My wife and I found our first investment property after looking through the Real Estate section in the newspaper one Saturday morning. We focused on finding a good buy with a great location even if it meant doing a major renovation on the property. The biggest psychological obstacle was getting our heads around borrowing large amounts of money and looking at it as a debt for life, instead of looking what it costs to service the debt after expenses and tax deductions, which was minimal.
The location was great. It was close to the city and opposite the Swan River in Perth with river views, but the inside was a different story. The whole unit was green – green paint, green carpet, green mould, green everything! Kermit the Frog would have been in heaven. It was run down and neglected. Quite a few people went through the inspection on the first Saturday it was opened, and many left holding their noses and pulling faces (as the place reeked of pets, urine and mould) but we saw beyond that.
It was a one bedroom, one bathroom unit, all with original fittings from the 70s. Despite all its faults, we could see potential and we bought it. We spent $15,000 and a couple of months to totally renovate the place – new modern kitchen, new bathroom, sanded jarrah floorboards, electrical rewiring and replumbing. We furnished and fully equipped the whole unit and it came out a treat. We rent it out fully furnished and equipped and needless to say, the rent has tripled since the renovation
The first investment property is always the hardest to purchase because there’s a psychological process that every person goes through, but since then, we have learnt from our experiences and refined our skills to purchase even better properties to grow our substantial portfolio.
If you undertake renovating properties, it can be time consuming but rewarding, and purchasing new properties is also an excellent investment strategy for those that don’t have the time to renovate. We have used both of these strategies successfully.