Hans Jakobi - His New Office

Hans Jakobi continues the story...

The back fence had been kicked in and almost everyone who looked at this building said "Oh yuck!"

Ironically there is a real estate agent's office next door to the building.

One evening my wife and I were driving into Bathurst and we talked about expanding our offices. We had already been given Council approval for the construction of a new building on our farm and the cost estimate for this work was around $55,000.

We also considered buying an existing building in Bathurst or Lithgow because these are larger towns with a bigger workforce. Lifestyle is very important to us and therefore the biggest objection to that option was that an office in Bathurst or Lithgow also meant an 80km round trip and a daily commute of over an hour. This was not why we moved to a farm!

So we looked at what buildings were available in Portland, which was only 10 minutes away by car. Out of the three buildings that were available, the old Westpac bank building was by far the most solid, even though it was also the one in the most amount of disrepair.

We decided we would see if we could buy it and peered in through the dirty windows to see if we could spot a real estate agent's sign and find out who had it listed.

Since there was no sign, we asked our solicitor to find out who the owner might be. Within 24 hours she came back with a list of potential owners and it was now over to me to do the ringing up.

Once again, we were in the car and my wife was driving, so I could do the phoning. The first person I called was in fact the owner and he turned out to be a doctor who lived about 600 kms away. He had bought the property as an investment and hadn't been near it for many years (if at all). He had no idea what it looked like and it soon became obvious that this property was a pain for him.

Here's how that first conversation went:

Hans Jakobi: "Hi, I'm Hans Jakobi, I'm ringing from Portland and I'd like to speak to Dr L."

Receptionist: "He has a patient with him, can you tell me what it is about?"

Hans Jakobi: "Sure, it's just a quick call to ask him if he owns the old bank building in Portland and if he might want to sell it."

Receptionist: "Let me check with him."

Hans Jakobi: "Thank You"

I wait for just a moment and then I'm put straight through to the doctor.

Hans Jakobi: "Hi Doctor, I know you are busy, so I'll be very quick. I am looking for a building for my business in Portland and was wondering if you own the old Westpac Bank building in town?"

Dr: "Yes I do."

Hans Jakobi: "Are you interested in renting it out"

Dr: "Yes."

Hans Jakobi: "Would you be interested in selling it?

Dr: "Yes"

Hans Jakobi: "Great. I'm just in the car at the moment and you are with patients so let's talk later and see if we can work out a deal. What number can I talk to you on later tonight and when would be a suitable time for you?"

Dr: "Ring me on XXXXXXX at 8.30 tonight and we'll talk." (The doctor gave me his private mobile number. Do you think he may have been interested to talk with me?)

As you can see, that first conversation was short, sharp and to the point. I listened to the doctor's voice very carefully and detected that he was keen to talk with me.

When I rang back that evening I explained that we had already received Council approval to build another building on the farm and that I was looking at this as an alternative option. (I'm indicating to the vendor that I have other options.)

I also indicated that the cost estimate for the construction of this new building was $55,000.

I then explained that I understood that if I were to purchase the bank building, I'd also be acquiring another portion of land and that I would be willing to pay slightly more than $55,000 for the land and building.

Make me an offer!

The vendor asked me to make an offer, so I offered $70,000 which he accepted immediately.

Just prior to exchange of contracts, we became aware of a Council requirement for the strengthening of the awning on the building and also that the roof was leaking and would need to be replaced. Because the Council requirement had not been disclosed to us earlier we used this to reduce the purchase price by $5,000.

Within the following 6 days we had settled on the building at $65,000 and during the next 6 weeks we spent around $35,000 completely renovating and repairing the building internally and externally.
This meant that our investment in the building was $100,000.

What's it worth now?

About 9 months after we had purchased the building, I spoke to the neighbouring real estate agent on his way home and asked him how things were going. In the course of the conversation he mentioned that he recently had his building valued. Casually I asked him what he thought our renovated building was worth.

His reply was as follows: "I'm not a valuer, but it would have to be worth about $200,000."

Even though I have no intention of selling the building, I was rather pleased with his reply.

Wouldn't you be?

Here's what our offices look like today:

hans jakobi image  hans jakobi graphic

  

If I had to exit the property for any reason, do you think it would be easier to sell in it's present condition than prior to the renovations?

Do you think I've made money with this deal?

The strategies and techniques I used to purchase this property and to add value to it, are just a few of the many tips and ideas which you will find in the Super Secrets® To Real Estate Wealth course.

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