My Worst Investment
  • 10 December 2017

My Worst Investment

One of the highlights of the year for me is travelling around the country talking with members and being asked all facets of questions. Many of these questions are so relevant and pertinent that I use them to write articles to inform others. I was recently in Perth at an event talking to some members when I was asked ‘what was my worst investment?’

I honestly don’t have to think too hard about this question, it was my England misadventure.

Many of you would question why I would purchase in England. Well, during the early stages of the Club I was watching members attaining properties through the Club and I was amazed at how many people were not diversifying their portfolios. I continually saw people purchasing in their own backyard again and again.

I quickly realised that I had done the same thing because I lacked confidence in buying outside of my area or state. As the Club expanded and infrastructure was implemented into all the good growth areas in Australia our members and I were able to diversify with confidence within the country. However, I wanted to diversify my portfolio further and when an opportunity arose in England I jumped on board.

The England Opportunity!

The opportunity in England was two 14-year old full brick homes. I aimed for structurally sound full brick properties to avoid any maintenance and repair issues associated with lighter constructed homes. I carefully researched the market, crunched all my numbers and everything was seemingly okay, however, this is where my nightmare began.

The First Mistake/Agent!

The agent who I had been liaising with ‘forgot’ to tell me that the second house used the power from the first and to rent the homes I would need to have power individually to each. The agent's failure to disclose this information to me was my first costly mistake, but unfortunately, not the last. Oh well, on to agent number two.

The Second Mistake/Agent!

With my new Agent in tow, I had a new Lexus put into the garage of one of the houses for Club members to use if they wished to stay at the property while travelling around England and Europe. Only one person took up this offer and so after a few months I decided to either bring the car back to Australia or sell it. The agent decided he could sell the car for me and so I sent him the required forms.

He then promptly vanished with my new car and after countless international phone calls to the British local police, they said it was a civil matter as I gave him the forms to sell the car.

How do you find the agent or retrieve your stolen possessions? Well, in this case, you don’t. It became impossible to deal with the situation from 10,000 miles away and so I hired a new agent to help manage my disaster.

The Third Mistake/Agent!

The English winter was in full swing and I was proud that I had ensured that my properties were sturdy full brick homes. However, I had been informed that one of the properties was deemed as un-tenantable due to the cold. Days turned into months and after five months I had enough! I engaged another agent to see if he could find a tenant.

To my absolute surprise, the new agent told me that it was rented and that they had been living there for at least a few months. As it turns out the third agent I assigned to my properties, had been there rent free without telling me for over 4 months! And worse still, it took a further two more months to evict him and to allow the new agent, number four, take over.

The Fourth Mistake/Agent!

As the new agent, number four, had helped remove the old agent, I felt that this new agent would perhaps do a good job and properly manage my properties. Upon appointing the new agent they quickly informed me that there were major upgrades needed in the kitchen of both houses and they very nicely organised a quote for approximately 30 thousand pounds for these renovations.

They must have thought that we had never seen the properties or only seen them briefly. We queried the need for this and sent an independent qualified tradesperson through the property. He came back and said that at most it would need a few hours by a good carpenter to bring the kitchens up to new.

I had learnt from my previous mistakes, all three of them, that I should replace this agent before he costs me even more money! So welcome agent number five.

The Fifth Mistake/Agent!

This Agent requested that we agree to them spending up to 300 pounds a month on "urgent" issues for the tenant. This seemed fair and reasonable, however, it just turned out that we got invoices every month for approximately 300 pounds. Agent five did not survive past this point and so we moved onto Agent six.

The Sixth Mistake/Agent!!

By this time we were looking at selling the property but the agent valuations came in well below market value. I'm well aware that agents organise low valuations on unsuspecting sellers to either get quick sales because they are desperate for commissions or they know someone suitable to buy or offer the property at lower prices for a kickback or secret commission at the seller’s expense.

I thought I would play their game and asked them to supply some information on properties that we could buy as an alternative once we sold. The properties that they offered Kathy and I were in a worse condition, older and surprisingly, more expensive than the valuations which they provided for my properties.

So What Happened?

Well, after roughly 10 years of mistakes, disasters and lessons learnt, I still own these bloody properties. Not much more can be said except I now am forced to manage the properties, from 10,000 miles away myself. Weirdly enough, they remain tenanted and they provide a good return.

As a side note, many of you would be wondering about the car, well after years of fighting my way through red-tape I found out what happened to it. The agent has simply returned the car to the dealer for a tidy sum and walked away, roughly £23,000.

Another story which comes to mind...

Is when Kathy and I first got married we purchased a property and the agent informed us that the hot water system needed to be replaced at a cost of $600 and the new regulation required extensive copper piping. We called a friend of Kathy's who was a licensed plumber and we asked him to double check and he came back and had fixed the problem and it cost under $40.

That's the problem with diversifying, it is scary and can be very dangerous. I completely understand why people are intimidated and will not expand their portfolio to contain interstate properties, which is vital with property investment. It is safe in your backyard and there are so many sharks out there, that is why I am proud of the Club and what we have been able to achieve for our members.

Many have used our strategies and our free services to ensure that when diversifying their portfolios they are protected and the sharks are kept at bay.

Kevin Young

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