When discussing buying “Australia’s Cheapest Home”, the most common reaction from other investors is one of the following: # 1-You must have been very lucky. Or # 2-The seller must have been very incompetent.
Most of the people who know me well can guarantee that I strongly believe in making your own “luck”-through hard work, sacrifice, and tenacity.
Many months ago, when I lived in Australia and worked as a real estate investment researcher, I came across a three-bedroom, one-bathroom house in a small town in New South Wales called Molly.
The property was listed for $ 80,000 and required little work. At the time, the trading numbers weren’t very attractive, but they were attractive enough to add properties to the pipeline list (like any other number that meets certain criteria).
It was a few months ago that I received an email from a listed agent informing me of a $ 20,000 price cut. As you can imagine, this quickly peaked my interest.
Without hesitation, I called the real estate agent who represented the seller and immediately started negotiations. After a week, including a few people being thrown back and forth, I got a call from a realtor that someone broke into the property and completely destroyed it. Unfortunately, negotiations stopped immediately and the deal appeared to be closed at this stage.
Over the next few months, I’ve been following up with realtors to keep up to date with the seller’s claims progress and see how his intentions are progressing.
A few more months passed when a real estate agent called me one morning and asked me how much I would pay if the property was refurbished and moved in.
I know the seller is likely to get a fat check from the insurance company and will not refurbish the property to my standard. I decided to submit a $ 37,000 lowball offer without much expectation.
Surprisingly, the offer was accepted, but the tug of war was not yet finalized.
Real estate remained vacant while insurance companies delayed seller payments, and sellers, realtors, and I became more and more impatient.
After spending almost a year trying to get this deal across the line, my impatience finally made me better. I called a member of the National Association of Realtors and said, “This transaction takes a long time to complete and I’m tired of waiting.
Now and today, only I will take this destroyed vacant asset from the seller’s hands for $ 15,000 in cash. Otherwise, I would be out of the deal and invest elsewhere. The realtor sent my message to the seller, saying, “The seller accepted your offer,” and called me within an hour.
*** wonderful ***
As soon as we closed, I started and completed the refurbishment for $ 15,000. The total value of this transaction was $ 30,000. With a happy tenant in place and the property in good condition, I decided to list it at the “outdoor” price of $ 80,000.
Before buying, I knew two recent comparable sales in the $ 80,000 and $ 110,000 areas. The property was successfully sold for $ 75,000 within two months of listing, with a very decent $ 45,000 profit.
What can we do from now on
An important factor that can be implemented when building your own real estate portfolio here in the United States is to always have a pipeline list of transactions that may seemingly lacking numbers, but still track price fluctuations on a regular basis. You can contact the real estate agent / seller and the base to see if the transaction will be closed in the future.
After all, I don’t think luck was a factor, so I have to disagree with others. This is because it takes almost a year to secure this transaction at such a large discount. The last thing I heard was the seller. He left with fairly decent money from the insurance payment. (Not so incompetent after all).
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