Hey Guys,
Well it's been a few weeks now since we signed the contract on property number two, so I thought I'd share with you all how and where we ended up.
For those that have seen my posts, my GF and I have been wanting to purchase a property in inner Melbourne. As we currently live in Collingwood, our preference was to purchase in the same area: Collingwood, Fitzroy, Fitzroy North, etc.
We looked at a number of deals, mainly in Fitzroy/Collingwood, however, missed out on a few early opportunities and thankfully so. It was interesting to see how quickly the dynamic at auctions had changed during the period Aug-Nov. Literally we saw prices jump 10's of thousands in such a short period of time. Because of this we were feeling down and depressed as we were effectively getting priced out of our desired market. We didn't think we'd end up buying anything and even considered going to the opposite extreme and moving to Epping!
In the end we ended up purchasing a 2 Bed / 2 Bath apartment/townhouse in North Melbourne.
How the deal came about was quite interesting. We had seen the property previously but figured that it would be well above what we were willing to pay. I was extremely suprised to see that the property was 'passed in' at auction. Y-Man and I were actually talking about buying after a property had been passed in at the last MIG and I told him there would be no chance of that in inner Melbourne in the current climate!
Anyhow, we called the agent the following Wednesday to see what exactly went down. We were in fact just about to offer on another property in the Unit Block we currently live in (also 2 Bed/2Bath) and I made sure that the agent was aware we were putting this particular deal on hold in order to talk to him!
The feedback we got from the agent on the auction was that buyer interest was there but nobody put up their hand . We decided to go and inspect the property the next day (few other parties in attendance) and following our inspection, I was at the Agents office the next morning (Friday) ready to sign a contract and give them our deposit cheque. Before going to the office I did query the Agent on the Vendor's expectations as the price on the ad post auction was above what we were willing to offer just to ensure we weren't wasting each others time!
So, offer and cheque signed in the Agent's office on Friday morning, offer accepted Friday afternoon. Negotiation went quite smoothly as the Vendor was keen to sell. He required the funds to purchase a partner's share in their business as his partner was relocating interstate. Our initial offer was rejected, however, we only had to counter once with an additional $6K. My strategy here was that the extra $1K between the half-way point looked on paper a little closer to the Vendor's counter but not entirely there. Agent told us that they were 'umming' and 'arghing' about it, but eventually decided it was close enough! Maybe we could have played hardball but if $6K was the difference between getting the contract counter signed or not, it really wasn't much in the longer term.
With some guidance from some forum members, I think we paid about market value or thereabouts.
So that's really it. The other property we were looking at in Collingwood eventually sold weeks later for around the same price. I'm thinking property we ended up purchasing will do a little better in the longer term. The bedrooms are a little bigger, the living and dining zones are separate, the courtyard is more useable and best of all the apartment is in a heritage listed building so it has that uniqueness factor. Together with being close to all the amenities that North Melbourne has to offer! The property is actually in the same block that DavidMc recently purchased which is a little weird! Hopefully he knows something I don't! Haha..
I've learnt a great deal from this particular purchase. I really enjoyed researching and attending local auctions. We experienced some lows when we were struggling to find a place and we enjoyed the highs when a place that met our requirements came to fruition! I learnt that leverage is a vehicle to build wealth and that property really interests me.
It will be interesting to see how our two properties actually perform over the next few years as we now have an inner and outer property albeit in Melbourne and the latter in Brisbane. Our strategy will be to hold this property (most likely it will become an IP at some stage) and rinse and repeat this cycle (equity release/purchase/hold).
Any future purchases however will be CF+ or as close to neutral as possible as this purchase is likely to prevent us purchasing again until 2011. We're OK with that as we now have exposure to the inner city. In the interim, this gives us time to increase our cash buffer, educate ourselves more and to also allow us to develop a solid strategy to move forward to the next property and beyond. On first thought, I'm already thinking a property in an outer area where the deposit and purchase/holding costs are less and most probably in Sydney or Adelaide. Inner purchases generally eat too much of your available capital and are initially heavily CF-
To finish, I'd just like to thank a everybody on the forum for all their input and guidance. It's refreshing to be around like minded people who have walked the walk! The depth of knowledge and experience here is amazing. We're lucky enough to now be able to put plans into action and I look forward to continuing my journey with you all into the future.
A special thanks though to buzzlightyear, JamesGG, DavidMc, Rob Williams and most importantly PT_Bear my mortgage broker! Thanks for structuring our finance to allow us to actually purchase this property!
Merry Xmas!
Well it's been a few weeks now since we signed the contract on property number two, so I thought I'd share with you all how and where we ended up.
For those that have seen my posts, my GF and I have been wanting to purchase a property in inner Melbourne. As we currently live in Collingwood, our preference was to purchase in the same area: Collingwood, Fitzroy, Fitzroy North, etc.
We looked at a number of deals, mainly in Fitzroy/Collingwood, however, missed out on a few early opportunities and thankfully so. It was interesting to see how quickly the dynamic at auctions had changed during the period Aug-Nov. Literally we saw prices jump 10's of thousands in such a short period of time. Because of this we were feeling down and depressed as we were effectively getting priced out of our desired market. We didn't think we'd end up buying anything and even considered going to the opposite extreme and moving to Epping!
In the end we ended up purchasing a 2 Bed / 2 Bath apartment/townhouse in North Melbourne.
How the deal came about was quite interesting. We had seen the property previously but figured that it would be well above what we were willing to pay. I was extremely suprised to see that the property was 'passed in' at auction. Y-Man and I were actually talking about buying after a property had been passed in at the last MIG and I told him there would be no chance of that in inner Melbourne in the current climate!
Anyhow, we called the agent the following Wednesday to see what exactly went down. We were in fact just about to offer on another property in the Unit Block we currently live in (also 2 Bed/2Bath) and I made sure that the agent was aware we were putting this particular deal on hold in order to talk to him!
The feedback we got from the agent on the auction was that buyer interest was there but nobody put up their hand . We decided to go and inspect the property the next day (few other parties in attendance) and following our inspection, I was at the Agents office the next morning (Friday) ready to sign a contract and give them our deposit cheque. Before going to the office I did query the Agent on the Vendor's expectations as the price on the ad post auction was above what we were willing to offer just to ensure we weren't wasting each others time!
So, offer and cheque signed in the Agent's office on Friday morning, offer accepted Friday afternoon. Negotiation went quite smoothly as the Vendor was keen to sell. He required the funds to purchase a partner's share in their business as his partner was relocating interstate. Our initial offer was rejected, however, we only had to counter once with an additional $6K. My strategy here was that the extra $1K between the half-way point looked on paper a little closer to the Vendor's counter but not entirely there. Agent told us that they were 'umming' and 'arghing' about it, but eventually decided it was close enough! Maybe we could have played hardball but if $6K was the difference between getting the contract counter signed or not, it really wasn't much in the longer term.
With some guidance from some forum members, I think we paid about market value or thereabouts.
So that's really it. The other property we were looking at in Collingwood eventually sold weeks later for around the same price. I'm thinking property we ended up purchasing will do a little better in the longer term. The bedrooms are a little bigger, the living and dining zones are separate, the courtyard is more useable and best of all the apartment is in a heritage listed building so it has that uniqueness factor. Together with being close to all the amenities that North Melbourne has to offer! The property is actually in the same block that DavidMc recently purchased which is a little weird! Hopefully he knows something I don't! Haha..
I've learnt a great deal from this particular purchase. I really enjoyed researching and attending local auctions. We experienced some lows when we were struggling to find a place and we enjoyed the highs when a place that met our requirements came to fruition! I learnt that leverage is a vehicle to build wealth and that property really interests me.
It will be interesting to see how our two properties actually perform over the next few years as we now have an inner and outer property albeit in Melbourne and the latter in Brisbane. Our strategy will be to hold this property (most likely it will become an IP at some stage) and rinse and repeat this cycle (equity release/purchase/hold).
Any future purchases however will be CF+ or as close to neutral as possible as this purchase is likely to prevent us purchasing again until 2011. We're OK with that as we now have exposure to the inner city. In the interim, this gives us time to increase our cash buffer, educate ourselves more and to also allow us to develop a solid strategy to move forward to the next property and beyond. On first thought, I'm already thinking a property in an outer area where the deposit and purchase/holding costs are less and most probably in Sydney or Adelaide. Inner purchases generally eat too much of your available capital and are initially heavily CF-
To finish, I'd just like to thank a everybody on the forum for all their input and guidance. It's refreshing to be around like minded people who have walked the walk! The depth of knowledge and experience here is amazing. We're lucky enough to now be able to put plans into action and I look forward to continuing my journey with you all into the future.
A special thanks though to buzzlightyear, JamesGG, DavidMc, Rob Williams and most importantly PT_Bear my mortgage broker! Thanks for structuring our finance to allow us to actually purchase this property!
Merry Xmas!