This deal blew my socks off. Slow market? What slow market?
A recent sale in the press the other day caught my eye.
Basically the vendors bought a property and turned around and sold it nine months later – for a capital gain of $500,000!
That’s nice. I’d take that.
The property wasn’t amazing. It certainly didn’t have a lot of street appeal:
But it was well located in Sydney’s northern beaches, and it had a massive back yard, which attracted a lot of interest from families:
Again, it’s a case-study in knowing your market. I’ve written before about how there’s still a real shortage of quality stock on the market, despite the warnings about ‘unseasonably strong listings.’
Don’t believe the hype. There’s still a shortage.
Anyway, the property had sold nine months ago for $1.7m.
It was a quiet time in the market – interest rates were starting to lift and confidence was low. The vendors wanted $1.9m, but the eventual buyers put in a low-ball offer because it was all that could afford.
The real estate agent laughed at them apparently, but then called them back two weeks later and said they could have it.
Which just goes to show, you’ve got to be in it to win it. You never know what’s going to happen.
So anyway, they bought it at a good price which meant they were always going to be in the money.
And then they spent $80,000 putting in a new kitchen and giving it a lick of paint. Nothing major.
When it was put on the market a couple of weeks ago, they had 91 parties through the first inspection!
What was that about demand slowing down?
The got an offer for $2m straight away, had five serious parties, and closed the deal that night.
At $2.211m.
Nice.
Know, I don’t know the circumstances. I don’t think the vendors had planned on selling so quickly. I don’t think they were investors.
But still, I think it’s proof of just what’s possible in a market like this, or any market for that matter.
As the saying goes, you make money when you buy, not when you sell, and these guys had bought well.
Sometimes, you can make real money just by having faith in your market research (by following good economic commentators… like me!), and then holding your nerve.
And a good property is a good property. If you become an area expert, you’ll know that family properties like this are in high demand for example. You know what is going to sell and you can plan accordingly.
And then if you have the luxury of timing the market a little, that can give you an extra boost.
In this case, the timing is not about what was happening to prices in the market over-all.
The timing here was about how much stock they were competing with.
As always knowledge is power.
And there good deals to be found every day of the year!
DB.