This was my first property, a little house in the middle of nowhere. I can look back now and really say, this was a great purchase!
Back then, I was really scared to buy my first property, and the thought of getting into hundreds of thousands of dollars in debt, really frightened not only me but also my husband.
We had the deposit and the capacity to buy a half a million dollar apartment somewhere. And even at that time that amount could only get you a small 1 or 2 bedder in a suburb relatively close to the city. The fact was that even though we had the financial capacity for this purchase, we felt it would tie us down and prevent us from traveling the world, starting our own business or doing many things we wanted to do.
It had always been my dream to build a property portfolio, so I realised that if I didn’t take the first step, this dream would get farther and farther everyday.
After about a year or 2 of procrastination, I asked myself; what can I do to make this fear go away? and the answer came almost instantly: What if I could find a really small property in NSW Australia? I thought that if I made a mistake when buying, it would only be a tiny mistake instead of a huge half a million dollar mistake. Better yet, what if I made it cash-flow positive? This meant that if I wanted to quit my job and travel for 1 or 2 years, the rental income would be enough to cover the outgoings of the property and I would not have to worry about having to make enough money to pay the mortgage.
That was it, it was settled, I would find a tiny positively geared property worth less than $100,000. I have to be honest, this was not an easy task, particularly here in Australia, however, this was not impossible either. I found a few properties and sent some initial questions through to the real estate agents:
1 – How much were water and council rates in the area?
2- Is the property being currently rented out?
3- If not, does the property need any repairs before it can be leased?
4- How much would it rent out for per week?
5- What is the size of the property? (building and land)
6- When can we inspect the property?
7- Do you have any other similar properties for sale around the area?
One of the agents was very diligent in replying with the details of the property we inquired about, plus another property. He said one of them needed some repairs and the other one didn’t. We traveled 5 hours to go and see these properties.The one that needed “some repairs” was a really old house that pretty much needed to be torn down and rebuilt. We were not very confident at that point, however, to our surprise, the other one was this tiny one bedder with a cozy fireplace and needed very little repairs done. We were given inflated rental figures but we figured even if we got $50 less than what the agent said we would still be in the positive including admin, maintenance, rates and other outgoings.
I got a loan pre-approval with a good friend of mine who was a mortgage broker. I wasn’t a broker at the time so I asked for his help with this one. I got approved, made an offer, signed the contract, got the building and pest inspection done and away we went.
It took me 3 months to rent the property out due mainly to the property manager’s un-eagerness to do their job but once I changed property managers I was getting positive cash-flow on the rent and the expenses pay for themselves. Needless to say I have a property that is paying itself off and I lost my fear of buying!!!!!
Within 3 months I purchased another 2 properties and I haven’t looked back since. I really love this, I learned from my mistakes however “tiny”, and made better decisions when I went for my bigger purchases.
I still look at this tiny house and it inspires me to keep going and to keep loving my job and career.
With a grateful heart
-Juliana Ardila
