OK Daz,
I have to ask the obvious. The property you left in your spread: how did you turn a property bought for $780,000 into a property worth 4.6mil in two years?? Was it just extremely undervalued at the time of purchase? Did you put up a factory? What's the story? Please share it!
I already have Luce.....that property is our "ugly duckling" which I wrote about on these forums about 18 months ago.....it's in the archive of this and other forums. I have no clue how to dig it out.
Suffice to say that it was unloved and unwanted. It sat there on the internet (one of only two props we've ever bought from an ad on the internet) for well over 6 months with no takers......what can I say ?? Anyone could have bought it - but nobody but us did.
That's not to say it wasn't keenly sought. The grumpy 79 yr old sod next door (who owns land on both sides of us) desparately wanted it to link up all three blocks. However, the agent was one of these slick new guys who only advertised on the internet. He failed to put up a sign. Of course, the old guy didn't have a computer and couldn't go on the internet. He didn't know it was for sale !!! When he eventually found out I was the new Owner.....suffice to say he was pretty dark and offered me a 100K premium on top of whatever I'd just paid. Lucky I didn't take it hey !!
Was it extremely undervalued at the time ?? No. The asking price on the internet for 6 months dropped from 860K to 840K and then finally to 820K when we stumbled on it.
The agent said I was braver than most, as out of more than 20 parties that had arranged to see the place, I was the only one prepared to stop and get out of the car.....the others simply turned their noses up and drove on. I was definitely out of my comfort zone and had absolutely no-one to ask for help and no books or research material to fall back on. Out on a limb.
I had a quick squizz over the land, trying to see what I could see past the 83 tonnes of rubbish strewn about the place. It's hard to "see" when there is that much cr@p on the block and up against the fences.
I took the wife around after hours to see the place. Her only comments were ;
1. It's absolutely disgusting....I wouldn't pay $ 2,000 for it, and
2. Have you got any idea what sort of nice house we can buy with that money.
Hmmmm....time for some reflection whilst out on my limb.....hmmmm
I offered 680K to start with and got a verbal pasting from the Owner (a bankrupt, enormously fat, lazy truckie and his far worse wife) about how valuable it was.....they'd paid 600K for the place back in '97.....but they didn't know I knew that.
Anyway, she's a very long story.....it took a year to get the dregs of tenants out of there. Installed a good tenant without securing a Lease (he verbally promised me he'd move in and then sign up - then proceeded to tell me to get stuffed he wasn't signing anything - won't fall for that nice guy caper again).
He improved the place for us, but eventually went into liquidation as well (you can read about that sorry saga in the "Risk came through" thread) and now we have a fastidiously clean, slim, organised & neat truckie in there making oodles of money and flicking a bit our way.....and we have him on an executed 42 page Lease that has him locked up tighter than a drum.
Off to the side of all of this, and of no doing on my part, the block of dirt has naturally risen in the general industrial market out there from $ 114 per sqm what we paid for it up to between $ 675 and $ 700 per sqm in 3 years.
If you simply believe experts that warn you that commercial property exhibits low capital growth compared to residential, because it yields higher.....then swallow that line at your peril. I certainly did for about 6 years until I woke up to myself, did some research and got some cold hard numbers and decided to ignore the experts warnings.
I suppose one of the reasons the Land is going up so fast, Owners of businesses here in Perth that operate from premises like this do not want to be subjected to the onerous conditions of being a tenant and are prepared to bid up a place just to secure a good permanent site to operate out of.
To answer your other question, we haven't done anything to improve the place and haven't spent on dollar on improving it or building anything on it. The couple of rusty old sheds what we bought are still there.....and will likely be there in 3 or 4 years time.
I might start plans on developing the land, but really....why muck with something when you don't have to ?? I'm a bit lazy when it comes to that.
) and gave it a whirl (the last one we did was about 18 months ago).
