Valued at roughly $1 million, it did not sell for 18 months, and then the bank stepped in, foreclosed, and sold it for about $650,000.

The property investor and coach said she had learnt from her mistakes during the last housing market downturn, and this time she is in the position to capitalise on distressed sales...

“It’s better to have not bought and wished you had than to have bought and wished you hadn’t”.

He knew this to be true from his own mistakes (or what I would prefer to call ‘lessons’).

If you’ve ever bought a property and not gotten the results you wanted, you’re not alone, it’s way more common than you would think.

Just last month I saved one of my clients from making what could have been a huge mistake by focusing her attention to the potential complications of a property she was looking to buy.

#1 Buying “out of town” without local knowledge

#2 Making an “emotional” purchase instead of a “business” purchase

When we first met, she was very committed to investing in a family home close to where she lives, which would have been cash flow negative, thereby, moving her away from her passive income goal.

So, I suggested she put on a business hat and look further afield.

She came to me excited that she had found a great property in an out of town area. There were two red flags that stood out to me as a seasoned investor.

1. Find out more about the area and start thinking like a local. These were three one bedroom units on separate titles. Why were they not being sold individually? They seemed like a bargain with an Auckland hat on, is that true of this area?

2. The roof needed replacing, not major, but with a steep site what would the scaffolding cost be?

Those two red flags turned out to be a very big deal.

This part of the country is mainly flat so there was little interest for one bedrooms with forty steps to get to your front door and no on site parking. The two companies she approached about the roof wouldn’t even quote on the price of scaffolding on that slope.

As an investor myself, I have had to learn to take the emotional Quadrant One* family home (in an area I love) hat off to avoid the Quadrant Two* mistake of having to top up a second, third or fourth mortgage, making me cash poor.

Instead, I learned to put on my business hat and do the numbers looking for a Quadrant Four* positive passive income (from day one – yes even in this market) property and use Quadrant Three’s* active income to make up a deposit instead of leveraging (if needed).

A lot of investors accidentally find themselves cash poor, stressed and disillusioned they bought the wrong property. Instead you want a cash rich passive income property to provide you a lifestyle of security and freedom from buying right (even if you have to get help to do so).

*Find out more about the quadrants in international best-selling book Property Quadrants www.propertyquadrants.com

Renovations are one of my favourite things and something I’ve never lost money on. Yes, you can make money on renovations if you follow these four critical components:

You make money on your purchase and in a down market, you can count on your end value going down from the time to buy to the time you sell. Therefore, it’s critical you find a motivated seller. This is easier than you think as homeowners are the main buyers. They don’t see what the house can be, only what it is. There are very few buyers for a renovation so if the vendor is motivated, they will meet your price.

In a cold market, your buyer will be a homeowner and they will definitely get a building inspection report. Those reports kill deals. Buyers pull out on the smallest thing. You need to get a report done first to make sure you can fix everything on the report and there are no unexpected, expensive surprises. Then get a post renovation report and have both available for your buyer.

When there are 10 properties for every buyer to choose from, yours must pull at the heartstrings of your buyer. Buy a property that has something extra to offer. Such as an extra bedroom, rumpus, space for the trampoline, walking distance to shops or transport, sleep out, granny area, extra bathroom, big garage. Something more than the standard three bed, one bath.

Selling is an art. In a cold market the agent you choose could make or break a deal. Ask for a referral from property traders or look for award winning agents who have the number one status in their company.

When I buy my trade, I start with my sale price, deduct the costs, deduct my profit and that’s my buy price. When I set my sale price, the agent I’m buying it off will give me a ‘maybe’ price (it ‘should’ sell for $900K) but I use a definite price (I will get $800K) and that’s how I do my numbers. If it sells higher and I make more, I can live with that. If I listen to the agent and get less that’s my money being lost not theirs.

Those are rules I follow right now. You must have all four critical components in place for a profitable trade.

Drop me an email and let me know what’s your biggest obstacle to completing a

renovation?