A look into my own investing journey

This is the second of a set of three Sunday blogs that look into some of my own property investments. I’ve penned this to share my mistakes and my outcomes…. and to demonstrate the power of patience and time.

This particular purchase was opportunistic on my part. Our property portfolio was largely consumed by houses, (as opposed to units) and some held blue chip addresses, while others were regional or in gentrifying locations.

I had been working as a buyer’s advocate for five years when I spotted this opportunity. A friendly local agent called me late in the week, just two days before the scheduled auction for a cute, un-renovated Victorian terrace and asked, “You don’t have anyone for this little single-fronted cottage, do you?” I hadn’t inspected it because I didn’t have a client brief for a terrace at the time. I tapped away on the keyboard and checked out the listing. It was a great location; one of the best streets in Spotswood and the floor plan and condition looked OK. I conceded I didn’t have any suitable clients for it, and then our friendly agent shared two critical pieces of information with me.

“Cate, we have nobody on it. The vendor has to sell.

So I asked him to show me through the property. I’d already told myself, “Unless the condition is terrible, I’d like to buy it.”

The inspection went to plan. The property was rented to students and they weren’t in a hurry to move. I could envisage a great renovation one day, but my primary reason for circling in on this opportunity was capital growth. Being just five train stops from the city, offering local shops within meters, and boasting a pretty, tree-lined streetscape, this cute little house had all of the hallmarks for outperformance growth.

I secured the property in 2014 for $540,000; a good buy at the time. It was negatively geared at the time, but the cashflow was manageable due to the price-point of the asset. Our renters stayed on for a few more years and our plan was always to conduct an extensive owner-builder renovation and to pay for it with equity that was released from the property’s capital grown gains.

Historical sales suggested an average growth rate exceeding 7% per year. A well-timed renovation could bolster capital growth, but the secret with any renovation is to avoid overcapitalisation and project overruns. We had started working on concept designs with our architect and our instruction was to retain the front half of the dwelling and rebuild a new bathroom/living/dining, encompassing little more than the current footprint of the dwelling on the land.

Once our renters gave notice to vacate, our owner-builder renovation began.

The renovations cost $150,000 in 2017; a shoestring budget for a considerable renovation. Husband mastered the finishing trades, from kitchen installation, tiling, and painting. We didn’t exceed budget, nor did our timeline need extending.

This is no mean feat considering the challenges of running multiple trades on a project in this climate.

The property leased quickly, and for a considerably higher amount than the house had previously rented for. Our tenant demographic was also different given the quality of the renovation and the price-point. We no longer had students applying and our renters have all cared appropriately for the dwelling.

These days, Spotswood has put itself firmer on the map with Grazeland attracting thousands of foodies to the inner-west. Our little cottage remains one of my favourite of our acquisitions and proved a nice place to stay when we conducted a significant renovation on our home.

The gains have been attractive so far, but it’s still early days.

Period properties in central locations like this show their strength when they are allowed decades to perform.