I heard the other day that an old friend of my daughter was not only selling stuff successfully and profitably on Trade Me, but was also the owner of three houses. I know if you get into rental property investment with your eyes wide open and a serious intention of purpose, you’ll do well. It’s overall safer than stocks, definitely more profitable than gambling on the horses, and the occasional awkward tenant apart, it’s usually not too much of a hassle.
We didn’t do very well with it, because we jumped in and bought a house with our eyes mostly shut; saw the problems but ignored them in our enthusiasm to give the thing a go. In the end, while we never had it empty of tenants - which was something of a miracle – we had to replace the roof, redecorate it at least twice, and never managed to deal with some of the problems the previous owner had left us. Things like wonky cupboard doors, and floors that were uneven, and terribly badly put-together shelving and so on. And then the lounge was too small, and ran into the kitchen -–which was also small.
In the end we got rid of it at a loss. Our worst ever investment. We did make some money on another house we bought for rental: my son-in-law who was living there with his daughter was asked one day if he’d be interested in selling it. He was quite happy to move out, and so was my daughter, because there were 40 steps down to the house from the road (!)
We’d bought the place cheaply – probably because of the steps. That’s the way to buy a rental property. Buy something that’s cheap, but is still in good condition. The less you have to spend on it, the better. The person who was interested in buying the property was willing to pay twice what we paid for it! That’s the way to go!
Admittedly the property market was on the move, and we managed for once to catch the wave. As it is at present it might not be so healthy.
Furthermore, the government is thinking seriously about reducing all the perks landlords can get on owning property. Not so good.
Photo courtesy of elisfanclub on Flickr.com