Sam & Dave’s Journey

We recently had the pleasure of working with an investor couple to purchase two investment properties both in different price ranges and suburbs, one higher and one lower. The first property we searched for was a 3 bedroom house on a reasonably good size block in the booming western suburbs of Melbourne. After inspecting a few, we came across an amazing period style home right in the village of Seddon, 550m from the train station and located within a 7 kilometre radius of the Melbourne CBD. It was definitely ticking a lot of our boxes for an investment grade property. A lot of these types of properties require quite a bit of up keep and in time all need to be either re-stumped, re-roofed, re-wired, re-plumbed or all of the above, which can run into many tens of thousands of dollars. That’s fine if your buying price is extremely low and you have ample time to put into these labour intensive upgrades and not to mention, have the know-how of property renovation (finding some good tradies, sparkies etc.). All of these works take time to complete before you can actually get to a stage of letting the property. The worst thing is you are stuck paying for a mortgage on a property for which you receive no income but with a lot of outgoing costs.

Luckily for us the property we found had been re-stumped, re-roofed and re-wired within the past couple of years and we were provided with the relevant documentation to support this. Having said that, it always pays to do an independent building inspection regardless of what you are told just to make sure (a) the work has indeed been done and (b) to what standard.

After doing all of our due diligence and keeping well informed of how the auction campaign was tracking, finally the day of reckoning arrived. We knew it was a good property and would sell well above the quoted $600k to $650k range since all of our comparable sales analysis pointed to a selling price of mid $700’s – more like $740k to $770k.

The bidding started at $600k and went up in $10k and $20k increments and it started to stall at $685k before being kick started again in lower and odd number increments up to $700k. It kept on rising ever so steadily between us and one other bidder who wasn’t looking quite so comfortable after we went past the $700k barrier whereas at this point, we were really only just warming up. The bidding now went into the $1k increments range until such time we had the winning bid at $721k. There were no further bids and we were successful in securing a fantastic result for our clients, well below what we had anticipated it selling for. This win now sets them up to investing in the second property sooner rather than later and puts them well down the road of being financially free. So, the moral of the story is always do your due diligence and always conduct a building inspection. I always say to our clients that it’s not about what we can see but about what we can’t see behind those freshly painted walls, shiny bathroom fittings, re-stumped floors and new roof.