Being in his 50’s and having some earlier investments that went badly, Peter (not his real name) decided to use our buyers’ agent services to turn things around and make sure he was successful this time around. His goals were to try and create some equity and acquire some investments so that he could have a comfortable retirement, given what had occurred to him previously.
With this in mind and knowing that he had a low borrowing capacity and a small deposit, we needed to ensure that the property we found would provide excellent cash flow to help with serviceability, as well as create some equity upfront when buying the property – buying under market value. By doing this, Peter can ‘recycle’ his initial deposit from this purchase and use it for the next property he buys.
We discussed a few different locations with Peter that would work within his budget of $400,000 – settling for the greater Newcastle/Maitland region. We knew these areas quite well already having had many successful clients of ours purchase or build property there, so our search commenced.
There were some fantastic opportunities in the Newcastle/Maitland region, allowing us to secure a freestanding house on a good sized block with a high yield. There is a lot of growth potential here, as we have seen the values increase over the years due to the transport links in to Newcastle, the planned infrastructure, the new Maitland hospital that is under construction and many more factors.
As the market conditions had started shifting in a positive way, vendors began holding-off on accepting lower offers on their properties. Stock levels were at their lowest in over a decade, reducing the availability of properties and given the low borrowing capacity, we had to get to work.
After inspecting a number of properties, we shortlisted a fantastic 3 bedroom house on a large corner block of more than 600sqm, providing future development potential too (STCA).
With the property currently vacant, we knew that the vendor had no cash flow coming in which would give us some leverage with our offer. With thorough research on comparable properties and determining the true market value, it was time to make our offer.
We started with a much lower offer to test the waters and with some back and forth negotiating and standing firm ground on our final offer, we were able to secure the property for 10% less than the asking price at $371,000. With an expected rent return of $400 to $420 per week in an area ripe for some serious growth, this was the perfect investment for Peter to start building up his property portfolio and start setting himself up for retirement.