Off-the-plan apartments and property clubs: The combination that almost ruined this investor’s journey

She decided to buy an off-the-plan apartment in Prahran, and while buying off the plan is a strategy most investors tend to avoid due to the associated risks, the property investor believed in its property market’s potential for growth.

Jillian said: “[Prahran is]... just a beautiful area and it was actually where I went to high school as well, so I knew it, [and] I knew that it [has got to] go up [in value] — that was seven years ago.”

As she dabbled in off-the-plan investment for the first time, she also decided to get involved with a property investment club.

“My understanding is that they have buyers that go out and things have got to pass a certain criteria — it's got to be next to transport, and schools, and in growth areas... and then, they also assess based on reputation… rental demand [and] rental yield,” she explained.

Blind 

While she admitted having trusted the property club quite “blindly”, Jillian still made sure to do everything right based on her own standards.

The property investor shared: “We went down [the block] when a lot of [the properties] had been built — sort of like a pre-inspection.

“The actual apartment we had wasn't finished, but we could go in other ones that were, and that sort of ticked all the boxes. We made sure we bought the one with the car space, because in Prahran, you can't park anywhere,” she said.

However, when her property finally went onto the market, she found that it was flooded with similar properties for rent that it took her about three months to find a tenant.

According to Jillian, there were 107 properties in the block where she bought the off-the-plan apartment, and there were two other blocks built by the same developer in the same area.

Seven years later, the $420,000 property, which rented for $380, was valued at just around $410,000 to $420,000.

Jillian said: “We had that idea where you sort of double [the value] every 10 years… We thought, 'Well... the two other properties in Sydney haven't doubled, exactly, in 10 years. They've maybe doubled in 15 years …' "

"We should have gone up half in seven years… We've got another apartment and one villa and they have sort of done that.”

In hindsight, she knew that the time and effort she was able to save by buying off the plan and trusting a property investment club will not make up for the due diligence she failed to do.

Given the chance to work with the same club for future transactions, she would make it a point to know the numbers relevant to her investment.

According to her: “I would say [to the CEO], ‘Can you please give me the figures as to why you did this property [to] one of your portfolios, anyways? And then, maybe give me the figures of… everything that was offered that year so that I can see where [the investment is headed]…”

“[So I would know if] everything they have done was a load of garbage or whether it was just [the fact that] I picked a lemon,” she concluded.

It might take decades before the property takes on a more positive flow, but since Jillian bought in a good area, Smart Property Investment’s Phil Tarrant believes that “it'll sort itself, actually, in good time”.

 Tune in to Jillian Bullock’s episode on The Smart Property Investment Show to know more about the property investment lessons she learned at a young age from her parents, her dreams of property development and the reasons why she began property investment.