Investing in a cheapy

Now and again I do a search for the absolute rock bottom properties in Australia and see if I can see something interesting. You know what I mean; those places under $100K, wasting away in a rural area somewhere, an asbestos laden cottage that probably hasn't had anyone live in it for a while, begging for a bulldozer.

Why do these properties even exist? Should they, not unlike the Detroit-like sub-prime houses, be flattened to make way for something new, or better yet, returned to mother earth?

The underlying fact remains that these properties do change hands, and someone is doing SOMETHING with them. Have you had any experience with one of these? Please write comment about it below; I would love to hear of your experiences.

Here we go again

It seems to be a common occurrence on this blog, but once again it's been a long time between drinks (posts) as life gets in the way and other priorities take over. It's a bit like eating a cake and the cake is good, but if you swig a can of coke, the sugar overload hits you and in the haze of it all you realize you've forgotten to eat more cake. It's a bit kind of like that here on the PIIA blog.

Anyway. Today I am going to discuss extensions. We are living somewhat cramped (but happily) in our little three bedroom, one bathroom, one living area, one carport, 600m square block little 'shack'. It's cramped, I won't lie. So the conversation with the minister for finance turns to (well, I turn it to...) the possibility of extending the house back into the yard so we have an extra two rooms, an additional living area and another bathroom. This would make it a 5 bedroom, two bathroom home. Cost? Let's say $40K-ish. For us, that's a lot of money. The funny thing is, we don't need to come up with 40K because it's sitting there nicely in equity which we could just access. What it does mean, is approximately $40/week extra in repayments. We can afford this right now.

So what's the issue sir? The counter argument that is continually proposed is that we shouldn't over-capitalise in our current suburb, which is the lovely, but somewhat negative-press-receiving Caboolture. And if I'm being honest, I use the term 'lovely' quite loosely. But it's, you know, OK.

Counter-Argument 2 takes the shape of inconvenience during construction. This I can buy, BUT, we have been through much much more WITHIN our home, so an EXTENSION should be alright considering there would only be a little bit of modification to the existing to open up the thoroughfares.

SO yeah, a stalemate of sorts. I can't help but think that the extension would easily increase the net value. Our house would be five bedrooms. five! Two living areas! Two! And for the sake of using another exclamation mark, two bathrooms! Two! So a completely larger and better house in almost every way, bar the reduction in backyard space, which is kind of whatevs.

To further augment my thoughts, I have recently seen and worked with a few little extensions via my company, Sunray Painters. It seems legit that people all over the place are putting some money towards their little homes to make them just a tad bit more livable.

More convincing to do before I give this one up I think.

State of Affairs, October 2014

They say variety is the spice of life and so it has come to be for my family over the last few months. Throughout the last 4 years or so I've often blogged about the tiny little insignificant thing called 'life' that often gets in the way of my ambitious investing strategy and again, it has proven so.

A few thing then. We have sold our PPOR in Toowoomba. Sentiment in the Garden City boomed after the airport announcement and, when news of the bypass started spreading, the proporty market went into a sort of weird piranha-like eating frenzy where everything, and I mean, EVERYTHING, was getting snapped up quick smart. We jumped on the bandwagon and surprise, surprise, we ended up about $20,000 ahead of my best-case-scenario amount when it came time to order the removal truck. It took a grand total of 3 days to sell our comfortable home and I have to thank Ray White Toowoomba for the wonderful job they did for us. 

Just prior to this, we also bought a modest, tiny little three bedder in Caboolture. Remember that little thing called 'life' I was talking about? Well, when the planets aligned nicely for me to leave my job, this little Caboolture residence was (somewhat) ideal to shift into. And, it came to be, that after a short stint in a govy provided residence, we moved again. 

Kicking out the tenant was a whole new world of pain. I won't go too much into detail, but let's just say that SOME property managers have no idea what they are doing (shock horror) and in reality, since we began our investment journey back in 2004, this was the first time we were left with a very sour taste in our mouths. Luckily it all worked out satisfactorily in the end, but it was a close call. 

Caboolture is an acquired taste. The house itself is tiny and we are surrounded by EVERY neighbour having a dog, which of course is not a real confidence booster. On the plus side, we won't need a dog. The clientèle is very much mixed, low and medium socio-economic families, single mums and a lot of renters. Our street seems leafy enough, quiet so far and, the best part of it all, it's a hell of a convenient location. Besides, we've lived in Kingston in the Logan area south of Brisbane and we survived that experience. 

So where does this leave our portfolio? 

We are still in the process of consolidating. We have:

PPOR: Caboolture (QLD), 3 bedroom brick and tile, small suburban block.   

IP 1: Launceston/Invermay (TAS), 3 bedroom plus sleepout, tiny historical block of 405sqm, weatherboard, competitively rented with some renos completed mid last year. On the market, but no bites. 

IP 2: Ingham (QLD), 5 bedroom typical fibro, undesirable street, on the market, DEFINITELY no bites, but we can hang onto it as it's also strongly rented. Both of these IPs are just negatively geared. 

IP 3: Glen Aplin (QLD), small block near Stanthorpe, on the market but again, no bites. There has been some movement in the area where our block is and if the street is finally developed from dirt to asphalt, we may be in luck to make a tidy little profit. A lot of little houses popping up around our block. 

All of these are becoming very hard to move. Ingham is floody, Tasmania has a job crisis and the Glen Aplin block has it's challenges to develop. Hopefully we have a win on one of these soon. 

A little while later, a lot has happened.

Over the last few months, my little (but growing) family has encountered a bit of an uprooted  experience, as we flash-sold our house, moved into a government rental ice-box, bought a new house and are now pretty much waiting until we can move to said house. There are a lot of stories I could muse over from the experience, but I'll save this for a later time, needless to say, the experience has un-earthed its fair share of negatives.