly88

    Kelly88 Well-Known Member

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    @who? : how much do you get for the rental ? Do you get a good tenant on that ? What is the vacancy rate ?
     
  7. JohnPropChat

    JohnPropChat Well-Known Member

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    That's about 10% growth, overpaid as well I suppose?
     
  8. who?

    who? Member

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    Rent is currently at $200/week. Put at that price to attract tenants as vacancy was quite high the past 2 years.
    We only got a tenant early this year after almost a year without.
     
  9. Gen-Y

    Gen-Y Well-Known Member

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    Worst property I ever bought was buying where I grew up in my own backyard so I can keep an eye out.
    Sydney Picnic Point back in 2004.
    Fast forward today - it hasn't gone backwards, but it did slow my progress. :oops:
     
  10. spludgey

    spludgey Well-Known Member

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    A guy I was working with lost about $1m on a property in Port Hedland. So yours isn't THAT bad.
     
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  11. JohnPropChat

    JohnPropChat Well-Known Member

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    Oh yeah, one trick pony towns and small regional places tend to do that. Who would have seen that coming ....
     
  12. TMNT

    TMNT Well-Known Member

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    yeah $310 to $240k, is only a $70k paper loss,

    some people bought at $700-$800k and now its down to $250K!
    and some bought more than 1, OUCHY!
     
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  13. Kelly88

    Kelly88 Well-Known Member

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    @who : at least you have a tenant now. 1 year is a long time without tenant. Is it managed through an agent ?
     
  14. Rex

    Rex Well-Known Member

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    This is typical of property purchases in WA of the last 10 years, but usually with bigger numbers involved. Count yourself lucky it wasn't worse; at least you didn't buy at the peak of the market. Though a year of vacancy really sucks. What suburb?
     
  15. Skinman

    Skinman Well-Known Member

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    Worst purchase IP no1 H&L package in Wodonga in 2014. Cost $383k maybe worth $400 at a push now.

    Plus side decent CF and I get full depreciation although council rates of nearly $3k take a fair chunk out.

    Downside lost opportunity cost.

    Wodonga has done pretty well over this period on existing housing but median still well below what we paid for shiny and new.
     
  16. jins13

    jins13 Well-Known Member

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    My worse purchase is bad because it's not with a top 4 lender and paying the ridiculous interest rate. Once the loan is moved from the 6s to 3 to 4% interest rate, a pretty good property.
     
  17. spoon

    spoon Well-Known Member

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    Worst performing IPs were bought in then newly developed areas in Wagga. Typical new land developments, cookie cutters, kit homes. The only differences were colour of the roof tiles and bricks. Rental return was good. But CG sucked. But any vacancies, repairs or bad tenants you would be in the red. It’s in the early 1990s and interest rates were over the roof. We sold them in early 2000 and made little to no profit. Lessons learned. Location is important. Buy in capital city where those who’s got the money would like to compete for a place. Good school zone and infrastructure. Etc. Principles of KISS.
     
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  18. ALT

    ALT Well-Known Member

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    My first IP (3x1) bought in Perth suburb of Kenwick.
    Bought in 2004 for $135,000.
    Has a sewerage easement along the fence line, also came with a annexure in the contract of sale acknowledging it had had some structural problems and some movement had occurred.
    Never bothered with a building inspection on purchase (I do use them now!)
    No sign of any problems in the first few months, then the hot summer came along and the cracks started appearing, in the bathroom tiles, cornices, walls, mainly at the easement area of the property. Roof also started pulling away from the frame.
    Had an engineer’s report done who advised demolish or sell ASAP.
    By 2014 the cracks in some parts were large enough to get my hand though the walls and roof leaked like a sieve. Part of the ceiling collapsed as well!
    Engaged a ground engineering company to inject a liquid resin into the ground around the half the property, which raised the house at the worst sloping end by around two inches. Interesting to hear and watch as some of the cracks slightly closed as the resin was injected into the ground.
    Also replaced the tile roof with a colourbond roof to help reduce the weight on the walls.
    To fix the walls helifix steel rods were inserted into the cracking areas mainly around the door frames and window frames finished with strong bonding concrete, plastered and painted.
    The concrete floor was also in bad shape the uneven cracks everywhere. I used more bonding cement on those cracks and also floor leveling ( powdered cement poured onto the concrete floor and it levels itself out)
    Five years on and have only had the one floor to ceiling crack appear in one of the bedrooms, a few hairline cracks still appear, but nowhere near as bad as it was.
    Has been a good learning experience and I intend to hold onto it for the long term and await the next challenges it provides
     
  19. The Y-man

    The Y-man Moderator Staff Member

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    Awesome - I waned to know whether these resin injection things work.

    The Y-man
     
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  20. willister

    willister Well-Known Member

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    Always good to hear a good ending story!

    A relative of mine also had a structural issue type property. Purchased in an inner Melbourne suburb and didn't do due diligence, was a 7 year old double story with an extension. The rumpus extension bit was sinking literally due to poor foundations, in the end he quoted around 10 engineers to have a look at it and finally found one who could help him out for about 3/4 the prices of most others. Still good today after 10 years.
     
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