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All's well that ends well

Tracey Bryan and her husband Mike bought a 15-bedroom house in the inner Brisbane suburb of Spring Hill in January 2007, and subsequently had major dramas that saw them rack up $80,000 in debt on their credit cards and then take out a loan paying 4.85 per cent per month.

Their experiences are set out in the My Property Nightmare story in the April 2008 API.

However, there is a lot of light at the end of this investment tunnel.

Despite all the drama, Tracey says the end result of the property purchase has been very favourable, with the property finally ready to rent out from September 2007.

They bought the property for $720,000, the renovation ended up running to $270,000, holding costs added about $100,000 and furnishings for the apartments came to $50,000.

That brings total costs to $1.15 million. On completion, the property was valued at $1.4 million and the Bryans were able to refinance and get back all but $100,000 of the equity they’d put in.

Rents for furnished student accommodation had also climbed well above the level Tracey originally planned for.

“I did my due diligence on getting $95 a room… but we’re getting $175 a room for a single,” she says.

Gross annual rent on the property comes in around $150,000, meaning it’ll deliver about $25,000 in positive cash flow in year one of operation. So all the stress and hard work paid off in the end.

Tracey, who says she’s an “eternal optimist”, took solace in her father’s wise words for much of her year from hell. He’s always told her that money problems are good problems to have compared to health or relationship problems.

“I kept it in perspective – most days! Whilst it was harrowing, when it came down to it, my family were all well and happy and we did have a roof over our heads and food on the table,” she says.

Tracey also advises that short-term costs are worth it if there’s a pay-off in the long run.

“Not paying for experts is false economy. My hydraulic consultant, town planner, fire safety consultant and others all saved me much more than they cost,” she says.

“The short-term financiers who gave me $100,000 in short-term funding were brilliant. They were very expensive but it is only short-term finance and the $1000 per week interest that I was paying them helped me get my development finished, which was costing me $3000 per week in lost rental income, so it was well worth it.”

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