Nathan’s Interesting Property Deals.
The cheap, the weird and the wonderful.
Once you have built your foundation portfolio, you will find that there are all sorts of weird and wonderful property deals out there. Each has a specific purpose in an investor’s journey, whether it be to build a good dose of equity, increase cashflow or generate capital through flipping. Here are some more interesting property deals that Nathan has done over the years.
The super cheap property deals.
It may be difficult to believe, but Nathan Birch from Binvested has spent less on a property that many people spend on their first car.
“The cheapest property that I’ve ever picked up was for $2,000,” he says.
That’s right – $2,000.
He went on to sell it for $20,000.
“My legal fees were almost the same price as what I paid for the property,” he says.
This was not the only crazy cheap deal Nathan secured over the years.
He also purchased about 15 properties that were less than $20,000 in price. These were not the sort of properties he built his foundation portfolio on. They were just property deals he picked up when he had some cash and was trying to flip to make money after leaving the workforce.
“I don’t own any of these properties anymore – I’ve flipped them on,” he says.
He also bought two regional properties that were $8,500 each.
“They were vandalised properties and I renovated them for $40,000,” he says.
He rented them both out for $250 per week before eventually selling one of them for $120,000.
What happened to the other one? Well…
“One of them got blown up – it got vandalised again and I got a $200,000 insurance pay out on it,” he says.
He then sold the land for $15,000.
Nathan says he has bought units for $20,000 that he rented out for $200 per week. They used to sell for $120,000, but they were in very depressed markets at the time he purchased them.
“When I bought them, they were like the dogshit – no-one wanted them,” he says.
Now, they sell for about $60,000 to $80,000 – that’s as much as four times the value Nathan paid – and don’t forget the rental income that came in every month.
Sharing the super cheap love.
Nathan didn’t keep all of these properties for himself. He also purchased properties for clients that were going for $250,000 – but he got them for $30,000. They were bringing in $400 per week in rent, which is a decent $20,000 a year.
This meant that after just two years, the clients had made all their money back again through the rent.
He bought ten of these all up – one for himself and 9 for his clients.
Nathan says that these super cheap properties were not foundation properties but they did help him and his clients during the different stages of their investing.
“Those deals were good for servicing, for pushing up my income,” he says.
They wouldn’t have been good assets to hold over the long term, but they helped his cashflow and made him a good profit once he sold them again.
The weird ones.
Nathan has purchased properties that you wouldn’t usually see advertised on realestate.com.au.
He has had a couple of obscure properties in which there was an estate being built and after five or ten years the developer sold the original dwelling.
“It’s like a weird block in a weird corner of an estate. The house has to be knocked over and hasn’t been lived in for ten years,” he says.
“It’s a bad sort of property.”
“Normally the house is in a far corner of a block or the front of it faces the backyard, or the backyard faces the street.”
Since the property is so obscure, it gets sold at land value, he says. Most would demolish the building and start again – but not Nathan.
“What I do is I go in and renovate the house,” he says.
He bought one that was like a three-bedroom house but it was attached to the back of a farmhouse mansion. It was done up as a pool-side cabana, with windows along one side of it.
“What I did was I left the house, worked with what the bones were, tried to decorate it a bit nicer and built another property in the back yard.”
It was in Kellyville, and he picked it up at land value for $445,000. He spent $50,000 on renovating the house and a further $200,000 on building a new property. All up he spent $700,000 on it – and now the property is worth $1.7 million.
“At the time of purchasing there was only going to be $200,000 profit in it, but the market went up.”
He was also able to build it better than what he had foreseen – so, a few things worked in his favour.
However, he wouldn’t have been able to do it without having a foundation portfolio under foot. He needed capital at hand in order to execute this negative cashflow strategy – but it certainly paid off.
Nathan still owns this property today after purchasing it about five years ago.
The wonderful ones.
Despite the super cheap and the weird properties Nathan bought over the years, some of his favourite purchases were the bread and butter properties he used to build his foundation portfolio with.
“The main properties that I bought were the cheapies in Sydney for $150,000 and the cheapies in Queensland for $150,000 or $200,000 in order to build a solid foundation portfolio,” he says.
“Once I had actually achieved those sorts of properties, then I started buying the weird stuff.”
“But, that weird stuff is too risky without having those foundations laid properly.”
He bought these bread and butter properties under market value with an upside for growth and a strong cashflow – factors that enabled him to minimise risk and maximise gains without sacrificing his bottom line.
The properties allowed him to build an asset base that would support him over the long term. They helped him execute different types of property deals such as commercial buys and development projects by providing a capital base and a source of income.
Really when you think about it, they are the roots of his success. No wonder they are some of his favourites.