Graeme’s Investment Experience #1

This week sees the completion of the construction of a granny flat I am building on my investment property in Brisbane. It’s been quite a journey with a few ups and downs.

I bought the investment property with the express intention of building a granny flat. Here is what I learnt from the process.

 

Check the contract
The real estate agent told me that it was renting for $500 a week, the contract said it was renting for $500 a week, the valuer assessed it saying it was renting for $500 a week – so you can imagine my shock when the tenant told me he was paying $350 a week.

Once discovered I went straight back to the agent who pretty-much said ‘yep, my bad. I didn’t verify what the tenant was actually paying.’  The agent compensated me and we moved on.

Choose a good builder
As soon as I exchanged on the investment property, I went out for quotes to build a granny flat. Some builders didn’t respond, some were slow and vague; one was sharp and on-the-ball straight away.  This is the builder that got the job. He stuck to the contract, kept me informed of progress and has delivered in time.

Manage existing tenants
I am a fair-minded but business-like investor. I kept the existing tenant informed of progress, even dropped his rent a bit during construction. But this is a business transaction and the tenant knows that, while I will treat him with respect, I will be charging market rents – and the Brisbane market has been going gangbusters lately.

Watch out for cyclones!
Managing the project from Sydney has been fairly painless. However a few weeks ago I had a panic when Cyclone Arthur was due to pass over my half-finished construction site! Thankfully a call to my insurer confirmed that my Landlord’s Insurance covered additional buildings on site.

Even better, Cyclone Arthur did no damage so I didn’t have to call on the insurance!

Timing
I am no Warren Buffett but, so far I have done pretty-well from this investment. I bought the property just as the Brisbane market was taking off and now have an additional source of income from the property!

In the next instalment I will tell you how I am going with my new tenant!

Graeme Salt is an award-winning mortgage broker – and he is pretty good at it.  He is also an investor in various things – though none of the above is advice.  If you want to chat Graeme about your mortgage needs or his life experiences – please contact him on 02 9922 5055