Forum Replies Created
ajsc79
We have just finalised a deal, with settlement tomorrow, that we bought in January 09. It was a relatively straightforward subdivision and reno of the existing house
Purchase price $250,000
purchase costs $10,000
subdivision $20,000
reno $45,000
holding $15,000
agent fees $ 9,000Total costs: $349,000
House sale: $310,000
Land $145,000Total sales: $455,000
Total profit: $106,000 on a 9 month turnaround.
We do need to pay GST on the deal but before GST the whole deal has about a 30% profit on total costs.
Cheers
K
Normally, developers look for at least a 20% profit in a deal. However, in this depressed market, where there are loads of bargains, I don't look at anything unless it has at least a 25 – 30% return. So, based on your total costs (purchase price plus subdivision, holding etc costs) I would be wanting at least a profit of $90,000.
Cheers
K
Call Susan Banks from SBS in the Brisbane CBD. Her number is 07 3221 1100. She is fantastic.
I have recommended her several times on this forum and the feedback has always been excellent.
Cheers
K
Investor123 wrote:I would not say that Personal Loans and Credit Cards are bad debts, they are just unsecured debts. Bad Debt means you have had collectors after you or a bad payment history.Actually, personal loans and credit cards are bad debt. Bad debts are debts on depreciating assets. Most cars, electronics, general bling etc are bad debts. This is opposed to good debt, which is a debt incurred in order to be able to buy an appreciating asset, eg, property. I have millions of dollars worth of debt, except that mine is all by way of mortgages on a property portfolio that is increasing in value. This is all good debt.
But back to the point. Dimitri, I wonder whether it would be worthwhile going to see someone who specialises in debt reduction. There are people/companies, who will help you write a budget, organise consolidation of debts and help you make firm plans to eliminate debt. I know that several people will tell you that you can do this all yourself, but I would think that if you have incurred (jointly) $120,000 worth of bad debt, that you will probably need some help and support to change your spending habits.
But apart from that, I agree with the other posters. Apart from no banks lending you money with such a significant debt, property investing is not a "get rich quick" scheme. To my mind, it is one of the most reliable methods of wealth creation, but it takes a lot of discipline and in this market, it will be costing you money to start off with. Decent positively geared properties are not easy to come by, so most properties will take money out of your pocket, at least in the short term. Also, with the market quite sluggish, it will be a while before any decent capital growth is seen.
Pay down your debt, learn some financial discipline and in the meantime, start researching where/what you want to buy.
Good luck
K
We have just had a child led necessity to upgrade to a seven seater. While my heart swooned at the Mazda CX9, we just couldn't justify the cost, despite being essentially retired and completely financially independent. I always thought that when I was in this position I would just buy the car I wanted and not worry about the cost. But I still couldn't splash out. After doing loads of research, we eventually bought a new diesel Santa Fe, because it ticked all the boxes for us. And the only reason we bought a new one was because of the 50% rebate which made the cost the same as a car that was a couple of years old.
I still like to think that one day I will say "money is no object", but, in truth, I will probably always do a cost/benefit analysis. I think it is because we had to be incredibly financially disciplined to get into the position we are in now and that sort of discipline is hard to undo.
Cheers
K
I'd recommend the TAFE Property Investing Course. It has been discussed on the forum before so if you do a search you should find out info about it. I did it a few years ago and found it to be excellent: no products to sell, a diverse range of opinions on different strategies and potentially an excellent network of people that you will get to know over the course which takes about 6 months.
Cheers
K
Do a DHA search on this site. It has been discussed several times over the past few years.
Cheers
K
It depends on whether the property he bought was a PPOR or an investment property. If when he sold it he claimed the PPOR CGT exemption then you cannot get the FHOG now. This is the case regardless of whether his name is on the mortgage or not. The basic rule is that if either you or your partner have ever owned a property (PPOR) then neither of you can claim the FHOG.
Cheers
K
I'm with Yossarian
You asked for advice and you got it. The fact that none of the responses have been "positive" including some responses from very experienced property investors, suggests that you aren't likely to get the answers you were hoping to get. Maybe you should take on board some of the advice you have received.
K
You will need to look at what the sales agency says. If the agency says that the vendor must pay commission if the agent finds a purchaser willing to pay the appraised price or higher (whether or not the vendor accepts such an offer) then it would appear that you will probably have to pay the commission. However, the agent would need to show that there was a written offer and not just a verbal offer.
You may have an out if the property is in the name of both you and your husband and your husband didn't sign the sales authority. However, you may be deemed to have had the authority to sign on his behalf. You really need to go and see a solicitor to see if there is a way out.
I know this is going to sound harsh, but you did give the agent authority to market your property and you did agree to sell your property at a price offered by a purchaser. You signed a sales agency that presumably had the appraised or expected sale range. Why did you sign it if you didn't want to sell at that price? Apart from your initial protest, did you at any time prior to telling the agent you weren't prepared to accept the offer (after previously telling him that you would) give any indication that you didn't want to proceed with having the agent sell your property?
From the agent's perspective, he actively sought out a property to sell (agents often call vendors who advertise their property privately: in fact, whenever I privately advertise one of my properties to rent, agents call me asking if I want to sell). He does sound a bit pushy given that you initially said no, but it's a tough market out there for REA's at the moment and they need to aggressively pursue listings. You agreed to sell your property through him and you signed the sales agency with his appraised price range. He then found four buyers and presented you with the offers. You accepted one. A few days later he gets a call from you telling him that the deal is off. If the sales agency says that you are liable to pay commission if an offer within range is presented and you reject that offer, then of course the REA is going to chase that commission. Expecially if you gave him no indication after you signed up that you weren't happy with the way things weren't progressing.
Just in answer to your question about consumer rights, I would think that if the sales agency stipulated that commission is payable on a written offer within range, regardless of whether you actually sold at that price, you would be liable to pay that commission. A sales agency is a contract. You would have to prove that you signed under duress for the contract to be voided, that is, you were somehow threatened or intimidated into signing the contract. Naivety and blind trust isn't enough. There is no legal obligation on a REA to discuss "market expectations" (although his failure to do so should have been a indication that he may not be someone you feel comfortable selling your property through) and despite your claim that range was not your "expectation", you signed the contract.
Now that I have said all that, there are a couple of things you should look at:
1. Does the sales agency stipulate that a written offer, without acceptance from you, is enough to trigger the payment of commission?
2. Were there actually written offers? I can't imagine that any contract would require you to pay commission based on a verbal offer, as per Terry's post above.
3. Does the fact that your husband didn't sign the agency mean that the sales agency isn't binding? You will need legal advice for this
4. Did you at any time after signing the contract but before offers were presented, tell the REA that you didn't want to proceed? If so, make notes now of exactly what you said and his response. These notes will help later if you get sued for the commission.Good luck
K
Hi Matt
I think that there are about 60 units in this block. I am reasonably familiar with Adelaide and I would expect that a block of flats that large in that area would be a bit of a slum. The figures may stack up but I think you should also be looking at not only the quality of the tenants you will get, but also the quality of the other tenants in the block.
If you haven't already, I suggest that you go and inspect the units and have a talk to some of the people who live there. Also go and check it out at night to see what the nightlife is like there.
Cheers
K
It depends on the state you are looking in as to whether you can kick the tenant out when you purchase the property. I know in the NT when you buy a property, the tenant continues on their lease until it expires. Call the Real Estate Institute in your state to find out what the deal is.
Cheers
K
Hi Volitans
Congratulations on the purchase of a property you are happy with.
I agree with your comments about "who cares how much money they make". I bought my first IP nearly six years ago for a grand total of $90,000. I bought through a buyer's agent who charged $3,500 for finding the property. At the time, everyone I knew told me I got ripped off and the agent was charging a huge commission for finding me a cheap property. I then started researching the area where I bought the first property and went on to buy over 20 properties in that area, without using the buyer's agent. Three years after my first IP purchase, my husband and I retired. We were both under the age of 40. I now do property development for the fun of it and we live a completely amazing life.
Who cares how much the agent made? I know I did extremely well out of the deal and am completely happy with the $3,500 I had to pay him.
Cheers
K
The most I have ever paid for drafting fees is $2500 and that was for three houses that the Council had problems with and required a lot of to-ing and fro-ing with the draftsman.
Get some recommendations from people and then get quotes. The prices quoted above seem a bit steep to me. However, I am in SA and things might be a lot cheaper here.
Cheers
K
Unless you are looking at absolute top end of the market (ie, multi million dollar properties) then just go to a draftsperson and get them to draw up designs. I have never known a developer to use an architect for straightforward developments.
We just use a draftsperson and have no problems at all. Find a good one through recommendations in your area.
Cheers
K
You can make whatever offer you want. There are no rules or laws regarding the kinds of offers that can be made, regardless of whether there is an upcoming auction. Even at auction, providing you have the approval of the vendor, any bids can be subject to various conditions.
I think that what the agent is trying to say is that unless the offer is unconditional, then the vendor won't consider it. But don't let this push you into doing something that you don't want to do. Unless the vendor has specifically given the agent instructions not to pass on offers under $xxx or conditional offers, then the agent is obliged to pass on all offers to the vendor.
Good luck
K
I'm with the others on this. I haven't practiced Family Law for a long time but my understanding is that if the transfer from both parties to one party is pursuant to a property settlement and it is reflected in in an agreement that is stamped or otherwise acknowledged by the Family Court, then it will be free of stamp duty.
I'm sure your lawyer will know exactly the documents to prepare.
Cheers
K
Hi Andrew
Your post is confusing. On the one hand you say that you conceded that your suggestions might be dodgy but then for the rest of your post you justify why you don't see a problem with doing exactly what you have proposed.
AndrewBuysHouses wrote:At the risk of provoking Richard's ire, I will say that any sort of entrepreneurial spirit will always raise eyebrows. Richard, has anyone ever told you that wraps are illegal, or that what you do with vendor finance is not right? Has Neil Jenman ever made you mad? While I think that a lot of what goes on in this industry is "dodgy" as I said before, I don't feel it is up to me to judge the activities of other entrepreneurs just because I'm a little more old fashioned than they are. If I think they're out to get rich by screwing people over, well I'll judge them then, but not just because they're skirting around a legal system that is clearly not designed for these types of transactions.And the sort of "enterpreneurial spirit" you have suggested in your earlier post will raise the eyebrows of the bank and the police if you get caught and charged with fraud.
Richard is not a lawyer, and often states in his posts that he is not a lawyer but it is not too often that he is wrong on the legalities of money lending. I am a lawyer and I can tell you that your suggestions all amount to fraud. Yes, several people do what you have suggested but that doesn't make it right. "Everyone else does it" is not a legal defence. What you proposed was illegal and it is entirely appropriate that an experienced member of the forum points this out so that other readers know that it is illegal.
Those people in this thread who have jumped down Richard's throat should perhaps be taking a look at the level at which they are prepared to engage in criminal activities to get ahead financially, rather than attacking someone who has called fraudulent behaviour, well, fraudulent behaviour.
K
CRJ is correct. It only applies to spouses and then only for a PPOR, not an investment property. There are other circumstances when there is a SD exemption but they are too complicated to go into on this forum.
Cheers
K
If it is your PPOR and it has currently in your name and you want to add your spouse's name, then it is exampt from SD under the Act. This is one of the very few situations where there is a SD exemption.
Cheers
K
