Bad or Horror Stories

T

toony

I have only been investing in property for the last 10 years. In that time I have not experienced any real problems or issues. The worst experience I had was renting to my brothers ex girlfriend who left without paying her rent and the agent gave her bond back.

I have heard stories about interest rates at 15% and property prices not moving for many years around the early nineties. I have heard about a few who may have been bankrupted by over committing etc.

Does anyone have any bad stories, they wish to share on their experiences over the years by investing in property?
 
thanks.... but no thanks

Toonsman,
You're askin' us oldies to re-open old wounds ...and then rub salt in them. Have mercy man.:eek:

LL
 
landlubber said:
Toonsman,
You're askin' us oldies to re-open old wounds ...and then rub salt in them. Have mercy man.:eek:

LL
Click to expand...

actually landlubber l think is would be a very good learning curve for some of us to learn that it hasnt been all smooth sailing for "you oldies"
sometimes it all sounds too easy by some of you guys/girls
I am sure we can learn something from the tales of terror as l am sure you did
cheers yadreamin
 
I would also like to hear about the bad old days. Those of us born after the mid 70's or so have never gone through a recession as workers / investors. It would be wise to remember that these things do happen.
Alex
 
OK I'll bite. We bought an IP one bedroom "flat" NOT "apartment" in a small 60's block in Perth in 1991. It was definately negatively geared. We thought it would be fine because it was positioned next to a lovely old Federation mansion.
Paid $72K. Rented it out for 3 months with a property manager. Tenant left and 4 weeks later we still had no tenant. So to save money, sacked pm and let it out ourselves. Got $120 pw rent for 4 months then found out through the very demanding body corporate that aprox 6 or 7 people sharing flat in shifts around the clock!! Property vacated within weeks and was really grubby. Required, new tiling, bathroom and kitchen, full painting throughout. New bath. Cost maybe $2500. It then spent 6 months on market and eventually sold for $64,250. The only plus in all this is that we still have a negative loss $15K Capital sitting with the ATO. It was not a happy time. :-((
 
I bought an IP in Upper Mt Gravatt, Bris, in 2000 for $105k.
It had been a PPOR for the previous owner but he had just had a new home built and needed to sell his old PPOR fast, as interest payments on the new home were biting.
He had originally bought the first PPOR in 1992 for $110k. Looking back at prices in 1992, that was a reasonable, uninflated price to pay.

So, he had ZERO capital growth for 8 YEARS, and even had to drop his price $5k to get a sale. If you added inflation figures for 8yrs, he would have less than zero growth.
 
My only negative experience was to sell an investment property I had in Sydney in 1997 and then watching the price take off over the next 5 years. :(
 
Hi all
I will bite
Just a short story on in the high interest rate era and it problems.
At that time I was a reasonably successful supplier of service to the garage door industry and had 4 guys working with me.
We had a cheap house for the era and was going well then the rates stared rising before long the rates we up around the 13%.
I was ok as I had very good cash flow (and at that time it was cash) and we would be carrying around 10k a week in cash, in his infinite wisdom the prime minister of the time (Mr Hawke) decided to take on the pilots.
This did two things 1 crippled the tourist industry and 2 sent interest rates higher.
Now everymans loss is another mans gain.
I had at this time started a new business ultraclean laundries, its was a group of laundries that specialized on corporate Laundries we had the crest, top of the town, oxford tower and a few government dept inc corrective services among others as our client. what Mr. Hawke did was basically kill this company off, as the hotels had more staff then guests at times.
It took about 4 months for the hotel industry to start to collapse the cost were killing them. (I remember the then informus “it’s the recession we have to have” statement from the then Paul Keating and each time I hear it send shivers down my back. It killed a lot of hotels) so a very sharp pencil came to me with an idea that at the time I thought was stupid but like most stupid things I run with them.
His idea was to go to a liquidator and ask for an option for oxford towers hotel 130 room hotel.
Ferrier and Hodgeson was the liquidator.
We had 3 problems
1. the rooms were 27sq each
2. they had no laundry facilities
3. they had no resale history

So to get around this we did the following
1. Strata the units thru Sydney council they would do that if we could supply laundry facilities
2. I set up the first communal coin operated laundry they wanted 60 machines I gave them 10 washers and dyers
3. We got a group of investors to put up the money to pay for the renovation of all the rooms and the option allowed us to sell and take deposits and at the settlement pay for the hotel at the same time.

We Reno in 2 months we sold all the units within 4 weeks.
The whole hotel industry was in a dizz, the crest was sold to the Koreans for 22 mil the hotels val on the liquidators books was 60 mil the replacement was 45 mil.
The Koreans Renoed and turned into what it is today a Korean bath house with rooms above.
The Top of the Town is a unit development the same as Oxford Towers.
I hedge and even then used a split loan setup but did it myself using two account with the same bank and as I had good cash flow the rates didn’t kill me but a few it did.
I sold and bought in the same era I bought at 45k Granville sold 2 years latter for 95k bought at 85k merrylands ( Jenman Real Estate and my sales person who still is a friend was Neil Jenman and his office had only been going about 6 months) ( bought from a Greek who lived in Greece and the interest rate was at 14% I think, sold for 135k.
At this stage I had a lot of option I could buy for 240k
A brand new binet house in castle hill (bank in possession)
A castle in seven hill ( and a castle it was with draw bridge mote comm. Kitchen the lot.
It was a theme restaurant it had about 25 rooms and was on 1 acre of land in the middle of seven hills.)
A 3 storey full brick house in Liverpool and the top floor was over 12 mtrs to the ground so was the largest at that time house in Liverpool 14 car garage massive house( bank in possession)( this property was on the market via the bank at 380k and I had them down to 240k)
And a property in Ashfield going to auction.
I did a job on the Ashfield property got a report and got the valuer, inspector to give me a list of faults and added a few then tried to buy before Auction from the bank.
The bank gave me that they would not accept under 250k.
I then went to auction with my report photo copied in a pack of 10.
Mine auction was 4th on the list and walk around the other before asking if the new anything about this house 4th on the list of auction for that day, that’s about to fall down and why the council hasn’t sent a demolition order I got rid of all 10 copies. the seed was set. The auctioneer asked for a opening bid no bidders (wonder why with that many defects) so the vendors brother (who at that stage I didn’t know) opened at 220k, I went 221, he 222, I 230, him 234, me 235 and then thru him a 1 dollar coin and told him to give it to the auctioneer and the house is his as I ‘m not going a dollar more.
The Auctioneer said he would need to get directives and I said why he’s stood here either knock it down or I walk and I still have this house now and that was still with rates in the high10%, they were by this stage coming down.
I got out of the Laundry industry but kept the laundry service section and still do have it and because of the success of the property section moved into real estate and have been dabbling in it since then.
The high interest rate era is a killer for a lot of people but it also opens doors that you would never think would have opened.
For me I don’t think we would have 1 br, studio, 27 sq mtr apartments if it was not for this era they are the bread and butter of small investors now,
but were unheard of then.
When you get a pressure cooker and that’s what this era was you have lots of opportunities you must have cash flow to take advantage of them.
And it gives you great power to do some of these neg’s.
I got a great thrill morbid as it may seem to neg nab down from 380k to 240k and then say sorry found something else and not go thru nab for my lend but that’s me.
There is no such thing as the bad old days as you learn to adjust to the state of region you are in.
For me the one thing that I have learnt is that yes there is a silver lining in any time zone you just have to find it.
Business has been going for centuries and it constantly changes you have to change with it or against it.
For me interest rate changes are not that much of an issue you adjust your forecasts to allow for that.
Its focusing on your goal and adjusting you mind set to that goal that’s more my concern.
This is long and have done it in word to help out.
Sorry if any headack’s
 
mdk92 said:
My only negative experience was to sell an investment property I had in Sydney in 1997 and then watching the price take off over the next 5 years. :(
Click to expand...
that was my bad story too. sold an ip in 1998 and made $30k. was very chuffed with myself until i watched it triple in the next 5 years.

also sold another ip in 2003 and made profit of around $80k. again chuffed until i now realise it was a prime site for three townhouses, right near (but not to close) to main trainline, and now that i am looking at townhouse sites i'll be paying around $100k more than what i sold that one for.

makes me think three times and look at all possible angles before i consider selling anything nowadays.
 
Wow, Grossreal, a very entertaining post. Any chance of another recession in my lifetime, so I can get some of that action? Call me if you need someone to circulate those building inspection reports before auction. Sounded like a ton'o'fun. :)
 
Thread title change?

Maybe this thread shoud be called:

Lessons I have learnt when things didn't go to plan.

(Or something more eloquent)

Mine would be; not all 2 br s/s units in the Eastern suburbs of Adelaide are the same and watch out for heavier mortgage break costs on loans that have intro honey moon rates.

Basic stuff now, but not when I was starting out.

A
 
hi
yes it is
and you are in one now this is better for me now than then.
If I was reborn as a pet it would be a cat as I like to play with something get it over the line and then play with another deal and just like a cat sometimes the mouse does get away runs off and hides under the chair or something and you pick up something else that does look better.
you can only be a cat, in these market places and its fun being one.
for me todays market right now in sydney is a cats market and you don't have high interest rates,
but you do have very uneducated property holders that have the jitters about interest rates, possible war, petrol going over 4 dollars and doom and gloom etc
that is the recipy that cats want and if you get in the claws of a cat you had better have a good escape plan.
I saw on today tonight one night they call them vulture and my friend calls them that( neil Jenman )( we have our disagreements) well I call them cats and why is simple a cat will maul you and play with you and at the end will decide weather to throw you away and play with something else or will eat you if your a mouse.
so if I do need assistance I will email you.
 
We had a bit of a bad trot with a residential house we bought in Rivervale, about 4km from the Perth CBD back in '97.

Thought we had got a bargain, a nice 3x1 fibro tile house on 683sqm of dirt, with a fantastic rear yard. Looking back, I think we got swayed too much by the yard's presentation, and with my wife being from outback Queensland, she was highly influenced by the pawpaw and mango and fig trees growing healthily out the back. Lawn looked a treat and everything seemed OK.

We checked the title out, and saw that the same family had owned it for 15 or so years, with one change 3 years prior, and that was when the husband and wife divorced. The husband had kept the house and the wife moved on, so he was living there alone, and obviously been "tinkering" on the inside for quite a while.

Asking price was 129K, and we put an offer in of 120K. He came down to 127K, and then we upped our offer to 122K. To be pedantic, he came back with 122.5K, which we were very happy with as he'd moved heaps. We signed the dotted line and thought we'd got a bargain.

Just at this point we shifted over to the Middle East to work and left the property in the hands of no less than 3 'reputable' PM's. Four months later one of them finally notified to say they had found some great tenants, 3 young lads and everything was great.

Tenants moved in, rent payments immediately stopped and parties immediately started. We had neighbours complaining to all and sundry about parties going on 'til 4 in the morning, drug deals happenign left right and centre....you get the impression - party central.

We kept getting reports from the PM saying everything was just great, at $20 per month postage and petties on the accounts, as an example. Tenants were looking after the place and the gardens were a treat.

We'd also ticked a little box or two on the management form saying the PM was authorised to take out CR / WR / LT / Ins / Maintenance / PM Fees etc out of the rent and to credit our bank with the surplus. After a year of leasing out, we hadn't received a penny.

Came back to Australia, and the wife and I decided on our first afternoon back to drive past the place and have a look at "our lovely house". We sat outside in the car on the opposite side of the street and the wife instantly burst into tears. I got a tad miffed. :mad:

Where our front lawn had been, 3 dead cars were upturned, with their bare axles exposed. You couldn't see the front door for garbage and car parts piled high. The garage was far worse.

Despite a "no pets" policy on the PM form, they had two adult bull terriers in the backyard, and they'd just had a litter of 6 puppies, with full reign throughout the house. There was a further 4 cars in the backyard in varying stages of being torn apart. They were operating the place as a "chop shop", buying wrecks for $ 50, doing them up and selling them for $ 500 to their druggy mates.

All of the fruit trees out the back were dead, having been smashed into by what only could have been a demolition derby conducted in the backyard with the wrecks.

Next day I called a meeting with the PM and her principal, and we met on the kerb outside the front, with a report they had faxed me 8 days earlier stating they'd just performed an inspection (which they charged us $ 60 for) and everything was just as we had left it. Their only comments were "I'm speechless" and a shrug of the shoulders and "What can I say ??"

They reminded us it was our property not theirs, and if we read the agreement closely, it clearly stated that the Owner held the Agent harmless and not liable for any risks associated with the property.

So, after I ran them both off, and quickly physically evicted the 3 hopeless druggies (no Mr Nice guy - trot off to the tribunal for me) I set about, with alot of generous help from the entire extended family refurbishing the place.

Spent 3 hours digging with a shovel just to get to the front foor so I could open it up, 17 trailer loads of their garbage to the tip, both dad and I got rashes under the arms cafter carrying out the flea infested carpets where the dogs had had their puppy litter on the floor of the main bedroom.

My wife was out the front 2 days into the clean up, when a young 15 yr old girl came up and asked if this was the place where she could score a foil. My wife said "A what ?" To which the girl said "Don't worry" and turned around and left quickly.

The next day I was out the front with a wheelbarrow and a big V8 pulled up, with two big heavy looking characters emerged. Instantly twigged they were the suppliers looking for their money as well. They asked where my tenant was. I said "I don't know, he took off and owes me $ 800, if you see him tell him I'm looking for him." They said with a deep low voice "If we catch him first, we'll snap his spine."

So, 3 months of intensive full time renovations, $ 25K worth of capital expense to rectify white ant damage the previous vendor had covered up with masking tape and repainted over (white ant inspector employed didn't find a thing....and his certificate with all of the legal get out clauses was only partially valid for 24 hours after the inspection, thereafter the entire certificate was worthless).

Got the place up to scratch again, re-advertised it, got lots of "ooh, this is lovely", picked out the best of a bad bunch and proceeded to tell them that this was our house and they were to treat it with respect. Signed up the "nice" couple who proceeded to also stop paying rent, and decided just for giggles to trash it again.

We got despondent, gave up on the area and it sowed the seeds for literally giving up on residential tenants altogether.

Put the place up for sale, and the next door neighbours sneakily fooled us via a "undisclosed nominee" offer to our agent via a 3rd agent after initally inspecting the place on the first home open as a normal buyer. We got taken for about 8K worth of losses on the sale price because of that tactic, and when confronted, our REA who was supposed to be looking out for our interests also shrugged his shoulders and said "What can I say ??"

All up, our impression of our experience with this house was ;

Pumped in lots of heavy physical work
Pumped in lots of time
Pumped in lots of money
Received lots of headaches
Received zero financial benefit

Gave the whole thing up as a bad joke, and invested our money in Big 4 Bank shares and haven't looked back. I think CBA were at about $ 14 a share, and WBC were at about $ 8 a share. Cap gains and divs have been a joy ever since....with no headaches and no time and no ongoing costs involved.
 
We bought a townhouse in Canberra in 94 for 142K. Change in federal government in 96 meant property prices in Canberra dived over the next couple of years and that coupled with a bad tenant (not paying rent, using a bedroom to maintain his motor bike), meant we decided to sell in 97 for 117K. All up a loss of around 50K over the 3 years we held the property. Looking back lots of lessons learned but the experience did keep us out of IPs until early 2003 meaning we missed most of the last boom :(
 
Dazzling, what a story! I'm suprised you ever even looked at property again after such a bad experience. To make it worse, I cannot believe your PM's.. Makes me want to drive past my places :)

You have convinced me landlord insurance is a good idea (I'm going to ring NRMA this afternoon!). Was the house in a low socio-economic area? I don't know Perth at all.

Just terrible. Thanks for sharing all the same..
 
Our bad experiences (only been in it for 10years too...) I have posted about numerous times, but revolve around IP#1 - an OTP where someone did a runner with our deposit, and IP#3 - a brand newey - with faults and unexpected costs.

Cheers,

The Y-man
 
Dazzling that was a great read, sorry it sounds like you've had a dreadful time with that house, indeed enough to put you off for a lifetime or until the next boom at least
 
Dazz said:
We had a bit of a bad trot with a residential house we bought in Rivervale, about 4km from the Perth CBD back in '97.

Thought we had got a bargain, a nice 3x1 fibro tile house on 683sqm of dirt, with a fantastic rear yard. Looking back, I think we got swayed too much by the yard's presentation, and with my wife being from outback Queensland, she was highly influenced by the pawpaw and mango and fig trees growing healthily out the back. Lawn looked a treat and everything seemed OK.

We checked the title out, and saw that the same family had owned it for 15 or so years, with one change 3 years prior, and that was when the husband and wife divorced. The husband had kept the house and the wife moved on, so he was living there alone, and obviously been "tinkering" on the inside for quite a while.

Asking price was 129K, and we put an offer in of 120K. He came down to 127K, and then we upped our offer to 122K. To be pedantic, he came back with 122.5K, which we were very happy with as he'd moved heaps. We signed the dotted line and thought we'd got a bargain.

Just at this point we shifted over to the Middle East to work and left the property in the hands of no less than 3 'reputable' PM's. Four months later one of them finally notified to say they had found some great tenants, 3 young lads and everything was great.

Tenants moved in, rent payments immediately stopped and parties immediately started. We had neighbours complaining to all and sundry about parties going on 'til 4 in the morning, drug deals happenign left right and centre....you get the impression - party central.

We kept getting reports from the PM saying everything was just great, at $20 per month postage and petties on the accounts, as an example. Tenants were looking after the place and the gardens were a treat.

We'd also ticked a little box or two on the management form saying the PM was authorised to take out CR / WR / LT / Ins / Maintenance / PM Fees etc out of the rent and to credit our bank with the surplus. After a year of leasing out, we hadn't received a penny.

Came back to Australia, and the wife and I decided on our first afternoon back to drive past the place and have a look at "our lovely house". We sat outside in the car on the opposite side of the street and the wife instantly burst into tears. I got a tad miffed. :mad:

Where our front lawn had been, 3 dead cars were upturned, with their bare axles exposed. You couldn't see the front door for garbage and car parts piled high. The garage was far worse.

Despite a "no pets" policy on the PM form, they had two adult bull terriers in the backyard, and they'd just had a litter of 6 puppies, with full reign throughout the house. There was a further 4 cars in the backyard in varying stages of being torn apart. They were operating the place as a "chop shop", buying wrecks for $ 50, doing them up and selling them for $ 500 to their druggy mates.

All of the fruit trees out the back were dead, having been smashed into by what only could have been a demolition derby conducted in the backyard with the wrecks.

Next day I called a meeting with the PM and her principal, and we met on the kerb outside the front, with a report they had faxed me 8 days earlier stating they'd just performed an inspection (which they charged us $ 60 for) and everything was just as we had left it. Their only comments were "I'm speechless" and a shrug of the shoulders and "What can I say ??"

They reminded us it was our property not theirs, and if we read the agreement closely, it clearly stated that the Owner held the Agent harmless and not liable for any risks associated with the property.

So, after I ran them both off, and quickly physically evicted the 3 hopeless druggies (no Mr Nice guy - trot off to the tribunal for me) I set about, with alot of generous help from the entire extended family refurbishing the place.

Spent 3 hours digging with a shovel just to get to the front foor so I could open it up, 17 trailer loads of their garbage to the tip, both dad and I got rashes under the arms cafter carrying out the flea infested carpets where the dogs had had their puppy litter on the floor of the main bedroom.

My wife was out the front 2 days into the clean up, when a young 15 yr old girl came up and asked if this was the place where she could score a foil. My wife said "A what ?" To which the girl said "Don't worry" and turned around and left quickly.

The next day I was out the front with a wheelbarrow and a big V8 pulled up, with two big heavy looking characters emerged. Instantly twigged they were the suppliers looking for their money as well. They asked where my tenant was. I said "I don't know, he took off and owes me $ 800, if you see him tell him I'm looking for him." They said with a deep low voice "If we catch him first, we'll snap his spine."

So, 3 months of intensive full time renovations, $ 25K worth of capital expense to rectify white ant damage the previous vendor had covered up with masking tape and repainted over (white ant inspector employed didn't find a thing....and his certificate with all of the legal get out clauses was only partially valid for 24 hours after the inspection, thereafter the entire certificate was worthless).

Got the place up to scratch again, re-advertised it, got lots of "ooh, this is lovely", picked out the best of a bad bunch and proceeded to tell them that this was our house and they were to treat it with respect. Signed up the "nice" couple who proceeded to also stop paying rent, and decided just for giggles to trash it again.

We got despondent, gave up on the area and it sowed the seeds for literally giving up on residential tenants altogether.

Put the place up for sale, and the next door neighbours sneakily fooled us via a "undisclosed nominee" offer to our agent via a 3rd agent after initally inspecting the place on the first home open as a normal buyer. We got taken for about 8K worth of losses on the sale price because of that tactic, and when confronted, our REA who was supposed to be looking out for our interests also shrugged his shoulders and said "What can I say ??"

All up, our impression of our experience with this house was ;

Pumped in lots of heavy physical work
Pumped in lots of time
Pumped in lots of money
Received lots of headaches
Received zero financial benefit

Gave the whole thing up as a bad joke, and invested our money in Big 4 Bank shares and haven't looked back. I think CBA were at about $ 14 a share, and WBC were at about $ 8 a share. Cap gains and divs have been a joy ever since....with no headaches and no time and no ongoing costs involved.
Click to expand...

I know this is an old post. I feel demoralised just reading it. Looks like expriances like this is what makes you stronger if you can get through it.
 
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