Forum Replies Created
Ask your accountant but I think its capital improvement as the fact that the roof leaks would have decreased the purchase price of the property and you are now just bringing it up to an acceptable standard.
There should be enough upside to R/E investing that you do not not need to get into any grey areas regarding tax. Watch out for tax audits.Andrew
Xenia
We are from Adelaide and have just done a Lease Option deal in the Northern suburbs (Paralowie).
The area is not too far from home so that may have helped choose the area. Also there has been some good growth lately so I hope it continues for a bit longer at least. Houses in the area can still be purchased for a reasonable price compared to properties closer to the city and beach.Good Luck finding the next deal.
Regards
AndrewJason
Some agents we have found have been reluctant to allow us to add clauses like “subject to acceptable finance” and “subject to acceptable building inspection” as they realise that this can be a huge cop out for us (who gets to define accepatble). Another way around this, provided provisional finance is approved, is to sign the contract (dont pay a deposit until after cooling off) and arrange valuation and building inspections within the cooling off period (3 days). If the valuation or inspection dont come up ok then just cool off or if they don’t happen in time then cool off and re-sign the contracts again. We have done this a few times and it was n R/E agent that put us on to it initially. Getting the valuation done quickly enough can be a bit touchy but work with your Finance Broker on this one.
In SA there is a section on the REISA contract allowing for time to find finance but if the bank approves the loan but the bank valuation does not come up ok this does not technically mean that the loan has not been approved. As such it can get messy getting out of the contract as the agent may want written confirmation that finance has been declined and you have paid a deposit etc. etc.
Good luck in Prospect we have a couple there and have done well.Regards
AndrewSoma
I look forward to seeing your effort using the REISA form.
Andrew
Hi Soma
I am also from SA and are still trying to work out how best to create the contracts for L/O’s witout spending a fortune.
I agree with Tim that in court there is no substitute for a watertight contract and as such all money spent is worthwile. But out of court I think that spending the time with the purchasing tennant to make sure that everyone is clear on the terms, conditions and outcomes of the transaction and then maintaining close contact with them to see that all is going well may prevent the necessity of having any cut price contracts tested in court.
Obvoiusly in the long run having good, legaly binding contracts will make the process easier and quicker to complete but by then possibly the cost of preparing the documentation may not be such an imposition.
At the moment I feel that there may be a lot to be gained by getting my feet wet and getting a couple of deals under my belt using some basic contracts and then spending the money on some better ones later. Obviously your level of risk aversion may make you feel differently.
To anyone else who has some lease option startup stories and gems of wisdom I would love to hear (read) them.
Thanks
AndrewMichael
I attended WB’s course last year. The course was informative but follow up help and replies to requests for further information was non-existant. Be carefull and get all questions answered on the day.
Andrew
