With housing prices among the highest in the world, can you imagine acquiring Australia’s “cheapest house?”
Seems a challenging feat – but that is exactly what I did!
Some might say I accomplished this with pure luck. But if you know me at all, you also know that the word “luck” isn’t one making a frequent appearance in my vocabulary.
With that being said, I’ll tell you exactly what it took for me to purchase the property now known as “Australia’s Cheapest House.”
I grew up in Australia. After a rather exciting stint in professional soccer (another story in itself), I was working as a property investment researcher and discovered a vacant 3-bedroom, 1-bathroom property located in Moree, a small town in New South Wales.
Rundown and in need of cosmetic repair, the property could be purchased for the asking price of $80,000. The numbers didn’t look very attractive at first, but as it fit my other criteria, the prospect was tempting enough to throw into my pipeline.
A few months had passed when I received an email from the listing agent. She informed me that the property’s asking price was now reduced by $20,000. That certainly caught my attention!
The cheapest house was vandalized
The cheapest house was vandalized.
I immediately called the Realtor representing the seller to begin negotiations. A week passed with figures bouncing back and forth when I received a call from the Realtor telling me that someone had broken in and vandalized the property. Negotiations came to an abrupt halt; the deal seemed dead in the water.
Over the coming months, I continued to follow up with the Realtor, getting progress reports on the seller’s insurance payout, wanting to know what the plan might be in moving forward with the deal, etc.
Two more months went by, and I received a call from the Realtor asking me what price I would be willing to pay if the property were renovated and tenanted.
Knowing that the seller would likely receive a substantial check from the insurance company, without expecting much, I decided to submit a low-ball offer of $37,000 – if they excluded renovations and finding a tenant for the property. In this situation, I preferred to oversee renovations, as well as occupancy, myself.
The tug-of-war was not yet over
The price continued to drop for the vandalized house.
To my surprise, the offer was accepted, but the tug-of-war was not yet over. The insurance company was delaying the seller’s payout and the property remained vacant while the seller, Realtor and I grew increasingly impatient.
It was now going on a year trying to get this deal across the line; my patience had run out. I called the Realtor and told him, “This transaction has taken way too
long to complete; I’m sick of waiting. Right now and today only, I am willing to take this vandalized, vacant property off the seller’s hands for $15,000 cash and close within three days. Otherwise I am out of the deal, and will be focusing elsewhere.”
The Realtor conveyed this to the seller. Within an hour, he called me back saying, “The seller has accepted your offer.”
“Australia’s Cheapest House Lived Happily Ever After…”
Upon closing, I started and completed renovations for $15,000. I had a total sum of
$30,000 in the deal. With a happy tenant in place and the property now in great condition, I decided to list it at a “walk-out-the-door” price of $80,000. Within two months it had sold for $75,000 – a very nice profit!
This deal was accomplished by implementing three key traits: Dedication, Determination and Knowledge of Negotiation. Notice “luck” didn’t make the list!
Dedication
Most individuals would have backed out of this particular deal, as it took well over a year to finalize. The journey of purchasing this property definitely required a lot of dedication and belief from my end. As the saying goes: “What you believe, you can achieve.”
Determination
This was a key factor in obtaining the property. Once the Realtor called and informed me of the $20,000 price deduction, I made a decision that this property would be mine. And despite unforeseen obstacles such as the vandalism and an overly long insurance claim process, I was determined to stick by my decision and see this deal through, because “nothing good in life comes easy.”
Knowledge of Negotiation
In the heated market that I was working in (no, I’m not talking about the weather), of course I could not have purchased “Australia’s Cheapest House” without knowing how and when to negotiate. Timing played a big part when negotiating the final price as well as turning possible obstacles to work in my favor.
What is the cheapest house you ever bought? How did you negotiate such a cheap price?
Visit Engelo’s site here.
[hs_form id=”4″]
0 Comments