A little slice of history

(Maybe in the wrong section - mods, if I need to move it, please advise - maybe should be coffee lounge)

Not sure if this will interest anyone, but I'm going to share anyway!

Going through some old paperwork recently, I dug up the attached document - the letter of offer for my first IP!!

Block of 4 1BR units, purchase price $84,000, in a regional country town (city now). They were let @ $60/week - a gross return of about 14%!!!

I had the $8,400 deposit in cash, which I'd saved up from working my summer holidays and had probably just finished my first year of full time work. Technically, I shouldn't have got finance with only 10% deposit, but Dad's business banked with the same bank, and he "spoke to the bank manager for me". I guess this was back in the day that bank managers were actually bank managers!!

Looking back, I remember wondering why this thing cost me every year - but look at the terms! 12 years!! P&I! That's about $825pm; the $960pm rent, less PM, insurance (x4), water (incl. usage), repairs (they were 40-ish years old) didn't quite cover it.

So here I was, a young, wet-behind-the-ears landlord! At 22! I had NO idea. (In fact, the first rental statement I got had a hand-written note from the PM "Congratulations on being our youngest landlord" - wasn't I wonderful!)

Since sold them for a small profit (1 step backwards to take 2 steps forwards) but aaah, the nostalgia. And of course, the old "if I knew then what I know now'" syndrome!

Nice story.....I see they were bought 1997. Did u sell recently?
Did they appreciate much?
JB

Short version...
I sold them in 2006 for $120k.

Long version...
From the time I bought them until I sold in 2006, the rent went from $60 to $70 week, even to $75 for the one I repainted.

In 2004, I got them valued (by the managing REA) when they were fully let, at about $165k, so I thought that was quite nice!

But I got to the stage in 2006 where they were getting very haggard (needed new kitchens, new bathrooms, etc) and they ended up being empty. Couldn't afford to keep them, couldn't afford to do them up! (Also, by this stage, I was living in Geelong, about 3hrs drive from Traralgon, so couldn't practically do anything myself.)

And surprise, surprise, "someone just happened" to be looking for a block of units, and the REA thought of me! First offer was $100k, 6 months settlement and the buyer would collect the rent! Tell him he's dreaming!! The REA got me to reveal the lowest price ($120k) I'd be willing to accept, and wow, another surprise, they came back with exactly that amount!!

Wow - I've learnt a lot over the last few years...

They've since been converted to serviced apartments.

But like I said, I took 1 step backwards to take 2 steps forward. The cash that selling freed up allowed us to renovate our own home (adding more value than the cash) and purchase a higher CG property with similar CF.

I should also mention that I only looked at property after it was recommended I read the first Jan Somers book, so I sort of feel like I've come full circle. (Apologies for the D&M)

So as recently as 13 years ago your Dad had to "pull strings" for you to get finance?

Interesting.

<<<<The REA got me to reveal the lowest price ($120k) I'd be willing to accept, and wow, another surprise, they came back with exactly that amount!!>>>>

Ha!! Nice lesson!!
Haven't we all been there!
JB

Yeeeesss..... not sure what you mean by that, Mr Fish!

I'd only been working for about 12 months, was on a relatively low income, and only had 10% deposit.

Are you saying that 13 years isn't that long, or that I should have been able to stand on my own 2 feet?

What's interesting?

No Wobbly, nothing like that at all.

I was remarking on the fact that "only thirteen years ago" your bank had strict criteria for lending. The undercurrent on SS is that there has been a level playing field since Grandpa's day, ergo only the slovenly DIDN't become rich via property. I have tried to say that's not the way it was but no-one cares.

It wuold be an interesting book: Fourty properties in fourty weeks with 20% deposit each! LOL

Sunfish said:

No Wobbly, nothing like that at all.

I was remarking on the fact that "only thirteen years ago" your bank had strict criteria for lending. The undercurrent on SS is that there has been a level playing field since Grandpa's day, ergo only the slovenly DIDN't become rich via property. I have tried to say that's not the way it was but no-one cares.

It wuold be an interesting book: Fourty properties in fourty weeks with 20% deposit each! LOL

Click to expand...

Aah, yes. I see what you mean.

With today's criteria (and yesterday's prices), I could have have put down 5% (+costs) of $4200! Then with IO finance (even if that was at 8-ish%) paying ~$530pm and gross rent of say $1040pm, the figures stack up a little differently!