[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

February 11, 2013 - 11:05 am

Sure…sorry needed to vent! Don't mean to hijack the post but my answers are not short to give you a bigger picture. I am stuffing up my due diligence somewhere I just need to work out where!

IP 1: Freshwater NSW (2 bedroom unit)

We have made $90k in equity since it was purchased in 2007 which is not anything to write home about and because it's a JV with my brother using the equity is more tricky than it is worth – I have talked to Richard about it last year. Tenants are not a problem here but the yield is only 5.2% off the original PP and 4.5% if you go off current value. GROWTH AND TENANTS BUT

UNUSABLE EQUITY

IP 2: Toowoomba QLD (3 bed, 1 bath brick house on a slab) 2011

Good tenant who pays $310/wk and we paid $285k but it really has only gone up by $15k…not good for almost two years. Could use a reno in a few years but there is no point now as it would be overcapitalizing. Just had an insurance claim as a number of tiles on the roof move and after a storm the kitchen roof and walls all flooded. NO GROWTH BUT TENANTS WITH BLAH YIELDS.

IP 3: Affectionately named 'My little lemon'. North Mackay, bordering on Mt Pleasant (4 br, 1 bth brick house on slab) June 2012

Sat empty for four weeks when when first bought and vacancy rates were around 0.6%. PM's mother got brain cancer but agency didn't tell us she had left and didn't pass on our property to another PM. We changed agencies and it rented out quickly.

Had an undetectable leak under the slab (I posted previously about this). We ended up re-routing the plumbing at a cost of $5,800. Then the plumber flooded the place by accident…which was fine, accidents happen and that was meant to be where this property turned around. Right?

Instead the a*s fell out of the coal industry and vacancy rates skyrocketed. I called my PM to make sure she had locked in the new 12 month lease we had agreed to a month prior. Apparently it was all good and being sent back just as she went to Bali for a week and a half…thank goodness.

In reality the tenants stopped by just after she got back to drop the keys off. The bond will cover the two weeks notice they didn't give…can't believe I didn't know it was only two weeks in QLD. Now it has been on the market for four weeks and we have drop from $590 to $560 per week with no takers. Paid $422k so at that rate it would still be ok return but I am not so sure about the market there now. NO TENANTS, NO FORESEEABLE GROWTH

At any rate, I see the above as littered with mistakes I have made myself, which I will have to learn from and avoid at all costs in the future. Beware of mining, don't buy houses on concrete slabs, stay on your PMs case every single day until a result is locked in, don't enter JVs where you can't manufacture a profit then sell, carry out better due diligence (the topic of this post) to ensure I don't buy in areas that stagnate, buy where I can manufacture growth always, and the list goes on…learning the hard way, but learning.

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

February 11, 2013 - 9:58 am

I have always done my due diligence…researching areas, sold prices, demographics, vacancy rates, visiting the area, working out the good suburbs from the bad, talking to the locals, visiting property after property and yet I have just pulled myself out of bed after having a mini break down.

I gave myself half an hour to cry and be frustrated and ponder that I may have ruined my husband's life after he trusted me to make it better and different to those around us. I had ten minutes or so where I pitied myself for being really unlucky…massive water leaks under the 3rd IP, roof flooded in 2nd IP, equity trapped in the first IP through a JV, property sitting empty for two periods of four weeks in just 7 month of ownership etc etc…poor me.

Then even worse.  I realized I am a 'dumb investor', something Freckle talked about on another post. It has percolated around in my mind ever since reading it. 'That's me!'. So next I really cried. I wanted to be the person that came from nothing and ended up a success. Instead I realized I suck at the thing I love the second most (after the family of course)…property investing.

Suddenly half an hour was up and it was time for the tears to go, the negativity to be dusted off and let all the little things I read on here start to filter back into my head. If I give up now then I will definitely be ordinary. If I look at what has happened as me being unlucky I will not learn from my mistakes and work out how to do it right. If I continue to do the same due diligence as I have done previously, then I will continue to get the results I am getting now; no growth, no equity, and worst of all no tenants.

I can change it all moving forward! Phew…back in the saddle

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

February 7, 2013 - 3:04 am

Going to re-read now. Both of you contribute such valuable info and opinions on here and it makes even more sense now

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

January 28, 2013 - 7:03 am

Our IP in North Mackay is sitting empty since Wednesday and we are nervously awaiting a call from the Property Manager to tell us if it is ok or not. I check all the flood plain mapping pre purchase however I have found a new one today that shows that for a one in 100 year flood it may just cover our street…yikes. Crossing fingers although apart from the mini tornado we haven't heard too much about Mackay this time round.

I don't  wish it on anyone and hope there are no more deaths and some glorious sunshine!

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 25, 2012 - 8:13 am

In my experience on both ends of the stick I have found  that your standard real estate agency will expect 2-3% and property marketers anywhere from 3% but usually 4-6%. 

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 11, 2012 - 9:42 am

Haha not a chance Nathan! I always said if we came across any hurdles, no matter how big, we would still dust ourselves off and try again.

Our original plumber sent us a quote the other night…from $20 000 down to $2,650! Too little, too late as we made our decision to go with the middle of the road quote that provided detailed and quick responses without being prompted.

Our plumber that we are going with (Dirk) also told us that we could apply to council to get a consideration on the water bill…turns out he was right.  Legend!

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 11, 2012 - 9:37 am

I just got two from Australian Tax Depreciation Services – $450 each including GST with site inspection.

Yet to check the figures as I only got them back last week.

They took a while though…just over two months! But could have been the time of year?

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 9, 2012 - 2:23 am

Thanks for the idea about calling the Master Builders. 

We have found a really great, licensed plumber, Dirk at Jayden Enterprises, who was referred by someone from the MBs.

He has been incredibly helpful and polite and was out at the property within three hours of calling. I have been waiting around two to three days for most of the other plumbers we had out there (with the exception of Matt Selby who was also great but couldn't do the rerouting as he works on his own).

Dirk drew up proposed plans and broke down the quote into cost per plumber and cost per apprentice as well as materials. All we received from others was *ballpark* figures and quotes that had a range without anything specified.

So to reroute all hot and cold taps, including moving the hot water system to a more accessible location and retiling/rebricking any damaged walls will now be a max of $6200. Dirk is also looking to reduce these costs where possible and has given this as a capped, worse case scenario. He is also going to look setting up the provisions for the pipe work in the laundry should we want to change this into a second bathroom down the track (when we have some money again and if it  will increase value).

Work starts on Monday and we are hoping everything will be smooth sailing from here on in. Thanks everyone so much for your help! x

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 9, 2012 - 2:14 am

Hi Dubstep,

Three of us went up there and were laughing so much as it is all so close. By the end of the weekend we were feeling more like locals and I must say going from one inspection to the next on the schedule was made more annoying by the traffic on the bridges. Hate to think what it was like prior to the new bridge being built!

I guess that is why it is important to talk to lots of people in an area you visit, to really understand the mindset. It isn't Sydney so not surprisingly they don't get annoyed by the same things as we do. 

A few agents pointed out that if there was a downturn in the future that affected the low vacancy rates that it would be the outer lying suburbs that they would have more trouble renting out. Having said that Mackay has a very low vacancy rate and they also said at this point in time just about anything would rent out in a flash.

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 7, 2012 - 4:17 am

But still change property managers!

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 7, 2012 - 3:47 am

We bought a few months ago in North Mackay (the part just near Mount Pleasant). Having some troubles at the moment with the plumbing but aside from that bought a 30 yr old 4 bed brick house and renting for $590 per week to four young people working in different industries up there. Could use a reno in five years or so but because the rental market at the moment is strong it doesn't warrant it currently. Plus we have to get over the plumbing bill

When we talked to various agents up there a lot said that many people in Mackay have the mentality that going over the bridges (from town to the northern suburbs) is too far. We found this hilarious coming from Sydney as it all seemed so close, even the North Beaches area which is a little further away. I guess the important thing is to think more like a local. We did buy over the bridge but just near Mount Pleasant so really not too far and this is a more prestigious neck of the woods from what we saw.

Agents (in particular property managing agents who do the letting) said that Ooralea, West Mackay, Mount Pleasant, Rural View and North Mackay were all popular with renters. A number of them also mentioned how important a big double shed and side access is…for the boat. It's true from what we saw up there, seems to be a prized feature. Some agents mentioned that the newer estates can be less appealing as they don't allow space for this.

I did a short stint for a company that sold properties up there and it is interesting to see the difference in the marketing perception as opposed to real perspective of good and bad suburbs you get when you visit an area. Definitely make a trip up there before buying and talk to as many locals as possible.

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 3, 2012 - 9:59 pm

Mozilla I will call them this morning as *sigh* I need to get a fourth quote – good idea! 

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 3, 2012 - 8:51 am

Haha unfortunately the fishiest  thing in Mackay is turning out to be the plumbers.

Today the lovely plumber who has had the cheapest figures, been the most helpful and sounds like he knows the most told me he has had a falling out with his brother…the leak detection guy because he is stressed out having too muCh work on but not enough staff. Plumber still keen to fix but I don't want trial and error finding the leak. The plumbers who said $5-8k for rereouting now have quoted $8-10k with nothing itemized!

Really cross and upset!

This is a good lesson for anyone thinking about buying on a slab in a regional town

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 1, 2012 - 9:17 am

We have found with all our places that when we are satisfied with an agent but not some of the management contract conditions they will usually agree to cutting these out if you negotiate or just cross them out when signing. Eg we didn't want to pay a $15/mth admin fee, so we crossed it out. Also didn't want to pay a half week rent for re-newing a lease so crossed this out too. Plus we always change the notice period to between 30 days or less, rather than 60/90.

I agree with Derek, make sure you find out the standard rate in the area and then negotiate down. They are trying to win your business after all and will usually meet you at a lower rate to avoid losing you to the competition.

Recently we decided on a company who had been wonderful to deal with prior to signing and then the property was handed over to an inexperienced PM who stuffed us around. Out of that we learnt that the agents will put a lot more effort into finding you a good tenant and fast when you multi list and they are racing another agency to win the business. A lesson learned the hard way (property empty for four weeks before I took it into my own hands to fix) but good for the future!

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 1, 2012 - 8:03 am

Hi Moxi,

Yes this is definitely something I have been thinking about. It would be much easier to manage from up there and remind myself why we thought this place was so wonderful just two months ago! My skills on the end of a fishing line leave a little to be desired however

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 1, 2012 - 7:34 am

We were suckers with a scamway presentation when a 'friend' of our tricked us into coming around to discuss a 'business deal' we may be interested in.

When he first suggested it I straight away said 'It's not Amw*y is it? Because if so we are not interested'. He knew we were into property investing and so twisted the conversation to sound like it was related to this. Throw in the Robert Kiyosaki line and we thought he was genuine.

He came around to our house and straight away broke out the hour long presentation. About 45 pages in or so, what do you know, it IS scamway, disguised under the another name starting with N! We were really annoyed and unfortunately it has ruined our friendship as the trust was broken. I can see how people can be convinced and unless you are happy be be a low life manipulator then it probably isn't for you.

To add to this a colleague decided to quit her job in search of something closer to home. On the ferry a guy approached her who had been listening to her phone conversation (creep) to say that he owned a graphic design business with one office very close to her house. He told her he may have some work for her and so they arranged a time for an 'interview', complete with business card etc. She was very excited and spent quite a bit of time preparing. As it turns out it he was trying to rope her into Network 21…such a low life.

I think there are far more honest ways to make money for people with morals.

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

October 1, 2012 - 7:04 am

Update:

In the process of arranging a third quote I stumbled upon a plumber that has a brother with leak finding equipment in Mackay. I told him he really needs to improve the advertising!

As it stands we are waiting on firm quotes but our options look as follows:

1. Plumber one (works on his own)

 – $20k to re-route and fix damage created

 – $10k to re-route only

 – $5k approx to locate and fix current plumbing

2. Plumber two (larger company)

 – $5 – $8k to re-route only

 – $1k approx to fix leak in current plumbing but no facilities to locate the leak

3. Plumber three

 – $99 callout + $99 per hour to find leak (expectation from 0.5 to 5 hours) only

 – $1 – 2k to fix leak including leak detection and hiring of cement cutting equipment

 – $3k approx to re-route but he would have to refer us on (not sure how accurate this price is for that reason)

Going to start with the leak detection as the location (if we find it) could determine what is the best course of action. Going tell him we only want 2hrs spent searching at a maximum.

Thanks everyone for your help on here. It is fantastic to have this forum so we didn't feel so alone going through it! xxx

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

September 27, 2012 - 10:58 pm

We are so unsure of what to do. Things are a little harder to manage being so far away and of course this is the one week our property manager is away on holidays! 

Terry – we checked with our insurance and they won't cover it, apparently as there is no damage to the house. I asked him how we could possibly know if there is damage in areas we can't see. Feel pretty cheesed off about it as we thought we were fully covered for things like this.

We will hopefully get a quote today or Tuesday for the two options (lovely timing again with the public holiday) from plumber two and I think I arrange to get a third quote today. DEFINITELY not going with the first guy.

The idea of causing so much damaging only for this to possibly happen again is worrying us, as is the idea that the slab could be very wet…do they dry out once this issue is gone? Termites would be the icing on the cake!

If the whole thing works out at less than about $5 – $8k we may go with a longer term solution so that we can sleep easier at night not worrying that it will happen again and cause more costs and damage to the house. Also to know the plumbing is high and accessible.

The plumber yesterday said that it has probably been caused by some movement as a result of the ended wet season Mackay has experienced over the past few years.

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

September 27, 2012 - 9:28 am

Hi Keiko, 

Yes that is what we are concerned about…the whole open ended scenario. The leak detection guy said it would be hard for him to hear under the slab and didn't want to waste our money. Do you have any properties that had slabs that were fixed?

Also how much did the repair itself cost?

Its funny the plumber and builder friends we have talked to have said we are quite unlucky with this happening but it sounds more common than first thought. 

[PEACHYMember@peachyJoin Date: 2004Post Count: 78]

September 27, 2012 - 8:18 am

Sooo just had lengthy conversation with plumber number two.

 Definitely is a hot water leak and he said that it is leaking at around 1L per 10s. Said that he may have been able to detect a hot spot if the water was still running but as there is a valve that the  plumber installed yesterday to enable the tenants to shut off the water in between showers it isn't obvious now.

There are two options he has given:

1. Turn the hot tap on for two to three hours to hopefully find the hot spot which could take up to two hours. Then isolate and fix with worst. Ase scenario around a days work at approx $1000 and the need to use a cement drill which also sprays water inside or

2. Reroute at ball park $5000 – $8000 with proper quote to come. Labour around two days.

Better than yesterday. What would you do?

Cheers