Why We Bought a House We'd Never Even Seen!

We'd arrived in Brisbane, hired a car and were ready for our trip to Byron Bay. We were looking forward to a great weekend spent with family and celebrating our good friend's wedding. On the trip I asked Jess "do you want to see it?". Being the ever punctual person she is, begrudgingly replied "yeh, if we have time!". I was referring to the property we had purchased in Brisbane almost 12 months prior. We'd never even seen it in the flesh. Of course, we knew it existed. After all the bills had been coming in and the rent was being paid. But we'd never been anywhere near the joint. Up until now I'd been relatively private as to sharing that information with anyone (hello public blog!). I'd been concerned with how people would view the decision. I was always prepared for the comments. "You idiot!", "Why would you do that!", "What a risky, stupid thing to do!". Then one day I decided to actually reflect as to WHY I had made that decision to buy a house Sight Unseen.

Best Use Of Funds

At the time we had gathered together a deposit ready to purchase another investment property. Obviously being a Newcastle boy I explored all options in the area. The market had gone through several years of solid growth. By this stage even the outer suburbs had risen to a level where I did not see value. I started to look at interstate investing. We had recently moved to Qld and my eyes were open to the fact that all locations throughout Australia still had an underlying demand for property. I started to understand the fundamentals as to why property grows in value. Overall, price growth is really just an outcome of demand exceeding supply. But it was important to look into what determined supply and demand. Economic factors, jobs growth, affordability, credit, infrastructure, macro and micro factors, building pipeline. This pointed me to Brisbane. I was amazed at the level of affordability in a city with a population exceeding 2 million people. The infrastructure pipeline was huge, interstate migration was the highest it had been in years and job advertisements were increasing dramatically. My overall target was pretty simple. Invest in an area with the largest population that was within our budget to buy a house with decent land content. Simples.

Technology

Lets be frank. Most of the people we ask for advice regarding property invested during a time where technology wasn't readily available like it is today. Ignore their wisdom at your peril but also realise the game has changed significantly in how we can access information. You can get an extremely good idea of a location via the use of google maps, streetview, online chat forums, Facebook groups, research groups, Corelogic data, vacancy rates, research media, ABS statistics, selling history, etc. Whilst nothing beats local knowledge, it sure is a great way to narrow down your search quickly and focus in on areas you should be targeting. Technology is also brilliant when it comes to the property itself. Take a look at online advertisements now and you will see the vast amount of info they provide the purchaser. Virtual tours, floor plans, measurements, video advertising, Facetime. All brilliant tools for gathering information on how a property presents. Of course we must be wary that all technology can be manipulated - Beware the over photo-shopped listing!

Used Professionals

One of the main reasons we were able to buy property sight unseen was the use of professionals during the process. We first engaged a buyer's agent. Someone who had expertise in the area, had significant runs on the board both professionally and personally, knew the buying process and was completely independent. The BA was paid only by us using a fixed fee model. They were totally impartial to what we purchased and worked well within our brief. They were brilliant in communicating everything we needed to know, allowed us to make decisions and we were in no way forced during the selection process. They have since been a tremendous mentor to me personally and educated us along the way. They were able to organise a local agency in the area to perform a 3rd party inspection. This provided us with a true reflection of what the property was like cosmetically and whether it was rent-able. A licenced building certifier also carried out a building inspection on the property. They were extremely thorough listing all defects no matter how minor. At the end of all this process I really had to ask myself - "what is walking through the property myself going to achieve?". We had all the information on hand and professionals had listed both the positives and negatives of the property. Ultimately - the decision was up to us!

Emotions

By buying the property sight unseen we were able to remain unemotional about the decision. Don't get me wrong - we were aware of the financial implications of getting the decision wrong! But by not setting foot in the house we were able to ensure our judgement was not clouded by feelings and emotion. These have no place when investing in property. The decision needs to be based on numbers and fundamentals. Far too often I see investors being burnt by emotional decisions. Buying brand new because its "shiny", disregarding a property because of the colours, investing in a suburb next door because its "what they know". Sure, by all means remain in your circle of confidence but unfortunately a property doesn't increase in value every time you drive past!

Result

We purchased a brick home 30kms from Brisbane CBD. House was rented from day one for $380/week. We've had no tenant issues and always pay on time. House has 4 bedrooms, 2 bathrooms, a 2 car garage and is set on 600m2 land. Not bad for a $323k purchase price! Since purchasing prices in the area have steadily increased. Comparable properties are selling for close to $400k with some going over this mark. Overall we have been extremely happy with the low holding costs and growth performance of the property. Of course every investment is going to have its hiccups but buying sight unseen is not as "dangerous" as some make it out to be provided you stack the odds in your favor by minimising the risk.

P.S. - Still yet to step foot on the property!

Our Brisbane Investment!

- The Tattooed Investor