Update on the Investment Property disaster

Dear Reader,

Today, I wanted to give an update on my investment property. Indeed, I believe there are some valuable lessons to be shared.

Tenancy issues:

I would not say that this has been a great success overall. I have heard some instances where investors had had their tenants for few years. We’ve had our property for two years and a half and we’ve had 3 couples as tenants already.

But, in the last one tenancy, it took me 11 months to figure out that the tenants had paid monthly instalments instead of weekly to the agency – the agency has always paid us monthly. This has resulted in the loss of 4 weeks of rent potentially that we’re trying to claim through the bond and that the tenants have contested… obviously…

We’ve had troubles with the tenants below my property who have dealt with drugs and police issues… resulting in my renters to ask for a decrease in rent… 7%! They have finally chosen to leave…

We bought in a recent building to help us with the depreciation… what we discovered is the recent apartment blocks have been built in a hurry, resulting to us with around $5 000 this year alone in repairs… Yes, still tax deductible…

And, to finish with tenancy issues, New Farm being flooded by apartment buildings, the rent has come down from $465 last year to $450 this year per week.

Agency issues:

Now, on top of the above, we have experienced some huge issues with our agency. Back 2 years ago, when we bought our apartment, I carefully chosen this specific agency among others because it was a boutique of previous property investors who had “enough” not finding the right property manager.

Fast forward, May 2017, I received an email from an insolvency company mentioning that my agency trust was ceased. In the process, I discovered that they forgot to deliver me a week of rent as all payments and expenses were audited. They also had a faulty registration and were not aligned with the current legislation. But I didn’t want them to lose my business, I knew they had fought hard to make this one happen.

So I decided to stay. At present, I’m still missing my rent from May and 4 weeks of rent that the tenants have not paid…

Lastly, a faulty water cylinder and leakage to the shower box is going to cost me close to $4 000 in total… so…

Shall I stay or should I go?

You see, I’m a long term investor but I’m also a value investor. I don’t believe that the bull stock market nor the aussie property bubble will stand forever. And moreover, we’re engaged onto a property, negatively geared – which means we’re losing money every month, even if  paying less taxes in the process! – And it might not align anymore with our mid-term investment focus, which is to come back to Europe.

I’m really in search for cash flow, and return ON investment, not OF investment. Why would I keep a property that is making me lose money every year where I could invest in quality shares that will deliver dividends every year…

Here is the question that I’m asking my self…

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