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Turning A Challenge Into An OPPORTUNITY

Turning A Challenge Into An OPPORTUNITY
June 4, 2019 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

Many investors might feel they’ve cracked the property code after one successful deal, but the intelligent people understand that a single swallow definitely does not make a summer.

David, a 57-year-old small business owner living in regional Tasmania, has proved himself among the savviest of investors. As the operator of a backpacker hostel for fruit pickers, he’s learned a thing or two about managing finances.

David made some smart real estate choices well before hooking up with Propertyology. To his credit, however, he admits this early success was as much about good luck as it was about good planning.

“Twenty years ago, I bought an apartment off-the-plan in Sydney – one of the Harry Seidler buildings – and that did spectacularly well. I bought it for $1.5 million and sold for $2.2 million a few years later,” he said.

While David continued to invest in bricks and mortar, he was following a well-worn path.

As a keen student of property, David did plenty of research on when to buy, but found himself only purchasing in locations that he was broadly familiar with based on where he lived.

Second time around, he was living close to a different capital city market that was, coincidently, on the verge of a hot price-growth run. David purchased some properties in Hobart and enjoyed the gains that started in 2016.

Despite his success, David knew that spreading his investment wings was key to building a great portfolio. With that in mind, he sought out Propertyology’s assistance after some friends recommended their services.

David said he just wasn’t comfortable buying property in locations that he didn’t live in without professional help.

“I’d already bought those couple of properties in Hobart and, for a newcomer, I was doing pretty well. But you’ve got to diversify – you can’t buy in the one market.”

After deciding Propertyology was for him, David gave them the go ahead.

“I’m confident in their research and what they do.”

Propertyology recommended a location in regional Victoria. The team earned David’s confidence through articulating their research methodology and an extremely comprehensive research report for the individual location in question.

A few weeks later, Propertyology’s buyer’s agents found and recommended a 1950s four-bedroom, two-bathroom brick house.

“It was listed for sale for $375,000. Propertyology did a great job negotiating a contract price of $366,000. They also did all of the leg work on the due diligence.”

That due diligence unearthed an issue which may have caused others to pull out of the contract but, somewhat ironically, this ‘problem’ would eventually boost David’s result.

By employing talented local building inspectors, Propertyology helped uncover significant cracks in several foundational stumps. It’s highly unlikely that the owner would have even known about the issue, but it highlights the importance of having an experienced team.

The easy ‘out’ in situations like this is to crash the contract and move on to something else. Propertyology would have no hesitation in advising that if they felt it was in David’s best interest.In the first instance, the team sought more information through a stumping specialist. Armed with the extent of the damage and the cost of repairs, they discussed the pros and cons of proceeding with David and decided they would renegotiate with the seller.

“When we got a final quote for the re- stumping, it was only about half the number of stumps originally thought that needed bracing.”

“Bryan [Propertyology buyer’s agent] was fantastic. He negotiated $20,000 off the $366,000 purchase price while we only needed to spend about $11,000 to fix the problem. I had plenty of money left over to do some other little maintenance items that you’d expect every property to have.”

What started out as a potential big problem, ended up being an opportunity and, with expertise, turned in to a better net outcome!

While Propertyology buyers’ agent did the heavy lifting with the negotiations, David was all praise for another member of the team.

“Mandie did a fantastic job. She got all the quotes for the work and looked into the full extent of the problem. The way Mandie handled it and Propertyology’s constant communication gave me enormous confidence. They could see the value in the property rather than just the issues, which weren’t a big problem.”

In the end, the numbers stacked up. A total outlay of $357,000 in purchase and rectification now returns $350 per week – that’s a gross yield of just over five per cent.

David said his next goal is to pay down some debt and invest again with Propertyology’s help.

Propertyology’s thought-leading analysis, on-the-ground research, and negotiation skills are key to their success. David also appreciated the company’s national focus.

“You can’t put your eggs in one basket. It’s just logical and, as Bryan said, there’s 550 municipal areas in Australia and they’ve all got individual property markets and they’re all in different points in the cycle.”

“I would absolutely recommend Propertyology. In terms of their service, they were flawless.”

Propertyology is Australia’s premier property market analyst and award-winning buyer’s agency. Every capital city, every non-capital city, we analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.

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