Making space: simplifying & happiness

22 March 2017Matt Hilton

5 years ago I bought my first investment property. It was well out toward the boundaries of Sydney's suburbs, with my guiding principles being that the place needed to be able to have a small enough loan that it wouldn't impact on my lifestyle/cause debt stress, and have a good potential for rental income and capital growth.

It was a great purchase. Low interest rates and some serious funnelling of savings into the loan early meant that after living in it for the first year, converting to interest-only and renting it out for the second, by year 3 it was neutrally-geared. From there, I contributed nothing more: the tenants covered interest and costs, and a couple of times there was actually a small net-positive income.

I still found it stressful though. My agent was a poor communicator. They rambled a lot, had poor organisational skills, and using their tools very poorly: I frequently got emails with the full content of the email in the subject line; body empty. Over the years, there were standard incidents that needed addressing: replacements and general maintenance. Nothing uncommon. Every time these cropped up, the way they were handled reduced my confidence in the agent. It got to the point that every time they rang or emailed, I was hit with pangs of anxiety.

There's a place for actively-managed investments, but that was definitely not my intention when I purchased the place. I wanted something that would tick along with little-to-no input from me. After all, I was paying the agent to do the management and remove the stress, right? Hmm. Not so much.

It all came to a head when 2 months of severe mismanagement of a water leak caused the tenant to eventually (and rightfully, in my mind) give notice and move out. This was an excellent tenant, too: they kept the place very clean and tidy, were always punctual with rent, and were generally just a lovely courteous person. Even after all the mismanagement, the agent wanted to chase them for damages for "moving out without proper notice or cause".

I politely told the agent we would be doing no such thing, the tenant would receive their full bond, and that this would conclude my management agreement with the agent.

As this was all happening, I read an article on how our current work and life setup is built upon a core of mistruths about our ability to effectively multitask (hint: we can't), and maintain a constant pace of zero-downtime busyness (hint: you can't). The article advocated aggressively pruning your in-flight things: projects, hobbies and interests, financial set-up, even negative relationships. Leave space for taking advantage of new opportunities, rather than always having every waking moment completely filled.

This made immense sense to me, and reflecting on my financial set-up, I realised that the investment unit added a whole host of complexities to my life that added up and all took their toll: extra bank accounts and logins to monitor, strata minutes to read/scan/shred, scheduled payments of council rates to manage, tax deductions to claim, an agent to deal with, and a property I'd lived in (and was emotionally attached to) to worry about. So... what if I just took this opportunity to sell the place and be done with it?

So that's what I did.

The sale settled late last week. Now don't get me wrong, it was never a bad investment. I was fortunate to experience some excellent capital growth over the ownership period. However, in selling it off, I've reduced complexities in my life, closed bank accounts, cut out a stressful agent relationship, and converted a large single asset with high concentration risk to a nicely diversified portfolio of index funds and real estate trust investments: all indirect, all someone else's problem to manage, and all beautifully diversified at much lower cost than the 4% agent's fee I was paying.

<Insert sigh of relief here.>

Having too many open doors saps your attention, and closes your mind to creativity, opportunity, and simply living an enjoyable life.

Is there a door you could close to make more space in your life today?