The Property Pineapple - Jim Croft

“It was literally all the money was pouring into a hole.”

Sharon’s guest on this episode of The Property Pineapple is hotelier and family man, Jim Croft. Jim and his wife bought their first property as an investment in 2007. Although optimistic about its investment potential, they also chose the place based on it liveability, in case they would need to stay in it longer than first planned.

Jim wanted a place a little further out of town with some land, but his wife pushed for a property more central, with a focus on short-term gain. They compromised and opted for a blue-chip suburb as a safe investment option. The place was an apartment in South Yarra, a short walk to St Kilda Rd, the city, and the MCG.

The apartment came furnished, but Jim and his wife weren’t fond of it all. So they purchased new furniture, a TV, cutlery, and other assorted things, and were able to increase their rental yields by over 50%.  

They also owe much of this increase to them being ruthless in deciding who could lease the property. They decided to offer short-term leases, targeting professionals living away from home, who needed to be close to St Kilda Rd for work. Many of these professionals are supplied with a living away from home allowance, which is often enough to finance long-term hotel stays. Jim and his wife’s apartment presented a far cheaper option and proved a great strategy.

However, it didn’t always turn out the way they would like. One time, a tenant provided false information on the application, and they discovered someone completely different occupying the apartment. They had also changed the locks and Jim suspected they may have been manufacturing drugs in the property.

The investment didn’t suffer much vacancy because of the short-term leases, but their finances were impacted by re-lease fees from agencies. This frustrated the pair, and they eventually found an agent that wasn’t intent on taking advantage of them.

Jim as much to share about the Body Corporate at the apartment building. For the most part it didn’t present an issue, as there were not many extra features at the apartment building. However, there were some significant ground works that needed to be completed, and Jim was hit with a $13,000 bill. This money was essentially thrown away, as the works added no value at all to their investment.

Jim continues to explain some of things investors may find themselves having to pay for through their Body Corporate, also discussing sinking funds. Jim then imparts some great wisdom about depreciation schedules, particularly in regards to his experience with the furnished property.

Then in 2008, Jim and his wife purchased a unit in a refitted heritage building in Kew. This complex had a pool, tennis courts, full-time maintenance, and so attracted hefty annual fees.

This new place they lived in for a short time, before vacating and finding a tenant. Jim offers the piece of advice for investors to be actively involved with the choosing of their rental tenant.

After a couple of years of tenancy, they took back the property and started renovating, adding a new kitchen. The plan was to sell the place when they were done. Jim contracted the work out, but was an active project manager, running around town picking out many of the materials needed. When doing this, Jim always had in mind the potential buyer, and so thought about what kind of fittings and surfaces they might like. 

They then sold both properties in 2013, using the returns to buy into a business and purchase another property that would be their family home. They lived there for a time, before needing to vacate in order to be closer to their business. In the interim, they had a daughter, and are gearing up to moving back into their family home in the not-too-distant future.

About Sharon’s guest, Jim Croft…

Jim is a father with a young family. He is the franchisee for a chain of serviced apartments in Melbourne, where he currently lives with his wife and daughter.

About your host, Sharon Taylor…

Sharon heads up the research division at Performance Property Advisory. She is responsible for the aggregation of economic and property data sources, as well as deep analysis of the data to provide quarterly reports on each capital city of Australia. 

These reports identify between 5 and 8 submarkets in each capital city, and provide an opinion as to the short term performance of each submarket. This information is vital for clients to maximise the performance of existing assets, and also for selection of new blue-chip investment locations.

 

‘The Property Pineapple’ is one of three segments you will hear on the Performance Property Data podcast. Released fortnightly, and hosted by Sharon Taylor (Research Analyst - Performance Property Advisory), the show presents listeners with stories from real investors, discussing their wins and admitting their losses.

‘Property Insiders’ are also released fortnightly and are conversations between David McMillan (Director Acquisitions - Performance Property Advisory) and industry leaders offering knowledge and expertise.

And ‘Performance Insights’ are released every Wednesday and Friday, giving you technical information and the lowdown on key property markets around Australia. These episodes are also available as short videos at our youtube channel.

For more information about how Performance Property Data can help you maximise your investment dollar, head to www.performancedata.com.au