How I bought “Australia’s cheapest house”

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The most common response I received from fellow investors when discussing my purchase of “Australia’s cheapest house” is either #1- You must have been extremely lucky. Or #2- the seller must have been extremely incompetent.

Most of those who know me well can attest that I am a firm believer in making your “luck” through hard work, sacrifice, and persistence.

Story

Many moons ago, when I was living in Australia and working as a property investment researcher, I came across an empty and 3 bedroom 1 bathroom house located in a small town in New South Wales called Moree.

The property was listed for $80,000 and needed only minor work. Although the numbers in the deal didn’t look that attractive at the time, they were attractive enough to add the property to my pipeline list (as I would any other that met certain criteria).

A few months had passed when I received an email notification from the listing agent informing me of a price reduction of $20,000. As you can imagine, this immediately peaked my interest.

Without hesitation, I called the realtor who was representing the seller and immediately began negotiations. After a week passed after some figures were thrown back and forth, I got a call from the realtor saying someone had broken into the property and completely ruined it. Unfortunately talks stalled immediately and the deal appears to be dead at this stage.

In the months that followed, I continued to keep in touch with the Realtor to get progress updates on the seller’s insurance claim and to see what his intentions were moving forward.

Few more months had passed when one morning I got a call from the realtor asking me what price I would be willing to pay if the property was renovated and put on rent.

Knowing that the seller is likely to receive a fat check from the insurance company and that the property will not be renovated to my standard. I decided to submit a low-ball offer of $37,000, without expecting much.

Connected: 5 Secrets to Making Real Estate Offers That Last

To my surprise, the offer was accepted, but the tug of war had not yet been finalized.

While the insurance company was delaying payment to the seller, the property sat vacant, which made the seller, the Realtor, and I increasingly impatient.

After nearly a full year of trying to land this deal across the border, my impatience finally got the better of me. I called the Realtor and insisted “This transaction is taking a long time to go through, and I’m tired of waiting.

I am willing to take this vandalized and vacant property off the seller’s hands for $15,000 cash, right now and today. Otherwise I will exit the deal and invest elsewhere. The realtor passed my message to the seller and within the hour called me back saying “the seller has accepted your offer.”

*** Wonderful ***

As we closed, I started and completed the renovation for $15,000, totaling $30,000 in the deal. With a happy tenant and the property now in great condition, I decided to list it at a “walk-out-the-door” price of $80,000.

Prior to making the purchase I was aware of 2 recent comparable sales in the $80,000 and $110,000 area. The property successfully sold for $75,000 within two months of listing, showing a very nice $45,000 profit.

what can you take away from this

One key element that you can apply when building your own property portfolio here in the US should always be to have a pipeline list of deals, in which the numbers don’t add up at first glance, but still you can track any price movements. and regularly contact the Realtor/Seller to see if a deal can be made in the future.

Connected: your real estate pipeline is full of gold

Finally I have to disagree with others opinion, as I do not believe luck played a factor, as it took almost a full year to secure this deal at such a huge discount and last I heard seller insurance Walked away with a good amount of money from the payment. (Not so inefficient after all).

Do you have a similar story?

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Note by BigPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.

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