The Property Investment

Regular readers of these blogs would not be surprised to know that I’ve spent a bit of time with our pest inspector, Greg, over the last 12 months. On his most recent visit he told me about the situation his brother-in-law has found himself in.

The brother-in-law has an investment property in Brisbane and, not one to trust a local pest inspector with such a large asset, he contacted Greg to get him to check over the property. Greg lives in Queanbeyan, NSW, just next to the ACT border – a bloody long way from Queensland’s capital city. Nevertheless, Greg really knows his stuff so his brother-in-law figured it was worth having to reimburse Greg for the return trip in petrol money.

Before Greg arrived at the property he sent a courtesy text message to the tenant to give her the heads up on when he’d be there. He received a very curt reply. Things went from bad to worse when he arrived and quickly realised that the tenant was quite obviously on drugs. Her partner arrived a short time later and a decent sized barney ensued, making concentrating on the job at hand difficult. However, even with these distractions, finding termites was not hard. They were everywhere.

A quick call to his brother-in-law and Greg was able to pass on two pieces of bad news in one go – “Sorry mate, but your tenant’s on drugs and the house is being eaten.”

The tenant was given her marching orders, but not before she (or her partner) left their mark on the property, literally. Greg had another visit after she’d been evicted to discover a bunch of fresh holes in the walls, and that the places where the furniture had been were hiding even more evidence of termite infestation.

So not only has this poor landlord been hit with the triple whammy of bills for treating the termites, fixing the damage from them and also the damage from the previous tenants, but the bills have arrived at the same time as the property is no longer making any income.

If you think I’m telling you not to invest in property, I’m not. Property is a good asset class to have your money invested in, if you go about it the right way. Having several hundred thousand dollars in one property leaves you open to a huge amount of risk. There is a lot of evidence to show that investing in property trusts is a much better way of spreading your money, avoiding the high entrance and exit costs associated with direct property investment and getting a better potential return.

And trusts don’t get eaten by termites.

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