What can you smell?
Weird title right? The photo taken by the drone does make this property look like a typical Kiwi unit block. Well it’s not. It’s a large site in a great location, with three existing units, however, it was far from a liveable state. Lucia purchased this property and after settling, she asked me to go with her to view and take before and after photos. When I got there, it was like a house of horrors, I couldn’t imagine how people could live in them, so who in their right mind would walk into this property and say, “I smell money”?
Let me walk you through this property, but first some context. I spent my childhood in a third-world country, the Philippines. Manila was the city I grew up in, which has a dense population of 14 million, so you can imagine how living spaces are quite tight. At one stage we lived in a 4×5 meter shared space. Now, I say ‘shared space’ because its main function was to sell products during the day, it was a dairy. So, in terms of compromising the standards of living to be able to have a roof over my head, I still wouldn’t live in anything like this block of units.
As I walked through the door of unit 1, the first thing that hit me was the smell, which was then immediately reinforced by the horrifying sight of the living spaces. The kitchen had mould in places I didn’t know mould could grow, the bedroom walls looked like they were crying, there were holes in the floor, and the bathroom was on another level of disgusting. In some areas, wooden boards covered up sections of the floor because you would literally fall through rotting floors and holes, and black mould covered every bit of surface. This got progressively worse as I went along, photographing the condition of these units. The nastiest scene left me complaining like a privileged little boy. As I carefully navigated this post-apocalyptic scene of a property, I heard someone take a strong inhale and say, “Mmm, I smell money”, to which I replied, “I smell something, but it certainly isn’t money!”.
A key trait Lucia has is her ability to see value in something. She teaches people to see past the obstacles that’s stopping them from achieving their goals. Towards the end of our visit she noticed that I was struggling, she just laughed at me and said, “You have to change your mindset. Anything can be fixed, it doesn’t matter if it’s leaky or even if it’s meth contaminated, I don’t care because things can be fixed and that’s not an issue to me.”
This was my epiphany moment. When she made this statement, I suddenly realised that I was being superficial with the looks of a property and I was missing the point of investment.
Why did Lucia choose to buy this property?
Lucia purchased the property for just over $1.5m, she engaged with the group partner renovation specialist to fix these three units and maximise their potential to add value. As you can see, her team did an amazing job turning what was unliveable to someone’s warm place to call home.
The renovation cost approximately $150k, bringing her total investment to $1.65m. Now, these ‘as new’ units provide three more quality places for people to live, the rental income and return for Lucia’s investment totals $1,680 per week ($520 for two, $640 for the other), if she’s paying principle and interest on the $1.65m investment, she would still be positive $243 per week if the borrowing was at 100%, the new value of the property is approximately $2.2m, a whopping $700k gain in only 6 weeks.
Being a seasoned veteran in property investment, Lucia’s mentality is always seeing the potential in a property rather than looking at the cosmetics, and she teaches this to anyone who is willing to learn. However, she never forces change in people, they need to want to change for themselves. That was the moment that shifted my mindset, because I let what I saw in front of me get in the way of seeing what could be.
I guess what I’m trying to say is, if you are cynical like me when it comes to viewing properties, then you need to catch the vision. Your goals of owning a dream home doesn’t start with quickly turning away when you smell a bit of must in the air. My advice is, as someone who still needs to purchase their first house, have a good sniff around, and then sniff some more, because when your nose gets hit with that first hint of potential, hold on to it and make it work for you.
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