How Easily It Can All Go Wrong!
Research is critical when it comes to property, most people know that. However, plenty still either don't do enough research or they rely on their solicitor to provide them with answers. Here's a very current and very real example of how it can all go wrong....
$125k or 20% in Under 6 Months
One of our clients took not one, but two splitter blocks and created $125k+ equity out of each of them in under 6 months. Each of these blocks were 800m2 and located on a corner, and subsequently subdivided into a total of 4 lots, each around 400m2. They backed onto each other, but regardless of this, they could have chosen to buy just one block and not the other. Our client paid $500k each for them, had each valued at $550k at purchase, and made $255k in equity through the subdivision. Not a bad result! So you can imagine how excited we were when an identical property across the street came on the market last week for $500k... carbon copy and we knew the results upfront!
The Value of Research
We knew the price worked. We knew the planning rules worked. We knew the end values worked. And anyone who had seen the previous projects carried out and then saw this property hit the market would have been licking their lips! Plenty of people would buy simply on the face of this. We can tell you, they wouldn't be licking their lips for much longer.
It Isn't Just About Dollars
The trouble is, the property that just hit the market, whilst it has the same land size, value and strategy as the original project and from the street even looks the same, it has two 'extras' that the original project did not. It is in an overland flow path and has pipes galore through the backyard. Ouch. The repercussions of this are many:
1) Subdivision may not be possible as council do not like allowing the creation of flood or overland flow affected property.
2) Even if you managed to get the subdivision through, you are left with a vacant lot entirely in an overland flow path and with numerous pipes through the middle of it. The house now on a smaller lot actually wouldn't be too badly affected.
3) Lastly, in a quiet market vacant land isn't terribly easy to sell, so you don't want to be trying to sell vacant land in a quiet market, when it already has numerous problems.
Your Solicitor's Searches
One problem for the inexperienced - and even the experienced alike - is they often rely on their solicitor to carry out their searches for them. The trouble is many solicitors either don't carry out the searches until your contract is unconditional, or they carry them out beforehand but don't receive the searches back until your contract is unconditional, and in addition they often don't explain the consequences of what these searches bring up. They aren't civil engineers after all. A good solicitor should carry the searches out early and get the results to you before you go unconditional, together with a comprehensive explanation or a referral to someone such as a civil engineer to comment on the findings.
Many Investors Do It
The scary thing is that many investors do just as we explain here. They find a property, they look at sales, determine that it is a good buy and/or the end values work, they place the property under contract and then they start the ball rolling with their solicitor. They don't research the pipes themselves. Why should they? Their solicitor does it.
Now you know why they should take charge themselves.
Research Is Just the Start
Carrying out the right research at the right time is just one of the critical components that you need to know before buying property. There are many more steps and crucial aspects that need to be addressed, not just by investors but home buyers as well. The Finding the DealHome Study Course is aimed at addressing those very fundamentals of property investing that can make or break the success of an investor. Contained on 5 DVD's ready for rapid, free shipping to your address, Finding the Deal is the brand new product from the Reno Kings that every beginner to intermediate investor needs to watch. For more details click here.