From Three Bedrooms to $200,000 in Profit – The Story of a Successful Australian Property Investor
Published 1:04 am 14 Jan 2020
What does a successful Australian property investor look like? In this article, DG Institute founder Dominique Grubisa shares the inspiring story of two property investors and three lessons you can learn from their case studies.
Offering what the property owner wants is one of the key mistakes that an investor can make. Never forget that all sellers want to make as much money as possible. In real estate investing, your job is to pull their prices down so you benefit more from the investment.
You’ve seen plenty of other people achieve property investing success. A quick search of the web reveals tons of inspiring property investment stories. However, so few of them actually provide you with lessons that show you how to profit from property investment.
In this article, we aim to buck that trend.
We’re going to share the story of a pair of investors who put the work in and unveiled some great opportunities. Plus, we’re going to share some lessons that you can take away from their success.
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Liz and Mike’s Investment Earn Them A Six-Figure Return on Investment
Liz and Mike had spent a while looking for properties in Blacktown. They’d gone through the court listings and nothing caught their interest. So, they moved onto looking at the court listings for a different suburb. black Still, they kept one eye on the Blacktown market. And it’s a good thing that they did as a great property eventually presented itself to them.
The property was a deceased estate with a listing price of $580,000. It had three beneficiaries, two of whom were still living in the home.
This presented an opportunity for the couple. Prices tend to be more negotiable on deceased estates when the money received will get split several ways. Liz and Mike used that fact to make an offer for less than the asking price.
However, they went about it a little differently than most.
The property should have gone to auction in December of 2018, right before Christmas. Most investors would sooner wait for the auction in the hope of snagging a bargain. But Liz and Mike knew they had an opportunity so they came in with a $525,000 offer before the auction.
Importantly, that made that offer subject to building and pest reports.
Those reports revealed there was a lot of damage to the property. As a result, the couple dropped their offer to $510,000 to account for the structural work they’d need to do.
With the property secured, the couple put their strategy into place.
First, they inspected the property even closer to see if they could slash anymore off their offer.
Those inspections revealed a poorly-wired outdoor pool that needed fixing. This allowed Liz and Mike to save a further $1,500 on their purchase, which they could put towards renovating the property.
The couple then focused on making the property more desirable to buyers in Blacktown
Originally, the property had three bedrooms and a single bathroom. However, the house offers plenty of room for remodelling, which is exactly what the couple did. They chose to install a second bathroom and create a new bedroom.
The Expected Result
The reason the couple went down this route is that properties of this type are sold at the upper end of the $700,000 range in Blacktown.
They have a conservative estimate of $750,000 in place for the sale price.
If you’re keeping track, you’ll know that this represents a $240,000 increase on the initial purchase price. And even with the cost of their work taken into account, Liz and Mike expect to make a profit of $200,000.bl
The Real Estate Investing Tips
That story has likely offered you some insight into how to be a successful property investor. You can see that Liz and Mike did everything that they could to secure their purchase for less than its market value.
Plus, they made their offer conditional to several inspections. This allowed them to slash the purchase price even further.
Both of these are great lessons for anyone who wants to engage in successful property investing.
But there’s more to the story that we haven’t share with you yet. Here are three real estate investing tips that you can learn from Liz and Mike.
Tip #1 – Find a Great Estate Agent
In sharing the couple’s story with Dominique Grubisa, Mike revealed how important their agents have been:
“There are some really mediocre agents out there. And we’ve found two different agents that are top-notch and they’re looking for stuff for us. They know what we want.”
There are two things you need to know when it comes to real estate agents.
First, you want the best ones that you can find in your corner. These are the people who will understand what you want and can help you to get it at the right price.
Second, you want the mediocre agents to be in the seller’s corner. This presents you with the opportunity to control negotiations. And it also means you’re dealing with a seller’s agent who’s more concerned about making the sale than doing what’s best for their client.
Tip #2 – Build a Strong Network of Contacts
What we didn’t tell you in the story above is that Liz and Mike didn’t buy their property on their own. In fact, they weren’t in a position to purchase anything by themselves.
Instead, they worked with money partners to make their investment a reality. And as Liz explains:
“I wasn’t able to find one who had all the money. But I was able to find six who had some of the money, and that’s been great.”
This highlights the importance of having a strong network around you as a property investor.
If you need a money partner, it’s your network that will usually reveal the right person for the job. And if you have a large network, you’re able to secure several partners, should you need them.
Simply put, your network gives you more options. And that’s without mentioning the opportunities that people in your network may bring to you.
Tip #3 – What Doesn’t Work for Some May Work for You
We’ve already mentioned how Liz and Mike circumvented an auction, which is something that many investors wouldn’t do. However, it’s also worth noting the time period that they purchased in.
As Liz explains:
“I know others have found that Christmas wasn’t a good time. [But] I think that shopping at Christmas is very profitable.”
Christmas isn’t a great time to buy if you’re looking to get a deal moving quickly. However, it is a great time for finding deals as there’s less activity from buyers.
However, the real lesson is that there’s no set formula for how to become a successful Australian property investor.
What works for you may not work for others, and vice versa. The key is that you’re willing to try different things to see what sticks. You may just create a strategy that’s ideal for your situation.
Learn How to Become a Property Investor
Liz and Mike’s story shows us that you don’t have to go the conventional route to be a successful investor. In their case, they bought during a time when most don’t. Plus, they worked with several money partners to make their deal a reality.
However, conventional doesn’t always equate to success.
The successful Australian property investor is one who understands every option that’s available to them. And you can only get to that point if you invest in educating yourself about property markets and investing strategies.
Lawyer, Asset Protection Specialist and Property Educator
Dominique Grubisa is a practising legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at email@example.com
This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.