Buying property – The incompetent agent

Once again, the poor ability of the real estate agent strikes again. As I posted in Buying property – Lazy agents, I have been in the process of buying an investment property through a less then impressive realtor.

Not only had he posted out of date photos that reflected the property in a poor light but he accepted, without negotiation, an offer that I consider was a fair bit under market value. His actions so far have not been to the benefit of the vendor.

Settlement date was due in a few days, when I received a call from my solicitor advising that the vendor was requesting an extension. The reason being that the owner was still looking for a property to rent. As I had been informed that the property was occupied by a renter and the owner was an investor, I saw no reason why the owner needed an extension for that reason. From my experience, it is usually the buyer that is seeking an extension to finalise finances.

So, I asked the solicitor ‘What does the owner looking for a new rental have anything to do with me?’. To which she replied ‘She is still living in the property (the one I sought to buy)’. I reviewed the contract and yes, the owner address was listed as the property address.

I called the agent to enquire and he apologetically confirmed that he thought the resident was a tenant and not the owner. The owner was still living at the property.

Ok, my bad also for not noticing on the contract but the agent had confirmed more than once that the ‘tenant’ was living in the property.

I ended up agreeing to the extension and the property settled a week later than initial contract date. An inconvenience to me only but did result in postponing potential open home viewings for prospective tenants.

It is interesting to note that the realtor had advised me that he had been in the business for 25 years. I would normally expect that an agent of 25 years would have better negotiation skills, have a sound understanding of his stock in hand and probably doing better than selling very low-level property.

Needless to say, if I do need to sell the property I will be looking elsewhere. If I need to buy again, however, he will be my go to man!

Should I or shouldn’t I?

A higher opportunity has become available at work.

Positives:

• I know I can do the job
• It pays more than I receive now
• It may open up other opportunities
• I consider I would be competitive in winning the job

Negatives:

• No variety to the role
• A negative work culture
• A fair percentage of lazy work colleagues
• The work environment could be more pleasant

I’m enjoying the work at my current location and my colleagues overall are good to work with. Other than money, there is no reason why I would want to change.

However, I have a goal to retire early. The only way I can achieve that is to have more money. I have investment strategies in place but again, I need money to fund them.

I always recommend someone should do what they enjoy. At another time I would.

Decision made. Pain today to relax tomorrow.

I will apply today.

Sacrificing now for the long-term goal

My life at the moment:

• Sleep
• Work. Pick up overtime and extra shifts if possible
• Eat
• Shower/brush teeth
• Train at gym
• Feed cat (x several)
• Shop for food. Buy sale options if possible
• Renovate home to add value
• Listen to podcasts
  • Property investing
  • Entrepreneurs
  • True crime
• Review potential investment properties online
• Watch TV
• Blog
• General home chores

What I’m not doing:

• Socialising. I’m in a new city and haven’t made an effort to make friends outside of work to reduce obligation to socialise (I know, a bit sad)
• Buying new clothes, except as a necessity. Work uniform supplied and live in t-shirts and tracksuit pants the rest of time
• Drinking alcohol excessively (a couple of beers weekly now only)
• Eating out. Very occasional pizza ordered with savings coupon
• Spending money on entertainment. i.e. cinema

Sound boring? Yeah, it kind of is but I’m suffering for my goal at the moment. My main thought at the moment is money, with the goal of not having to worry about money in 5 years. My goal is so strong that my boring life doesn’t feel boring. I have a purpose and I feel motivated daily.

My lifestyle up to now has been less than financially effective. Though I have managed to accrue a little money through property capital gain, I really haven’t saved a considerable amount and definitely not enough to retire.

5 years is a fair time to go without but I’m putting it in perspective. If the next 5 years of sacrifice allows me to relax in retirement, the time is well worth it.

Whatever you do, do it great!

“If a man is called to be a street sweeper, he should sweep streets even as a Michaelangelo painted, or Beethoven composed music or Shakespeare wrote poetry. He should sweep streets so well that all the hosts of heaven and earth will pause to say, ‘Here lived a great street sweeper who did his job well.“

Martin Luther King Jr

A great quote! Whatever the job is, do it to your best. Never consider a job too small or below you.

If an opportunity arises, don’t let your work ethic or attitude be the reasons you miss out.

Self-limiting beliefs – Not for Cathy Hughes!

One of the biggest obstacles to success is having self-limiting beliefs. I’m definitely a victim to self-limiting thinking. Often I’m caught myself in doubt due to my age, lack of education, my mental health issues, financial situation or whatever else I can find in the dark recesses of my mind.

I came across a wonderful podcast today on How I Built This. This episode featured Cathy Hughes . Cathy is the founder of Radio One. She is now 70 years old and has a net worth of over $500 million.

I won’t go into every detail of Cathy’s story and recommend you listen to the podcast and read Wikipedia. The major points that I took from Cathy’s story is that she had no self-limiting beliefs. She had a goal and had no doubt that she would achieve it.

However, Cathy had several potential obstacles that many would consider insurmountable to achieve even minor success:

• Lived in housing projects as a child
• Was a single mother at 17
• Is an African American woman
• Lived in middle America
• She started her career in the 60’s and 70’s, which I understand was a less enlightened time in the US for African Americans (I’m from Australia, so I wasn’t there to experience it)

Cathy apparently faced discrimination in her early days but again, she maintained focus on her goal and never doubted she would succeed.

Again, I won’t go into her whole story but one story she recounted was approaching financial institutions for a $1 million loan with only $10,000 in the bank. She went to 32 banks before getting the loan. 90% of people would give up after 2 or 3 banks but not Cathy. She said that she believed in the law of averages that every ‘No’ is one step closer to a YES. It is not hard to believe that she would have gone to 100 banks if she had to.

What if we all had the same confidence as Cathy that we would succeed despite self-imposed limits? Very few will achieve the success that Cathy has. Without question though, the person that follows a passionate goal without thought of failure will be far more successful then the one that finds reasons they can’t.

Sometimes money finds you

You just have to be at the right place at the right time sometimes.

I had just turned up to start a shift yesterday when a vacancy for a Sunday shift became available. I put my hand up for it immediately, even though it would reduce the length of my weekend. It’s all about priorities at the moment though. The chance to work 8 hours double time on a relatively quiet evening Sunday shift is a good financial bonus I can’t pass up.

Later in the shift, the manager on duty asked if it would be ok to alter a shift for the following week to finish at a later time. Again, I agreed immediately. The changed shift would result in 12.5% penalties being applied, while the previous shift didn’t. This more or less gives me an additional hours pay for the same amount of work.

Finally, approaching the end of my shift, some problems occurred on the network and trains were suspended. This means there were a lot of upset customers to manage. At the same time, it became apparent shifts had been messed up and there was no replacement for me. I was offered overtime until the replacement arrived. Again, I found it difficult to say no to a few more dollars in my pocket, so I agreed again.

Interestingly, I was only pondering that morning how I could accumulate some extra money by the end of the year. Maybe putting the thoughts out to the universe attracted some money my way.

Buying property – Lazy agents

As I posted a few weeks ago with Buying property – Thank you messy tenants! I have been on the look-out for an investment property.

After some research, I decided on an area that provides a generous rental income and has plenty of room for capital growth. It was then down to finding a suitable property.

In this day and age, particularly at the lower cost end, the primary avenue for locating property is on the internet. After entering the parameters I required, I generated about half a dozen quite promising properties and set about making a time to see them.

What I found interesting was that some real estate agents today are so lazy in advertising the properties. Their written profile of the property can be down right pathetic. They make very little effort to sell the benefits of the property and location. The basics are not enough, the agent should be selling the dream of owning the property, whether it be for investment or to live in.

Property photos can also be appalling. Only 18 months ago, I was in a position of locating an agent to sell my home in Sydney. One agent had a high-profile in the area and she impressed me with her pitch but the photos she used were obviously taken from her mobile phone. I enlisted her services on the proviso that a professional photographer was used. I had to pay the $500 for the photos and it was very well spent. The traffic through the first open home was fantastic, which created urgency and resulted in a very impressive offer the same day.

From a purchasing point of view, I use agents poor ads as an opportunity for me to save money. An unattractive ad in terms of wording and photos can result in less buyers to opens and therefore more chance for me to negotiate down.

The day came to view some properties. Two identical properties were open and hour apart in the same complex. One agent had listed very nice pictures and had sold the property strongly in the word content. The other property had dark grainy pictures that made the place looked very tired and the wording in the ad was generic. You can imagine that I was more interested in seeing the property with the nice pictures and descriptive wording.

Well, I was disappointed. The first property was quite run down and needed some cosmetic work. In saying that, I still thought it represented pretty good value if I could negotiate it down around $10K. The point is though that I did attend the property and I may have had the property had a less appealing ad.

An hour later, I attended the second property with less enthusiasm. It was great! The existing tenant was obviously very house proud and the presentation was perfect. She even had subtle incense burning that provided a pleasant fragrance to the home.

Other than possibly adding some paint, there was basically nothing to do. Another interesting aspect was that the agent had not even used current photos. New blinds had been installed in several rooms to replace some very dated curtains. A small thing perhaps but an ad is a first impression and should feature the benefits of the property in its best light.

When it came to price, the agent suggested a price that was in the range of $20K less than equivalent (but less impressive) property that I had seen an hour early. I countered with a number expecting some effort to negotiate. I was called back less than an hour later to advise that the offer had been accepted. Not the slightest effort to press me for even a few thousand. The thing is, I was more than prepared to offer more!

From my perspective as a buyer, the agent was great. He posted poor ads with uninspired wording and out-of-date photos and he failed to negotiate. If I was the vendor though, I would feel that I lost out on money and was paying a commission for nothing. They should actually be paying the tenant as they had really presented the property to sell.

Once the property sale settles, the agent will obtain his commission from the vendor. I might even use him again if I am looking for somewhere to buy in the area. But would I use him to sell for me? No chance!

Always be investing

I’m often asked on financial documents whether I own any investment properties. I hesitate slightly as I always want to include my own home.

When purchasing a home, my first concern is buying something that I like but secondly the potential for growth or value improvement or both. I don’t go in with the intention of selling after a certain period of time but I do consider any equity I accrue as money that I can use for my retirement or for other investments.

I apply a different perspective when buying a car but still with the view of not wasting my money. Other than specialised vehicles, cars depreciate as soon as you buy them. Additionally, the running costs, registration and insurance really add up every year. They really are a poor investment. I would prefer to have a car that is affordable and reliable rather than a status seeking item. There have been periods where I have not had a car at all when I had public transport on my doorstep.

Investment is not limited to financially matters but also for personal development. As I blogged previously in Motivational and inspirational podcasts, I prefer to utilise my driving time to listen to financial and business podcasts that add value to my day. Sadly,,,pathetically maybe…the only music I enjoy is dancy pop music. For a guy in his early 50’s, pulling up at the lights blasting the latest Bieber is a little awkward.

I love TV but rarely get into serial shows or sitcoms. I enjoyed the first season of Game of Thrones and the Walking Dead but I quickly got bored. However, I could watch countless reality programs on real estate, home improvement, DIY and cooking. To me, while still being entertaining, they are educational and an investment in my knowledge. I might learn something that I can used to make money or a new hobby. Watching endless hours of sports and standard TV programming takes up time and is fun but not particularly beneficial.

Admittedly, my investment mindset is only a recent thing. Over the years, I have no doubt thrown away tens of thousands of dollars through poor purchases and excessive entertainment (i.e. partying). For sure, I have accumulated some great memories but there is no question that had I started to invest in value adding purchases and personal development from an early age, I would be in a very desirable position now. I could still have had some awesome nights out and travelled but I could reduce them easy by 50% and still be doing well.

While reality TV programming and podcasts and relatively new, I could have spent a lot more time reading. Though I prefer non-fiction business and self-development books, even fiction has value as an investment in your education. My English language was (is still?) appalling when I left school. I didn’t enjoy formal education and I still have little understanding of nouns, pronouns, verbs and punctuation. However, through reading I have developed a fair appreciation of sentence structure and how to write. I will note that other than forced reading at school, I didn’t read a book until I was in my 30’s. Over a decade that I could have utilised to invest in learning.

Another aspect of investment is in your health. I was fortunate to find a love of working out and eating healthy at an early age. Unfortunately, I also found a love for drinking. I’m thankful I found the first as it balanced the drinking to a degree. In saying that, I have some health issues now that perhaps I could have avoided with a healthier lifestyle. Others have overindulged their whole life. Like financial investment, it’s a lot harder to start at a later age and get results. Start early with a healthy lifestyle for immediate and longer-term benefits.

My first property purchase wasn’t until the age of 40. Again, a very late starter. I have probably paid off a full mortgage in rental payments. If I had some foresight and put a little money into buying even a small unit or block of land and continued to invest money made, I would be on easy street now rather than fighting to find a way to an early retirement.

The point of my blog is not to illustrate my appalling earlier life choices but rather to show that there are opportunities to invest all around. I wish I could have realised it earlier in my life but there is no point looking back with regret. As my favourite saying goes ‘The best time to plant a tree is 20 years ago, the second best time is now’. Whatever your age and whatever your situation, it’s always the right time to start investing.

Buying property – Thank you messy tenants!

I’ve been off-line for a few days as I have been spending the majority of my spare time looking at investment properties.

I’m currently looking at the lower-end of the market with positive returns on investment. Associated with the areas I’m looking, the demographic of renters are not high income earners. Though I’m stereotyping, this can often mean that the tenants can be untidy and have poor quality furnishings.

I’ve bought and sold a fair bit of property during my life. Both personally and during my time as a real estate agent. A common factor has been that the clean and nicely presented property will sell more quickly and for more money. The unkempt property will stay on the market for ages and generally will get weak offers. Vendors start to get desperate and a bad return.

To me, I love it when I walk in and see that the tenant is a grub. I look past the mess and work out the potential of the place and what money I need to put into it.

• Dirty carpets. Do they need a clean or full replacement. Steam clean doesn’t cost much but replacement does. Adjust your offer accordingly but always double the value of your investment.
• Messy kitchen. Look past the stale pizza and masses of plates. Are the cabinets in good order. Are the bench tops stained or chipped. The worse it looks without actual damage, the better. Even if damaged, have an idea of what the repairs will cost and calculate into your offer.
• Bathroom. Dirty grout, filthy toilet. Awesome! My offer continues to drop $1000’s but in reality, it might only be a couple of hundred bucks to clean it up.
• Horrible gardens. Depends on the property. A large block and it might be cost prohibitive to clean up. A townhouse, a mow and a weekend gardening will make a big difference.
• Internal walls with dints, chips, murals or whatever. Unless there is structural damage, no big deal. Some areas might just need filling and paint. Other areas might need some plastering. A tradie might be required, which will be costly but a lot can be done with DIY. Double your estimate and deduct from your offer.
• Cigarette smell. One of my favourites. The smell can be very off-putting to some buyers, which only makes it better for me to buy low. It may take a while to air out but it could save me thousands!

There are a heap of opportunities for discounting. In reality, getting rid of the tenants and investing $1000 in a professional clean and some garden clean up and the property will look massively better. Not everyone sees that though and are put off immediately by the appearance. I just see dollars I can save.

Once I clean up the property, I have it re-valued. I have always added value. Sometimes a little, sometimes a lot. Use the extra equity to look into reinvesting to more property. I know zero about the stock market but have been fortunate with property. I prefer to stick with something I know then opportunities that I’m unsure about.

Anyway, I have a savagely low-ball offer in at the moment. If it doesn’t play out, I will move onto the next place that looks terrible and try again.