Do Not Overlook The Day Of Small Miracles

[Kristine..]

This could be in Commercial but I have chosen to post it here:

Do Not Overlook The Day Of Small Miracles

Property investors often wonder whether they can ‘afford’ to invest

In November, 2003 I bought a lock up shop for $105,000 in a strip of nine shops, which were all somewhat faded and not considered to be very lucky. A major shopping centre nearby had drained all the ‘retail’ spending out of the area, and the shops were used by hairdressers or by accountants rather than for retail sales.

I borrowed all the money and settled in January, 2004. I painted and redecorated , and moved some business activities from home into the shop and that was about it.

In late 2006 I started up the franchise in a different area and rented out the shop to an alternative health practitioner some time in 2007. She was there for two & half years and then the shop was let to a Church group as meeting rooms.

Today the Valuer rang me. He has just valued the property at $260,000. In 7 & half years, the shop has improved in value by $155,000 – a whopping 19% capital growth every year

Where else can you buy a 120m2 lock up shop, with 2 x internal Ensuite facilities, tea room, parking at rear for two cars etc?

It’s not flash, it’s not a multi storey office block, it’s not on an acre of land and it doesn’t have a multi-national world leading brand name tenant

But it’s never been empty, it’s in a safe location with good sight lines, and the shop next door is about to start construction on two apartments above their shop space, so we still have the opportunity for further development should we wish to do that.

Do not overlook the small properties. The tadpoles, the tiddlers, these are still fish in the pond. The concrete bunker a couple of suburbs away which I bought for $145,000 back in December, 2006 is now worth about $315,000 – where else can you buy a two bedroom garden villa unit with attached carport and secure rear courtyard?

It’s not all fashionable postcodes, or boutique houses, swish apartments or office blocks.

A basket full of pullet eggs is still a basket full of eggs. Over time, a pullet egg can still grow a full sized rooster.

Go and look for the small investments as well and as thoroughly as you go and look for the big ones.

Opportunity comes in all shapes and sizes. Do Not Overlook The Day Of Small Miracles

Even if the only investment eggs in the basket were these two properties, I would still have done very well!

Cheers
Kristine

 

[The Fence]

Should have posted in Commercial.

Top post and Kudossed...!

Gotta start somewhere.....congrats Kristine

 

[Dazz]

.....yeah, but think of the risk, pretty risky stuff. I reckon youse was lucky.

I could never sleep at night knowing that if I bought a shop, it might be empty for months on end. I see this all the time - especially now - and when I walk past I always say to myself "Phew, I'm so lucky I don't own that".

I reckon you were just lucky. The average punter could never repeat what you just did. It'd be far too risky.

Real lucky.

 

[jaycee]

.....yeah, but think of the risk, pretty risky stuff. I reckon youse was lucky.

I could never sleep at night knowing that if I bought a shop, it might be empty for months on end. I see this all the time - especially now - and when I walk past I always say to myself "Phew, I'm so lucky I don't own that".

I reckon you were just lucky. The average punter could never repeat what you just did. It'd be far too risky.

Real lucky.

I've heard those comments when some others got me intrigued into looking and "learning"(ha!) about lower priced commercial..

It was funny how so many people consistently said that same thing.. now I also heard from a smaller bunch the same thing about investing in anything in the first place, so I knew to discount them... but the rest.. it included resi invstors, up to and including some with a small number of paid off properties and other investments..

One time as an exercise, I brought up commerical one time, but in a negative way.. I brought up the high return, but then focussed on the risk factor (cause I dont have much equty to help me during a tough time), and suggested that not only is is risky if no tenant, but it can stay empty for longer than residential too - vry few people agreed with jme or asked questions, they told me straight up I was wrong,they aren;t risky, they ar good investments, that the've never seen empty shops for that long etc

So in the end I'm just confused.. like most people it would seem

 

[redwing]

.....yeah, but think of the risk, pretty risky stuff. I reckon youse was lucky.

I could never sleep at night knowing that if I bought a shop, it might be empty for months on end. I see this all the time - especially now - and when I walk past I always say to myself "Phew, I'm so lucky I don't own that".

I reckon you were just lucky. The average punter could never repeat what you just did. It'd be far too risky.

Real lucky.

Agreed,


I aim to track you both down and rub your bellies prior to buying my next lotto ticket and commencing my starring role in TT or ACA, Happy Daze indeed Momma

 

[Kristine..]

Hey, redwing

It is only the Maitreya whose belly is meant to be lucky for rubbing!

Dazz and I, we hard bitten old crusties, make our own luck! Dazz is good with buying Mad Max scenarios and for a while, I was good at seeing the ‘bones’ and figuring out where that could take me.

These two tiddlers have been quite surprising. The bottom of the market is a strange place. At the bottom, there are few disappointments on all sides. Tenants just want clean and secure with an inside loo and hot and cold running water. That’s pretty much it. If you exceed that, they think it’s wonderful.

Come up the food chain by even a small amount, and suddenly the expectation lifts to dishwashers and gas ducted heating. It may come as a surprise, but not everybody actually wants that. I remember a tenant not so long ago – single income family, two small children – who was concerned at how much the whole of house gas ducted heating was costing him. He much preferred to have only the gas space heater in the lounge as that meant only the one room to heat.

The market share which is actually in extremis is the lower end – the ‘affordable housing’ market. It is not just the politicians but the landlords, too, who can help take the pressure off the families on one income.

But this will only happen when landlords look and see the Small Miracles which any market has and which the market is hungry for.

I've been a bit distracted for the past few years, but once Mike and I finally get this HOTTA underway I certainly intend to be out there fishing for more mackerel.

Dollar for Dollar, there are often far better returns on the small fish than on the trophy variety!

Cheers
Kristine

 

[Melbournian]

in 7.5 years 100K to 260K?

hmmm is that considered in your view as good or bad?

 

[Kristine..]

Hello Melbournian

As you can see in my post, given the type of property, the neighbourhood and all other factors, I consider this to be a gobsmackingly good result!

This was a 'throw away' property considered to be well past it's use by date.

Yet it has still managed to nearly triple in value, despite a GFC and with nothing having been done to materially change the property in seven years.

Not only that, it is clear that should we wish to do so, we could use the footprint and build two residential apartments above the shop.

No wonder the previous owner regretted the sale so much that he refused to hand over the keys at settlement!


But you do get the point of my thread, don't you:

You don't have to buy in fashionable neighbourhoods or spend a lot of money to make worthwhile investments in property.


And as I have no money in this deal, and never will have any money in this deal, the Internal Rate of Return on my investment is infinite!

Cheers
Kristine

 

[jaycee]

I think it's a retty damn good increase.

Why what value would made been a "good" valutaiton in your book ?

 

[StefanA]

Great work on the growth Kristine. What % yield on original and current value does the church group pay?

With that nous, I look forward to reading about the gains in the tiddlers you've bought since. Maybe you want to spread your risk and buy some in Brisbane, or the USA, Greece, Italy.

Or does the use of small miracle in the thread topic mean you think the result cannot be repeated reliably?

 

[Kristine..]

Hi Stefan

Rent (net of outgoings) is about $1,050 pcm - $12,600 pa, which is about 12% net yield on purchase price and about 4.85% of current market value

I guess if we added in the Insurance, Council & Water Rates (paid by the tenant) that would be an extra $2,500, so the gross yield would be about 14.4% pa less Property Management fees, the only outgoing paid by us.

Do I think this can be repeated?

Yes, I do. I am a great fan of the bottom of the market - the Small Miracles - but I also have properties in other market positions which have also defied gravity over the past few years.

However, despite the serious pain of Land Tax here in Victoria, I will probably always be a Victorian investor. I applaud people who can buy elsewhere to their own neighbourhoods but Melbourne is my stamping ground.

Having said that, we are considering buying in Norwich but that is more so that a particular property doesn’t get sold out of the family and yes, it is entry level, bottom of the market, and an opportunity we may yet avail ourselves of.

Cheers
Kristine