Real Estate

The One That Got Away – A Missed Property Which Would Have Shaved YEARS Off The (FIRE) Dream (Part 1)

Reading Time: 4 Minutes

“Argh!” Yells the frustrated young man in front of his laptop screen, a painful wince crosses his facial features.

“What’s wrong?” His wise yet still sexually attractive wife calls out, hurrying over.

“It’s SOLD already #*@(%&#”, he shouts – slamming his fist down.

“Oh… don’t worry, there’s always another one”, she responds… glad her husband is just over-reacting again. He’s just a boy at heart, still throwing those kiddie tantrums – she tells herself, before resuming the latest Korean drama series on Netflix.

Her husband continues to yell and curse in the background.

~~~

Sigh.

Hi guys – that was the little conversation MrsFrugalSamurai and I had earlier.

You see, I’ve been moping around for a day or so now.

How come?

Because when you see the “deal of the century” come and go – well, it ain’t easy to recover from!

What deal?

Let’s rewind eh.

Earlier this week – on Tuesday night, I was perusing the inter-webs as you do, having a quick scan of the real estate listing portals when I came by an ad for a 3 unit block inter-state.

It might not look like much but this is THE golden ticket.

At first, I thought I was seeing things.

It was listed for $300,000.

But that wasn’t what caught my attention – what caught my attention was the yield it was advertised for.

Unit 1 (a 2bdr) was rented for $265/wk, Unit 2 (a 3bdr) was vacant, Unit 3 (a 2bdr) for $255/wk.

If you work that out, that would average to be around $770-790/wk (assuming unit 2 is rented – and being 3bdr SURELY it would rent for something at least similar to the other two).

$770 a week annualised is around $40k per year.

That means the gross yield equated to a WHOOPING 13.3% – that is phenomenal.

Usually you only find those types of figures in regional or mining towns – where yield compensates for a higher risk in tenant quality and vacancy times.

But this was in a capital city, in a fairly diverse (albeit lower-socio economic) area and one I was somewhat familiar with.

To say my heart was POUNDING is an understatement – all sorts of thoughts and visions flashed by my eyes:

  • $40k per annum, we can pay this sucker off in 8 years by itself and live off the rent!
  • Wow this would fast-track our FIRE dream by a GOOD decade or thereabouts.
  • Imagine what would happen if we had a couple, or three of these bad boys in our portfolio.
  • $$$$ symbols flashing before my eyes.
Image result for dollar signs gif
BLING! BLING!

It was too much, I had to sit down and grab a cool refreshing drink to calm my beating heart.

Yes, I’m ashamed to admit this but I got emotional, maybe a bit too emotional.

But to be fair, I think it’s the best real estate deal I’ve come across for a long, long, LONG time, probably the best deal to date.

EVER.

Why was it so good?

Wasn’t just the fact that it was ridiculously positive geared at an incredible yield.

It was the fact that the price was a good $60 or $70 THOUSAND below where it should be – based off my calculations and comparable sales in the area.

It was the fact that you could strata title these units, and artificially increase another $50K or so of value.

It was the fact that you could just renovate the properties (judging from the listing pictures) “as is” to further improve value or increase the rental yield.

It was the fact that being in a capital city location, vacancy times are reduced, the growth and infrastructure drivers will remain and tenant demand should always be there.

And finally, it was the fact that the block of land these units were sitting on, was significantly large enough to further develop and build more if you so chose.

What are you waiting for? Just BUY ALREADY!

I reckon aye! Shoulda just pulled the trigger.

Image result for do you feel lucky punk
“Do you feel lucky punk?” “Yes, Mr Eastwood, Yes I DO”!

Naturally I had to call the real estate agent. But being late night when I saw this, I decided to wait for first thing Wednesday morning (next day) to call.

Sigh, it’s painful to even think about how the conversation went:

Ring, ring

“Hello?”

“Hi, this is TheFrugalSamurai how are you, I’m just wondering if you have a few minutes to discuss this property I saw advertised online…”

“Sniff” (pulls out handkerchief and blows nose with a whimper).

S…sorry, but can’t talk about it at the moment – it’s still too darn RAW.

Get misty eye’d just thinking about it.

How about this, give me a couple of days more to recover… I’ll make sure to spill the beans and all on what happened next OK?

Ok, done deal – come back for the big reveal!

“Sigh”

The young man quietly shuts off his laptop… and stares at the pristine Eggshell White wall in front of him… a distant and forlorn look forms on his face… he reaches for the handkerchief again…

~~~

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P.s. Will be continuing on with the “Bear Market Series” (read here for the latest) but this story was too GOOD not to share.

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