FPI

First Property in 10 Year Millionaire Goals in 2008

i own a building (i did it!)

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It was a long hard ride around Australia… “i can tell you”,and all the while i was looking at deal and trying to think up ways to get into this elusive property investor market. There were not many experts that could give me a solution to my problem and or everyday people on the online forums even. I was mixing with a property developer that was not living up to promises but instead using my services and time to rip me off. I head to reach out in my own mind and problem solve a solution to get me out of my own situation.

Out of the blue some sunny day a bizarre concept caught my attention. Having never read about a deal such as this or anything anywhere near as close to it in any of the real estate investment and wealth creation books or anywhere in online forums or people in the street. I was on my own discussing with Family members to think through a decision. I had never imagined buying a property deal in this town. I new prior to traveling down for a Christmas break and catch up that house prices we’re still way to inflated from the 2003 boom and particularly in this town still way to highly priced still at 2007 for even the most basic of houses.

I was only home for Christmas to visit and catch up with the Family when from out of a conversation we we’re soon on the phone to the local agents to ask what was about. We asked “what’s your cheapest house for sale”? I did not even want to ask i did not think there would be anything in this town and was convinced nothing. They said that the corner shop building just down the road only a block away was for sale.

Being someone that thinks way way out of left of center! When i heard this my ears pricked up. I wanted to give the deal the time of day to think it through thoroughly because at the asking price it was actually very cheap in that regard. But could something be done to the property? Out with the calculator and some problem solving!

We got back on the phone to organize an appointment to inspect the property. The next afternoon on a nice sunny day (again) we took a stroll down the street to check what this place was all about.

It was a step back in time into a dis-used butcher shop which had run out of legs like most little butcher shops around. I regard these shops as being dead because they are not being used much anymore and often closed and past there used by date. It about the only one of it;s kind anywhere in town.

The place was completely gutted. Nothing in the floor space area but walls, carpet and a cork board ceiling and around 90 odd square meters of floor space and a little outback toilet adjoining the rear of the building. It was being used by a local church group and was wired for a number of computers in a class room type setup with Ethernet cables and connections all over the place. The local reverent was using it to as a base till they found a better church actually i think they ended up building a new one somewhere else.

After inspecting the buildings foundations and discussing things over a couple of days we submitted an offer and was counter offered an amount which we were happy to accept provided we could get a clause in the contract with 90 days settlement subject to council allowing a Development Application to change the building into a residence. I was on my way in 2008 to begin my building.

Council would not accept my drawings to scale and demanded a draftperson to draw them up even though i was taught plan preparation at a Tafe building & construction course. I paid $1350.00 for a plan to be copied from what i did and a couple of small changed. The first lesson you will learn about Council is they don’t make sense. I decided that day that i would not deal with council again for the duration of the project and i never did for any other exchanges of information. I had someone do it for me (i have heard that the Councilor has now retired).

After a grand total of nine whole months later a letter arrived from council with the approval of going ahead and starting the work to construct the internal layout and begin renovating. It was really quiet a basic plan it was only five walls to partition the building into livable areas and install a kitchen, bedroom and bathroom, laundry area. I asked Council if they could speed the process up and that i was living in the street, homeless and in a car at the time. But they would do nothing.

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Plan i drew in a computer program

Exterior of Building Before Photo

This deal has a reasonable Cash on Cash Return which made it all worth while. In a climate they are calling the worst global recession and 40 year low interest rates of 5.54%. $178 positive cashflow after all expenses and cost $9912.25c for the first unit stage then a further $1500 for the front part renovation bring it to around $11,500 to complete in total. That’s $9256 per annum cash in your pocket. It took quiet a few months and was tough going for a while but after it was all done it’s been worth it.

Below is a copy of the detailed spread sheet i kept of every cost that went into renovating of the property.