Real Estate

Our Latest Buy (Part 1)

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We’ve done it guys, WHEW.

Finally got there, far out.

“Wipes the sweat off my BROW”. 

Another little addition to the real estate portfolio.

Much relieved I AM.

You see, it’s actually been about 12 months in the making…

Because on and off for the past year or so, I’ve been tracking one capital city in Australia which I’ve identified as the next component of our FIRE goals (read about the goals here).

Where?

Economically this capital has been in the doldrums, and consequently its real estate market is shot to bits.

Picture this, advertised asking prices dropping by the week, no one turning up to open inspections and selling agents DESPERATE for an offer.

Conditions like this attract the type of buyer who smell blood in the water, the type of buyer who knows they have the pick of the lot, and the type of buyer who runs a personal finance and development blog.

Of course, I am talking about… Perth.

Image result for shark gif
Hello, I run a personal finance and development blog, nice to meet you.

Suffice to say, that when MrsFrugalSamurai had a work conference out that way late 2018… I eagerly tagged along, but not before shortlisting about a dozen properties to inspect over that long weekend.

It worked out quite well actually.

During the day whilst MrsFrugalSamurai was conferencing – I’d be zipping along in the hire car (Kia Rio – great little nipper from $16,990 drive-away) checking out properties…

No wait, I’d be checking out shopping centres first.

Shopping Centres?

Why shopping centres?

Because as a complete foreigner to the area, a shopping centre gives a great snapshot of the demographic in the immediate vicinity.

One of my quick hacks for filtering through the relevant areas if you’re not familiar with the area.

I must have gone through 13 or 14 shopping centres and malls with a trail of Mango, Banana and yogurt shakes, in my wake.

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Sure was magical… one minute no diabetes, and the next…

Good thing I did, because reading and researching about an area online is vastly different to seeing them in real-life, some places surprised and others… were completely accurate.

Of course interspersed between those shopping centres and sugar hits, were the inspections of the actual properties themselves.

There wasn’t anything particularly extraordinary or incredible about these properties – no, they were just the standard houses, townhouses and units (not apartments) you’d find in any neighbourhood.

I had them on the shortlist because I thought the advertised asking price was lower than what the actual value was based on prior research.

There are many things which I look out for when inspecting properties but the number one rule is location.

Location, Location, Location!

You’ve heard it all before right? Location, location, location when it comes to buying.

Things like, is it on a main road, are there power lines nearby, is it close to amenities like schools, shopping and transport etc.

That’s all fine and dandy – but you don’t need to spend hundreds of dollars on plane tickets, accomodation and car hire to work out the obvious when Google Maps can do it for you.

No, I’m talking about the intangibles when it comes to location.

Intangibles such as – next to a boarding house (1 was, insta-crossed out), or next to some fairly shonky looking neighbours (another 1 crossed out) or with huge overhang trees which look like they’re about to fall down (another 1 crossed out).

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“I dunno honey, our new neighbour is kinda creepy with that wandering eye of his”.

Pretty much on the second day, most of the properties were ruled out for one reason or another.

Until there was only 4 left…

The Shortlist

Here are the fab four with rough numbers:

Property 1 

2 Bedroom, 1 Bathroom and 1 Car townhouse in a top-notch blue ribbon suburb just off the main road, in original (meaning unrenovated) condition.

Asking $399,000, probably need about $15,000 of cosmetic renovations to really bring it in line with market. Would assume rent around the $380-$390 per week mark.

Comparable properties had asking prices of $450,000-$500,000.

Property 2

3 Bedroom, 1 Bathroom, 1 Car villa in a good, middle-class suburb, 200m to the local primary school (best one in area) and 300m to shopping. Also in original condition.

Asking $359,000, and again would need about $10-15,000 worth of renovations to spruce it up. Probably rent for around $320-340 per week.

This one was the cheapest 3 bedroom dwelling in the area, with comparable 3 bedders going for low 400’s.

Property 3

2 Bedroom, 1 Bathroom, 1 Car unit in a very good suburb, 200m to water, 500m from the nearest train station. In decent condition but needing a quick paint and fix job.

Asking $298,000 and probably rent for $260-280.

1 bedroom units in the complex were asking $310-$320,000.

Property 4

2 Bedroom, 1 Bathroom, 1 car unit in a working-class neighbourhood, next suburb down from a local economic and tourist hub. Unit was in good condition, except for a large crack in a bedroom wall and leaking pipes in the kitchen (strata to fix).

This was a mortgagee-in-possession i.e. bank foreclosure sale. The previous owner sadly bought it at $280,000 at the top of the cycle, now asking $149,000 after a whooping TWO years on the market.

Probably get around $190-$200 rent.

Funny one this, the agent was desperate to offload it and advised me that the bank will probably “accept an offer $15k or $20k below”.

~~~

I know what you’re thinking!

WOW if they are so undervalued TheFrugalSamurai – why didn’t you just buy ALL of them?

In hindsight, I should have… I really should.

But hey, at the time – I didn’t want to just pull the trigger on a million bucks worth of property – that’d be too much risk for me to handle. Bearing in mind the real estate market is still very much in the pits!

So which properties did we buy?

Come back next time to find out more!

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