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Property Investment Part 2

So we all piled into the car around 8:30 on Sunday morning. There was Deidre, Peter and Lucy, with me driving. We headed on up to Wollongong, about a 2.5 hour drive north-east of Canberra. You head up the freeway towards Sydney, and then shoot over to the right, heading to the coast where Wollongong is located. It’s where the property investment group was based. We managed to find them ok, and I was surprised how big the building was.

Getting out of the car, we stretched our legs and then went inside. There were a lot of empty desks with phones. It was Sunday after all… I guessed they had a huge staff of phone consultants making cold calls every day, trying to drum up business.

And speaking of business, that’s pretty much what we engaged in for the whole afternoon. We were there from 12pm through to 6:30pm, and we walked away with a brand new property of our own.

During that time we found out about the various options available to us, and how we could take advantage of them for our circumstances. We were presented with a property to consider, which we decided to take. We had the finances explained to us, and we signed a LOT of paperwork.

My friend Peter had an incorrect explanation of finances made to him, so he was pretty annoyed about what they seemed to want him to do, and he wasn’t interested. I got the finance manager to explain the situation to him correctly, and Peter was happy after that. He walked away with a property of his own too.

I should clarify that ‘walking away with’ our own properties was dependent on the successful attainment of finance, which we suspected we wouldn’t have a problem with. Deidre’s and my borrowing capacity was very surprising: $650,000. We chose a property in a developing area outside Melbourne that was about $330,000. Starting ‘small’.

We left, feeling like new property owners, something we hadn’t ever felt before. Something worth celebrating! So it was dinner and drinks at a restaurant on the way out of Wollongong, and then the drive back home to Canberra, arriving about 11pm.

That was Sunday.

On Monday I did some research and had some concerns about the value of the property in relation to similar houses in the same area. I sent them an email and asked them to advise of the major difference between values, up to $80,000. Quite considerable! I know values can change between houses, but by that much? Same property type, even the same street?

They didn’t reply to the email by today, so I tried phoning our account manager, who was unavailable all day today.

Now, there’s a 3-day cooling off period on the contract, and that was expiring tomorrow. Due to the unanswered concerns about the value of the property, the unavailability of our account manager, and various information on the internet that seemed to suggest the group regularly overprices their properties, we made a decision.

We rang them and cancelled the contract, terminating the agreement, and saying goodbye to our first property investment. The one that never was.

But don’t worry! The experience was invaluable, and we’re really very happy about it. We’ve discovered our borrowing capacity. We’ve discovered that we have the potential to invest in nice properties anywhere around the country. We’ve gone through the buying process – at least to the point before the end of the cooling off period – and we know what to expect in future. We have a better idea of the kinds of questions to ask, and how to quickly research investment groups and properties.

This is all invaluable as we move forward.

I’ve made the first step to doing it alone, so to speak, instead of having a property investment group managing it all for us. I’ve checked the value of properties for sale in Adelaide, in the suburb that my brothers live in. I’ve checked the range of rent that is being asked for in the same area. I’ve found that the average property is about $125,000 with the average rent being about $160 per week. The way I figure it, with tax benefits and depreciation, we could potentially make a profit from a cashflow positive investment.

So I texted my brothers’ landlord and asked if she’s interested in selling the house they’re in. She was, and asked me if I was interested in buying it. I said possibly, depending on price and the condition she’ll be leaving the property in. She’s going to get back to me.

Tomorrow night we’re speaking via video conference with a major property investor in Sydney, that I was introduced to tonight by my Sydney friend, Peter Hagerty. We’re hoping that we can get some good information from him about better ways of doing things.

So that’s the update on property investment. It’s all so very, very exciting!

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