current routine

As we’re currently doing our unit up, we’ve slipped into Reno Time.  RT goes something like this….

7am – get up.  Ingest coffee, then breakfast, while complaining of aches/pains/our suddenly rediscovered mutual loathing of renovating.

8am-9am – administration.  This is the part of the day where SO makes an emergency dash to Bunnings to get whatever we need, while I do paperwork (pay bills, etc) and make phone calls.  Today I organised new glass for our broken sliding door (courtesy of next door’s tenants), replacement flyscreens (for some reason, the unit doesn’t have any) and a new toilet pan and cistern.

9am-1pm – work on the unit.  SO ripped up the bathroom tiles today, while I kept working on the bedroom ceiling.  Tomorrow will be Sanding Day for the ceiling, so I can’t wait to see if it actually looks somewhat reasonable afterwards.

An action shot of SO jackhammering up the tiles:

Heh – cute backside.

1pm-1:30pm – lunchtime, which is normally provided by SO’s dad and stepmum.  While I’ve had inlaw dramas in the past, it is during these times of stress that they really shine.  The lunch is always delectable, and SO’s dad is an absolute trooper in the amount of time he contributes to our renovations.

1:30pm – 5pm – we drag our sorry carcases back to work.  At about a quarter to five, we start the cleanup process, which takes longer than you’d think.

This is pretty much how our days are going at the moment.  When we get home, we squabble about who has the first shower, then we eat an early dinner and relax in opposite ends of the house, far away from each other.  While we get along pretty well, all things considered, it’s imperative we have our separate time after spending all day together in a one-bedroom unit.

Roll on week two!!

investing in property: what do we do?

I thought if you’re reading this blog, you may possibly be interested on what we consider when buying investment properties.  Of course, you may find it all hideously boring.  I hope not, though!

In no particular order:

1.  Small units.  We actively seek out either one or two-bedroom units, preferably with a bathroom/laundry.  This is for a number of reasons.  Firstly, a lot of major issues such as plumbing, roof maintenance, and gardens, are not the problem of the individual owners, but are dealt with by the council of owners, who are elected once a year.  This removes a lot of things that can go wrong from our area of responsibility.

Secondly, I worked out that the highest return for the least amount of monetary output occurs in smaller homes.  What this means is that we can buy a one-bedroom unit instead of a two-bedroom unit and save $50,000.  In turn, the weekly rent isn’t that much less, it may be $40/week less.  This increases as the number of bedrooms increases, but not linearly.  What this all means is that we get better returns on owning two one-bedroom units rather than one three-bedroom unit.  Also, the Australian population is trending towards more single-person households, so we’re anticipating a real need by buying smaller homes to rent.

2.  Location.  This is an oldie but a goodie.  We look for properties that are undervalued for their location.  For example, both Osborne Park and Glendalough in Western Australia are close to Perth, public transport, shops, and other facilities that people value.  They are also surrounded by suburbs which are relatively much more expensive.  As property prices continue to increase over time, the handy location of these suburbs will see home values increase.  At the moment however, they are fantastic value considering how close they are to different amenities, and their proximity to more expensive suburbs.

3.  Scope of works required.  We are careful to only buy properties where we can do the majority of the upgrading ourselves.  SO is particularly handy, which is great (my father was an accountant, but not good at anything requiring power tools, so I still get a kick out of SO being good with them!), and I’m okay with grunt work stuff (scraping, patching, painting, tiling, and buying furnishings and furniture).  Any property requiring moving of walls, major plumbing works, electrical rewiring etc is passed over.  We know our limits.  We’re also savvy enough to recognise if there are major structural concerns, which eliminates the property from our list of contenders.

As part of this, we consider what alterations can be made which will improve the ‘rentability’ of the property, at minimal cost and effort to ourselves.  For example, in our current renovation project, we’re getting a front-loader washing machine installed in the kitchen.  Obviously it’s not an ideal location, but as the unit is on the second floor of a block of flats, which only has stairs and a (revolting) communal laundry, it will mean we can charge up to an additional $40/week rent for the convenience of washing your knickers in the privacy of your own home.

4.  Consider what else is happening.  This is one point that can be hard to do.  I’m an economist, so I tend to look broadly at what is happening in the area we’re looking at buying in (in our case, Western Australia).  However, there are also specific issues that should be considered.  Some of the things I think about are:

• what is happening with interest rates? (can we afford an increase/s? Will mortgage defaults increase due to these pressures, requiring more people to rent?)
• what is happening with the rental market? (eg. WA is undergoing a boom driven by the mining/resources sector, resulting in an influx of people who are looking to live in Perth for the short to medium term.  These people are more likely to need rental accommodation, than buy property here.)
• why would someone rent this property from us? (is it close to work, in a good location, close to public transport and shops, a ground floor unit)

5.  Tax issues and implications.  I’m not an accountant, so please don’t regard this as informed advice.  However, before buying a property, we carefully look at the specific implications for us, and what we have to do to maximise our return (or minimise our loss, whichever applies).  For example, we always get a tax depreciation schedule done by a recognised organisation specialising in such schedules.  This provides a basis for claiming depreciation of capital over time, and can result in a handy bonus at tax-time.

6.  Furnished vs. unfurnished.  We choose to rent our properties furnished.  While it does attract a more transient tenant, we find it’s worth the extra hassle.  We can also get a really good return from our depreciation schedule, as furniture and furnishings are included on it.  There are absolutely fantastic items for sale second-hand, which look like new.  For example, we bought a second-hand LG fridge/freezer which was the current model, and had only been used to store a small carton of milk, for $160.  It was in perfect condition.  Our depreciation schedule lists its value as $800.  This contributes significantly to our tax return at the end of the year.

7.  Don’t overdo it.  With our first renovation, we spent three weeks working weekends and nights after work to get it up to scratch for renting.  I would not recommend this course of action to anybody!  We were both exhausted, physically, mentally and emotionally.  After that experience, we’re careful to take annual leave (or other leave) to concentrate on the reno.  We try to stick to working Monday to Friday, 9am-5pm, leaving our nights and weekends free.  Sure, sometimes we go a bit later at night, or do a half day on the weekend, but only if really necessary.

8.  Budget cautiously.  This goes for everything, from the actual renovation budget, to the expected rental return and vacancy rate.  I personally budget for 6 weeks’ vacancy per property per year.  In other words, I’ve allowed for each of our properties to be vacant for 6 weeks each year, through making a slightly higher mortgage repayment every fortnight.  I also under-budget with respect to expected rental return.  On one of our units, I budgeted in the first year for a return of $180/week.  We actually got $220/week, and it’s just increased to $240/week.  For the next budget, I’ll put in a rental return of $220/week, rather than the $240 we’re now receiving.  This extra ‘fat’ in your budget can make an enormous difference if something goes wrong.

9.  What if….. something goes wrong? This can range from a water heater blowing up to more serious possibilities.  You need a plan just in case the you-know-what hits the fan.  What would you do if someone falls pregnant, loses their job, writes off their car, becomes very ill, etc.  It doesn’t really matter what you do, as long as you have a fallback position in the event that something disastrous occurs.

renovations: day one

After having some dramas with our tenant leaving (we just about had to pack all his shit for him, then the removalists cancelled, so we ended up dropping most of his stuff off ourselves), we finally got into the unit today to do some work.  I think we had a pretty good first day – we remembered everything we needed to, and we got some stuff done!  I even remembered to take the camera, so we’d have pictorial evidence.

SO removing the kitchen splashback tiles:

The bedroom ceiling, after we’d scraped off about half of the loose bits that were coming off.  Holy leprosy, Batman!

Note the oh-so-classy light fitting, which is missing the glass bit.  Only one of the four lights in the unit is complete, the rest are like the picture above.  This isn’t actually an issue, as the complete light fitting is so hideous, it’s uglier than a naked globe.  I was eyeing it with distaste today, and made a mental note that we’d need to get decent lights installed in the property.

We did have a brush with the realities of renovation which somewhat dimmed our first-day euphoria.  When SO opened the kitchen cupboard containing the hot water system, he took a big step backward and said in a strangled voice, ‘It’s infested with cockroaches’.  Sure enough, there were thousands of the little German roaches running around inside the cupboards.  For about fifteen minutes afterwards, the air was filled with curses and residual spray.  I hate to think how bad it’ll be when we actually remove the cupboard carcass.

Still, all in all, a sucessful and productive first day.  Let’s hope it continues!

tenant issues

 

The tenant in our revolting unit was supposed to move out today.  We have taken significant amounts of leave in order to do the reno on this unit.  However, to cut a long story short, he’s still in there, no doubt drinking himself into a stupor, while his stuff remains unpacked.

I’m not too concerned about this, as we’ve taken steps to sort it out.  We’ve organised a removalist to come tomorrow morning at 9:30am, and we’ll meet him there.  If he’s not packed and ready to go (or doesn’t answer the door, even) we’ll be there to ensure he has a helping hand with finishing up.  And I won’t be overly careful about helping him pack up, either.

It’s not like we’ve sprung this on him.  We gave him clear written notice in January that we wouldn’t be renewing his lease or entering into a periodic lease arrangement.  We followed this up with a reminder letter in February.  We’ve talked to him numerous times.  We’ve even arranged the fucking removalist, for fuck’s sake.  What more can we do?!

Sigh.  It’ll all be sorted out by mid-morning tomorrow.  That’s what I keep telling myself (and SO, who needed a beer to unwind). 

Our garden edging is nearly done.  The main part of the garden is all finished.  All we need to do now is a little bed along the driveway.  It may have to wait until our reno is sorted out, however.   I’d put some photos in, but I can’t be arsed at the moment.  Maybe later.

wardrobes

The weekend was a good one.  As you may suspect, we picked up two wardrobes for a song.  Normally $250 each, we got them for $90 each:

Sorry about the blurry image, it’s the best available. 

Unfortunately, we couldn’t remove them from the house we got them from.  So we had to undo them first, then load them on the trailer and take them home in pieces.  It only took three hours and two grown men.  I suspect I’m no longer the favourite daughter-in-law – my FIL was looking unimpressed, to say the least.  However, they’re home now, and both will look fantastic in our units.  I’m trying not to think about the re-assemblage issues.

The garden edging continues.  We only have about a day and a half left.  I can’t wait.  SO is off work on Wednesday, so he and his dad will do some more work on it, while I get to shovel dirt out of the beds.  It’s sand, with a liberal smattering of couch grass, rocks, and assorted weeds.  We figured there’s no point in making the garden look good if it’s filled with crap rather than soil.  Before we put good stuff in, though, the old stuff needs to go.  That’ll be my job. <sigh>

I went through the ironing room today.  The ironing room is where I iron, and where the clothes that are clean sit prior to ironing.  It’s also the room where my stash of eBay purchases which weren’t quite right live.  I sorted through the pile today and got rid of two enormous bags of clothes.  I still have one enormous bag left, which I know I’ll be able to sell on eBay (of course).  I really need to get onto it – if we’re going to be moving out of here in eight weeks from last Thursday, we need to get our household of shit into order.

helloooo, debt

After some to-ing and fro-ing, we signed another offer and acceptance form this morning to buy the Glendalough unit, for $10,000 more than our original offer.  It sounds like a lot, but it’s still $12,000 less than the asking price, so I consider we ‘won’.  The owner had already signed the O&A, so provided our finance is approved, this is really happening.

Deep breath.  It’s all going to be okay.  That said, I worked out last night that we will be in debt to the tune of one million dollars when this purchase goes through.  I try not to think about this too much, as it affects my sleep.

SO went out for a few drinks after work last night.  Guess who got called in the middle of the night, to come and pick him up??  I threw some clothes on and got him.  In four years, I’ve never seen him really drunk before.  He behaved himself however, slept in the spare room, and woke up this morning feeling revolting.  I only have minimal sympathy for him, as he knew he’d be out in the garden all weekend again, so he really has brought it on himself.

My head is whirling with everything that needs to happen now.  I think I’d better go and have a cup of tea [coffee], a Bex [panadol] and a good lie down [a nanny nap].  Not necessarily in that order.

Anybody have a spare million lying around they care to share with me?

on leave

I’m now on my five-week hiatus from work.  Woohoo!  In order to celebrate, I have an appointment with my psychiatrist this morning, and an appointment with my psychologist this afternoon.  I suspect they’ll both be interested to hear the recent course of events, with a reno starting next week on one unit, and the purchase of another underway.

Speaking of which, we put an offer in last night after work.  My God, the real estate agent liked the sound of his own voice.  It took just over an hour, in which he discussed strata titles legislation ad nauseum.  Really, who cares about resolutions without dissent?!  I may be cynical because my mum spent about twenty-five years as a strata manager, so it wasn’t anything new (or interesting) to me.  We were there to sign an offer and acceptance, not talk about the ins and outs of strata ownership. 

Still, we eventually managed to sign the pieces of paper we needed to.  We did get some revenge when we told him how much we were offering.  We offered twenty grand less than the asking price.  When he asked what we would do if it was refused, we kind of shrugged and said that we’d deal with that if and when it happened.  I don’t think that was the answer he was hoping for.

He did mention that the owner had already knocked back two offers on the same day, one for ten grand more than we offered, one for fifteen grand more.  He let out the fact that if the owner had accepted one of them, they would’ve settled two weeks ago.  As I said to SO on the way home, that means that there hasn’t been an offer made in eight weeks.  That’s a loooong time when you’ve got a place on the market.

Anyhow, we’ll see what happens.  We’re prepared to offer more if needed, but we’re also prepared to take our time.  After all, we’re not in a rush – we’re about to start a reno.

I need this job, I don’t get enough stress at home

All paid jobs absorb and degrade the mind – Aristotle 

I will be SO glad when tomorrow is over, and my five weeks of annual leave starts.  My Pointy-Haired Boss has been all over the place like a mad woman’s excreta lately, and this week has been particularly bad.

Picture this: We’re in her office.  I’ve just handed her a vital letter which she needs to authorise to go to the CEO for signing.  We’re talking about work stuff, and she’s in a filthy mood.

PHB: There’s a lot to do, you know!! You go on leave soon….(checks leave roster; little eyes widen in horror and fury)…you go on leave at the end of THIS WEEK!?  You can’t leave this (pointing at my letter, which is now on her desk) – it’s your JOB!!

Silence, in which she glares at me accusingly, expecting an answer.

Me:  Umm…..

So, yes.  There’s nothing going on there that a good elephant tranquilliser wouldn’t fix.  She’s known about this leave since the beginning of the year, when she demanded I tell her exactly what leave I wanted to take for 2008, and when I wanted to take it.  It’s not exactly a surprise to her.  She even knows it’s so we can do a reno.

I find it hard to work around her.  She’s incredibly mercurial with her moods.  And she doesn’t bother to hide it when she’s in a crap one, either.  This is really draining for me.    Still, I do get a big kick out of reading the Dilbert comic strips.  For some reason, they appeal to my black sense of humour.

confessions of a real estate junkie, part I: the saga begins

Heh.  If things are quiet for a while, you can rest assured it’s because something is happening behind the scenes.

Not content with doing up our own garden, and preparing to embark on a renovation of one of our units, SO and I have decided to buy another property.  When I say ‘SO and I decided’, what I really mean is, ‘I spotted a bargain, went and saw it, extolled its virtues to SO and he agreed to us buying it’.  This is essentially the same sequence of events that saw us buying two units last year.

Well, more specifics.  It’s a renovator’s delight (surprise, surprise).  It’s a two bedroom, one bathroom (with laundry included) in Glendalough.  Other than that, really, pictures say a thousand words.  One shot of the bathroom/laundry:

And, just for kicks, one of the toilet:

What more can I say?  Well, how about ‘revolting’?  However, this is the market we’re looking at.  When we’re finished, of course, I anticipate it will look more like this:

Well, perhaps not exactly, but you get my drift.

We met with our lovely mortgage broker tonight, and he confirmed that we should have enough equity to go ahead with an offer.  It really depends on how much our current three properties are valued at, so at this point all we can do is put in an offer and hope for the best.  We have an appointment with the real estate agent later this week, so we’re just holding fire until then.

In other news, the garden edging is now two-thirds complete.  SO was up until 11pm both Saturday and Sunday doing finishing off stuff (sorry, I’m not up on the technical side of garden edging terminology).  I think he’ll be greatly relieved when it’s all over.  I’ll be glad too.  I’m all for flogging a dead horse, but I don’t want him to actually die.  He’s not exactly used to hard physical labour, and I don’t want him to have a heart attack or a stroke.  Hopefully a couple more days will see it finished.  I’m crossing my fingers that those couple more days happen before the property valuer comes through.

love

When I met SO (we worked together) I thought he was cute.  I had a boyfriend at the time, however, and being inherently loyal, I didn’t go much past the initial observation that SO seemed nice, friendly, and professional.

Over time, as we worked together (our offices were next to each other), I came to know him better.  I saw a person who was not only nice, friendly, and professional, but who also laughed at the same things I did.  I started to understand why everyone invariably liked him.  I liked his voice, his smile, and his attitude to life.  I also thought he had a cute bum.

We began to spend a lot of time together.  I’m not exaggerating when I say that my work was suffering, and that it was, for a few months at least, merely an opportunity to see SO, talk to SO, and smile adoringly at SO.  Somewhere along the line I misplaced the boyfriend I’d had when I started the job.

We got together.  Our first date was dinner and a movie.  It was very romantic, a movie we’d both really wanted to see: Kill Bill, Vol. II.  When he dropped me off, he didn’t give me a kiss goodnight.  He just looked at me, shyly.

Very shortly I was spending every waking moment at his house – every night after work, every weekend.  I realised that he was kind and compassionate to everybody in his life, his parents, his step-parents, and my parents, including my mother, who can be highly stressful to be around. My friends loved him.  I also realised at about this point that we shared the same values and goals in life. 

A couple of things happened – he lost his job (due to a new manager) and my father was diagnosed with leukaemia.  He consoled me, and immediately contacted his second job and asked for more hours.  To help with things, I moved in.  We spent six months saving as much as we could on our reduced income, and seeing as much of my parents as we could.

Dad got sicker and sicker, and finally died.  Life became very tough.  SO had managed to get a job in his field by now, which was a financial relief, but I was falling apart.  I became very difficult to live with, crying all the time, not able to get out of bed and, eventually, suicidal.  During all of this, SO was a rock.  He held things together under enormous pressure, and managed to keep whole-heartedly loving me in the process.  It was during this time that he said to me, ‘I love you more now than when we first got together’.

We will have been together for four years next month.  During that time, we have been through a lot.  I couldn’t have done it without him.  He is everything to me.  I’m so lucky to have him in my life.