When I first started out in real estate, I was incredibly fortunate to have some wise old souls in the offices I worked in.
Lenny was well into his 60’s, smoked like a chimney (yes sales agents used to smoke in the office back in those days) and was still managing to pull a sale together every now and then despite the fact he probably should have retired many lifetimes ago.
He was one of those guys who would, without asking, share his wisdom on all things real estate and life.
After all, real estate WAS his life.
He’d been in the game for many, many years, and yep, he’d seen it all.
I think he liked the idea of a 17 year old fresh faced girl prancing around the office in mini skirts and high heels, but it wasn’t because he was an old perve; he just loved to share what he knew with someone who was young and who would listen.
“I wish I was your age but knew what I knew now”, he would say.
Back then I brushed most of these comments off with a polite smile, but being the growth mindset person I am, I always listened to him and his “advice”.
One piece of his advice that always stuck with me, was to never buy a property that you couldn’t add value to.
No upside, no go.
Funny because at the time I was one of those young girls dreaming of moving into a brand new home, house and land package style, and the thought of buying an old renovator meant one thing to me – work.
But when the crunch came and I was signing the Contract on my first home, budget prevailed and I had no choice but to buy something that needed a paint brush, some man (or boyfriend) power, and a few tweaks.
Lucky, because these tweaks made me $120,000 in 18 months.
Sure, the swing in the market had a LOT to do with this quick equity gain, but I’d had my taste of renovation, and I loved it!
Fast forward 18 years and I’m preaching this same concept to my clients today.
Buy something with some upside or value add potential.
Sure, I understand that every investor is different and may have their own take on what is the right property for them, but in my experience, it’s the properties with the value add opportunities that really stand out in the long term.
And if you're looking to build equity faster, properties with some form of upside are the way to go.
Let me share some examples.
The post war house on the larger block that is zoned LMR and you can split off the back and build a townhouse – buy that property.
The 150m2 run down apartment with city views in the boutique complex of 12 – buy that property.
The queenslander in the blue chip character home suburb that needs a raise and renovate – buy that property.
As for me, these days I’m only interested in adding properties to my personal portfolio that have some sort of upside.
Yes they need to tick all the boxes that constitute a great investment, like location and scarcity to name just two, but I also want to know there is room for manufactured equity through smart renovation work or future development potential.
When you buy right to begin with, this is like the added bonus you get on top, and who doesn’t like bonuses?