As a regular reader of various property investing magazines, I’m often in awe when reading property investor success stories! This is because up until now, I’ve regarded my own property investing decisions more as ‘learning experiences’ than profit generators! In other words, I’ve ‘arrived’ at Destiny only after going down a number of other paths that didn’t work out as planned.

One of these experiences involved a house and land package I bought from a building company. I bought it to lease back to the builder for a display home. This unique design with fabulous coastal views ended up taking many months longer to build than planned. I paid monthly draw down payments to the builder while no rent was coming in! I was originally told how much money I would save in stamp duty, since I only paid stamp duty on the land. No one mentioned the interest I would be paying during construction, especially when the project ran late. This extra interest I paid, far outweighed any discount I received on stamp duty!

Once the house was complete, it was evident that the display village was not going ahead after all! The builders all went down the road! Not long after my house construction commenced, local builders all became attracted to displaying in another even newer, more suavely marketed estate nearby. Not only did my house get thrown into the general rental market pool but it became one of a flood of new houses being built in the area. As a result, I had to accept a fraction of the rent I’d originally calculated and due to this influx of new homes my investment actually decreased in value over the 5 years I owned it. In the end I decided the holding costs and capital tied up in this property were not worth it. The builder went out of business. so the original agreed rent I should have received for the display home that never was, is one of many figures owed to the many creditors in the voluntary administration process. After holding for 5 years, I cut my losses and sold. I sure did learn a lot of lessons owning that property! In that sense I got bang for my buck!

After that experience, my confidence waned, so I enlisted a buyers agent to purchase my next properties! Though the results have been better, I sure learned a lot from these experiences as well! I look forward to sharing these with you in my next entry!

After our first year of real estate investing, my wife and I have decided to branch out from the safe established properties and buy a block in Mandurah, WA. Now our second year will be a journey into unchartered waters with new trials & tribulations.

We've spent the first year hunting for those elusive cash positive properties, less than 5 years old and located in boom towns. What we've ended up with so far are a house Mildura, another in Kempsey and a unit in Sydney. Whilst they are cash positive, thats where the resemblance finishes.

And so Jan and I have decided to take the plunge and build from scratch.

Finding a block of land was simpler than I'd thought. I contacted a few of the project builders offering 'house and land' packages for ridiculously low prices in the suburbs of our home city (Perth). They were quite happy to point us in the right direction for a couple of small building blocks in Mandurah priced around $100k. We actually made the 1 hour drive to check them out. This was a new experience as we have never actually seen any of the other properties.

The blocks of land were in fact blocks of land - big surprise. Apart from that it was nice to see the surrounding houses but I had to admit I could have done that on "Street View' and "Google Earth'.

We put in an offer, did the haggle bit, pretended we weren't interested, and ended up getting 315 m2 just 2 minutes from the train station for $92k. Next came the visits to display homes and the questions I wished I'd thought about before.

Is it deep sewered?

Does it have gas, water, electricity?

What does 'Strata block' really mean?

What is an R17.5/20 zone?

What is a variation?

Is that kink in the fence line a problem?

What are the site costs, does it need retaining, whats the slope, debris, tree trunks, limestone.....

By some miracle, at this point I'm optimistically cautious we have somehow managed to dodge most of those bullets. Many builders refused to take on a strata block - others were put off by the shape of the block. Finally we found one not daunted by the challenge and we are in the process of contracting for a nice little 3x2 with double garage to be built.

Fingers crossed.