My real estate fail: What I’d do differently if I had my time again

Everybody knows property is a sound investment, right?

Just squirrel away your dollars (maybe using the equity from your first property), take the plunge and wait until the value goes off the charts.

But what happens when that investment turns out to be a dud? Maybe you buy at the wrong time of the cycle, pay too much, buy a poorly built property or have the neighbours from hell.

Or … what if you’re one of those dills that buys a one-bedroom apartment in a suburb already brimming with them, and ends up losing tens of thousands of dollars? That last dill was, unfortunately, me.

This sorry little tale begins in the Melbourne suburb of Thornbury where, about eight years ago, you might have spotted moi rolling up to an open for an inspection with excited eyes and a head full of naivete.

I already owned a two-bedroom unit in the outer ‘burbs, which was ticking along nicely, thank you very much. And having recently devoured a book on property investing, plus a bit of Rich Dad Poor Dad thrown in, I decided it was time to strike.

After all, more people were living alone than ever, Melbourne’s population was booming, apartments required very little maintenance and Thornbury was a suburb on the up.

After looking around a few apartments, I fell for a light and airy one-bedder. “Oh, it’s so CUTE!!” I said to my then-boyfriend. “Hmmm, it’s a bit small,” he replied, a look of polite concern darting across his face.

When the first loan application fell through because I’d forgotten to measure the space properly, it turned out he was right: it was a bit small.

But with a different bank in place, on I marched, renting the place out for years – always tipping in a bit extra to cover the cost of the interest-only mortgage.

Short-term pain, long-term gain! After all, it was worth spending the money now to get the capital gains later.

And so I waited, pouring money in, including a few big payments to cover communal fencing, plumbing and future painting.

Eventually, with a plan to rent the place out on Airbnb while I took regular trips overseas, I moved in.

I couldn’t sleep well because of the passing traffic, and phone reception was terrible because of the concrete walls. On the upside, bars and restaurants were opening at a rapid clip, all within walking distance.

But the apartment building was becoming shabbier by the day. No amount of hassling the body corporate manager seemed to have any real impact.

Arriving home was depressing. My neighbours had way too many cats, and the smell of cat wee mixed with cigarettes slammed me in the nostrils daily.

Finally, when some horror neighbours moved in upstairs and started screaming the complex down, I decided I was out.

Fast-forward to auction day, and the neighbours were at it again, sparking a call to the cops. A police car arrived, and turned on the siren to amuse the kids. Not the best look on the big day.

“Any chance we could wrap this up soon?” I asked a policewoman guarding a confiscated bong in the communal laundry.

At auction time, the silence was unnerving. Not one bid – not a cracker. (Afterwards, a couple put in an offer for $300,000 – $3000 less than I’d bought it for seven years earlier).

About a week later, the bloody thing sold for $330,000. By this stage, all I wanted to do was get rid of it.

Just before settlement, drama struck again in the form of a blocked pipe in the bathroom. A emergency plumber charged an obscene amount to inform me there were serious problems under the floor, which would cost about $20,000 to fix.

Stressed to the eyeballs, I got a second opinion, with much the same conclusion. It wasn’t until I talked to my neighbour that we realised it was his pipes that needed fixing – and certainly not to the tune of 20 grand.

But back to the sale. My accountant told me I lost almost $30,000 if you include all the money sunk on the way, plus the costs of buying and selling.

I felt like an idiot. But I consoled myself by considering that at least it had given me somewhere to live for a few years, and people had lost far more money in other scenarios. And it’s not like anyone died.

So what would I do differently if I’d had my time again?

I’d look at more places, and choose an area that wasn’t saturated with apartments.

I’d buy a property, probably at least two-bedroom, that was better managed (reading the minutes of the body corporate meetings would have been a good place to start).

I’d also choose a complex with fewer apartments (this one had 16), on a quieter road. I’d also ask my family’s advice.

And before buying anything, I’d chat to the neighbours, and bargain harder on the price.

While the whole ordeal certainly didn’t put me ahead financially, it could have been much worse. I figured at least I’d had a crack and learnt a few (quite expensive and hopefully never to be repeated) lessons along the way.