November 15, 2023 by Dymphna

Would you bid on this hoarder home?

Yes, the market’s hot, but there’s still opportunity in this deal.

I’m going to tell you why property the best way to create wealth from scratch.

And look, I’m assuming you’re something like an average Aussie household.

If you’re a hedge fund starting out in the game looking to deploy your first billion, then property probably isn’t for you.

But for the rest of us, it’s amazing.

And the reason why is that there are just so many ways to play. Interesting opportunities come up all the time.

It’s like the other day I was reviewing an interesting sale over in Freemantle WA.

This one was a doozy. It was owned by an old hoarder who had done all of his own plumbing and electrics!

Ugly duckling barely gets to half of it.

You couldn’t live in it. You couldn’t insure it. You couldn’t even get a mortgage against it.

But for the right person with the right skills, it was a massive opportunity.

And it sold in less than three weeks.

The key is seeing where the opportunity is.

How long was this on the market?

Three weeks. I ran an auction campaign as I needed a cash buyer. No lender would lend on it. It’s very hard to insure as well, because you have to get common insurance with the neighbour, which is difficult to do.

What you were buying was a bit of a risk but a great street. It wasn’t for the faint-hearted. It wasn’t safe. There was exposed wiring. The electrical and plumbing work was done by the owner. He’s 99. He was a bit of a hoarder. There was a lot of rubbish inside the site and outside the house. He got sick and went to hospital and the hospital said he couldn’t go back home.

The Public Trustee got a quote to remove all rubbish and it was $40,000. There was a rusty vehicle out the back, covered in sheet metal. It was major surgery getting all that out.

But with so many problems, why did it sell at all?

It sold because buyers saw it as an opportunity to secure something for under half a million in Fremantle. This was a terrace home that had a front area, backyard, and off-street parking in a sought-after street.

The home was purple title. This means the property is shared with a neighbour. There are two dwellings on one parcel of land so you share all the land. They’re tricky – banks don’t on lend on those. Honestly, it wasn’t attractive at all. There were so many curveballs.

Aha. So splitting the title. That’s often a great strategy to create almost instant equity. But hang on, there’s a catch.

Can you split such a title into two?

It’s a very simple process, but everyone needs to be in agreement. In this case, his neighbour wasn’t in agreement.

The neighbour put up a notice on the day of the auction saying: “In case you didn’t know, we won’t change the title.” We thought the neighbour might have wanted to buy it.

They did bid, but they weren’t successful. It would always be in their best interest to split the title – it adds value to their property. They’ve renovated theirs. The only reason would be that they would have control over what the new owners do there. In fairness to the neighbour, you would want that, wouldn’t you?

In the end, it sold to a young couple with help from their parents. They plan to do all the renovations themselves. I hope they know what they’re in for.

Reno’s can be an amazing way to create value, but with a property like that – even the agents weren’t able to set foot in the place before the sale – there’s a lot of unknowns.

Still, the market is hot, and there’s an opportunity there:

Prices at the moment are silly because of the low stock. Everything we’re bringing to market is not staying on the market for long. I launched four properties about four weeks ago. Three of them sold that weekend, on their first open inspection. The only reason the fourth – 45 Bellevue Terrace – didn’t sell was because we were auctioning it and it had a set date. The market is hot.

Same story across the country.