When Chris and Justine Boyle tied the knot in January 2011, they made plans while on honeymoon to get serious about property investing. Two years later they have made substantial strides towards their goals, thanks largely to Chris’s sales negotiation strategy.
Having bought their first home in 2003 – a two-bedroom unit in Brisbane, which they lived in until 2007 – Chris and Justine Boyle were aware of the ability to create wealth through property.
“That unit had some growth and gave us the leverage to upgrade to a house, a Queenslander in Kelvin Grove, which we lived in for a year and started renovating,” Chris says.
“We’d planned to live there a number of years, but we realised we were hurting ourselves by having such a big house with a big mortgage. We would be better off financially to start renting and invest instead.”
So they sold their home and moved in with Justine’s parents in an effort to save money. After welcoming baby Amelie to the family in February 2012, they were even more focused on their goal to get ahead through property investing.
“At first, we were not moving forward with our goals because our strategy wasn’t working for us. We were looking for blocks of units in Brisbane to do up and strata title, but the market was too competitive,” Chris explains.
After investing in some education and mentoring through Real Wealth Australia, they tweaked their strategy and shifted their focus to the Queensland mining town of Blackwater.
“We started the course mid-August, and by the start of September I had my buying rules in place and realised we needed to buy a cash flow property. Within two weeks, I’d shortlisted all the properties that were for sale and found the two homes that I wanted to buy,” Chris says.
“One was more of a development opportunity on a corner block asking $505,000, and the other was a cheapie with an asking price of $370,000.”
After negotiating hard, both properties were under contract within a day. Chris negotiated a discount of $48,000 on the first property, down to $458,000, and $41,000 on the second, down to $329,000.
All was going well until Chris, a stickler for detail, checked to see how the rental market was performing.
“In the space of three weeks, between the date that we contracted and the date we were due to go unconditional, the rental market in Blackwater dropped 30%, due to a combination of commodity prices dropping and a number of miners being laid off,” Chris says.
In panic mode, Chris hurriedly began to negotiate his way out of the properties by leveraging the building and pest clause. Fortunately, he managed to get out of both deals and even got his deposits back. But Chris wasn’t finished yet.
“I decided to start again on the cheaper property. My goal was to achieve a 10% yield, so I went back and told the agent I could offer $234,000, which would allow me to rent the property at $450 a week.”
The vendor counter-offered at $297,000, but Chris stood firm. Shortly thereafter, the real estate agent delivered the good news: he had a sale at $234,000. This equated to a discount of $136,000 off the initial asking price!
It was a successful outcome, but the whole experience was “a reality check”, Chris adds.
“Had it been two weeks earlier that we’d put in our offers, we would have already gone unconditional and would have been stuck with two overpriced properties. The worst case scenario meant we’d have had to fund them through negative gearing, which was the opposite of our goal,” he says.
“Cash flow is still our strategy, and now we’re looking for properties with good cash flow and growth potential. I’m also trying to get instant equity by negotiating hard on purchase price. I think now is a good time for buyers to be negotiating these sorts of deals.”
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