Real Estate Investment is not for sissies!

After a difficult week, I now need to write a blog which I promised will always be positive. I have decided to list all the difficult things that happened and turn them into a positive.

This week I started the process of selling a property which cost me dearly, fortunately I learnt a number of lessons in this process. Firstly, I bought an investment property for an emotional and not a business reason. Secondly, I went into a partnership trusting someones word and not doing it legally.

Two years ago a partner and I bought a beautiful old Victorian style house which had been badly neglected, the idea being to turn it into a guest house which would hopefully pay it's own bond and other costs and after a year or two start making a small profit. The agreement was that I would invest a substantial amount to bankroll the renovations and my partner would extend the bond on one of his other properties to pay his half of the renovations. Well I should have insisted that we open an account in which we both deposit our share of the renovation up front, but I trusted him to live up to his word. Renovations started by breaking the house and making it totally inhabitable, soon after this was accomplished my cash ran out and everything stopped, I was asked to bankroll the renovations further because of his current (over)exposure the bank was not prepared to loan him anything else. Well, fortunately I started to see the writing on the wall and was not prepared to spend anymore. He has now finally offered to "buy" me out, which really means he commits to pay the bond and will pay me about 25% of my initial investment back in 12 months time. The biggest positive outcome from this mess was that I decided to move to RE/MAX in the middle of this mess!

Many other people burn their fingers while investing in property and I found this story fascinating Real Estate Investing Is Easy Right?? In short this guy buys a property as an investment that he renovates and then tries borrow against the new value only to then find out that a portion of his dwelling in on his neighbour's property.

Yet another sale of mine was rejected by the banks this week. I felt so sorry for the buyers, they are so keen to get away from their current living conditions. They are living in a hostel and although they have a large living area they are surrounded by many other people. They have sent their daughter away to live with her grandmother in fear that she might be raped in these overcrowded conditions. They were going to buy the property in partnership with another couple and this way they qualified but the other couple had some bad payments. Looking at the big picture this was probably better in the long run, if the partner was a bad payer he could have gotten them in deep financial trouble in future.

Sad new was the death of Mama Africa - Miriam Makeba. She was another example of the miracle of South Africa. She was treated very badly by the previous government, but when democracy came to South Africa she came home with happiness and not bitterness and hate.

Well at least I ended the week on a good note - I was invited to go and see Beauty and the Beast and really enjoyed it.