Client Background: Lucas is a young corporate professional in his late 20’s. He was looking to start his investment property portfolio. He knew his end goal was quite clearly, and how this purchase would achieve the goals, however he did not know what a good purchase looked like and how to properly evaluate properties other than by ‘feel’.
Where he was: Before joining the Property Investors Academy, he was unclear as to what he was searching for, where he was searching for it, the process that goes along with the buying process and the tools available to first time investors.
What was important to him: This was going to be Lucas’ first investment property. He was looking for a high growth property over the medium-long term in an area which was set to grow overtime.
Here is what Lucas purchased as part of the Property Investors Academy
Property Type: 4-bedroom, 2 bed house on a 600+sqm block purchased in Sydney
Purchase Price: $730,000
Rent: $470 per week
Rental Yield: 3.29%
Vacancy Rate (Current): 0.6%
Cashflow: Negative (Capital Growth Focus)
Current Value: $900,000+
Capital Growth: $170,000 in 10 months
Metro / Regional: Regional – 63.7 km / 53 minutes’ drive from the CBD
Renovation Required: No
KEY learning for Lucas:
The fact that there was no perfect property. Previously, Lucas was in the mindset that he would wait and wait and when the right time came, he would secure that deal. But the more he looked, and from the lessons, it become clear that this would have been a futile strategy.
Due Diligence Completed:
- Leveraged qualitative & quantitative factors to determine location, type of property, cash flow and risk-based analysis to zero in on the right property.
- Discarded lemon deals presenting hazards and high risk (avoiding key mistakes)
- Establishing negotiables and non-negotiables for the purchase
- Negotiated the purchase price down from $743,000 down to $730,000 for the issues that required rectification
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