Property investment can sometimes involve both head and heart.
BY ELIZABETH ALLEN
Almost all of the advice about investing in property tells us that the head must rule the heart. But does that always have to be the case?
Many years ago, I had a weekend home alone while my husband attended a conference interstate.
By the time he returned three days later, I had bought my first house.
The price tag: $43,000 reduced to $39,000. Now, even for 1985 that was ridiculously low.
The reason: the house was a mess.
But it was also cute, a prerequisite for me to fall in love. It was an 1890s two-storey workers cottage, perfectly proportioned, with front and back verandahs, and with fireplaces on both levels. It was situated close to a train station and less than four kilometres from Brisbane’s CBD. It was also two doors from where we were living so carrying out, and supervising, renovations was easy.
I spent $40,000 fixing it up and sold it five years later for $153,000 – only $2000 below my asking price – almost doubling my money.
What relative roles did head and heart play in my purchase?
Well, I guess I already knew that the suburb was a comfortable – if unfashionable at the time – place to live, because I already lived there.
I knew there was no hidden horror story, with the exception of occasional nocturnal screams from the birthing centre across the road, and that the local shopping strip met basic needs.
So on these grounds my purchase checked out.
But the house was almost falling down. The roof and gutters needed replacing; one exterior wall had rotted and the kitchen and bathroom had to be gutted. Neighbours later told me they had inspected the house when it was for sale but had rejected it on the grounds that the renovation was just too big a job.
My father described it as a “rat hole” at first sight and my mother refused to enter.
But I fell in love with its originality, grace and sleeping beauty air. I also loved the garden.
So if I’m honest, heart definitely ruled head.
When I came to sell, these qualities of originality and cuteness were also what lifted the price way above what three local real estate agents said it would bring. They told me $140,000 would be absolute top dollar. My heart told me someone else would fall in love with it, as I had, and I set the price at $155,000.
I had three offers within a week – all over $150,000.
Sometimes the heart wins out.
Elizabeth Allen is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au
API readers – tell us about an investment you’ve made where your heart ruled your head. Did it work out?