[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 26, 2008 - 8:40 am

Milly wrote:

Now this saga is going to continue but I'm no longer stressed about it. It will run its  course and after court  I will probably get $2/wk for the next 100 years, but it doesnt matter. This was a learning experience for me and eventually these people will be out. And frankly in the scheme of things, it is a minute hiccup. If this was the worst that ever happened to me , my life would be charmed.

 
Spot on, Milly, I'm glad you can already have some perspective. My Dad always told me that if you've only got problems that money can fix, you should be very grateful. He's very wise, my Dad.

Milly wrote:

But what I wanted to say to cu@thetop and others, mistakes are learning experiences that should never be repeated.  I dont believe in dwelling on the past on 'what I shouldv'e done". You can't change the past so concentrate on the present. Have goals but the future hasn't arrived yet so it is a realm of possibilities and that's exciting.

Once again, absolutely! I think that the ability to learn from mistakes, then quickly move on and look forward, which I've deliberately cultivated and am getting better at each year, is one of the most valuable character traits one can have, not only in investing but in life.  

Best wishes to you, Milly. You have a winning attitude and I'm sure it will work out OK.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 26, 2008 - 6:45 am

Our first property purchase – we paid top dollar in late 1993, just before prices crumbled. We bought for $111K in East Ipswich, and after spending $20K in renovations, ended up selling for $85K 5 years later… at that time, it was a huge loss to us. Still not a regret though – we learnt a lot from that experience, ie that you can't just buy anything at any price and it will go up. Both sets of parents had always experienced this and had told us that we "couldn't go wrong" with property. We learnt not to rely on generalisations like that but instead do some research…

And had we not sold that property at that time – even at a loss – we couldn't have gone on to make the other, more profitable investments, that we've had since that time.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 26, 2008 - 1:48 am

There certainly can be different valuations, and I have a property on which the "valuation for mortgage security" purposes is significantly below "market value", therefore I've had to keep much more equity in it than I'd like

This link is somewhat helpful to we novices in understanding valuation a little better: http://www.independentvaluers.com.au/content.asp?pid=1746

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 24, 2008 - 9:33 pm

You may want vacant possession, but with a fixed term agreement (which it sounds like they're on, as it has an expiry date) you're stuck for that duration. The vendors may want to give you vacant possession but they're unable to, unless they have grounds to evict.

The only option would be to ask the tenants if they're happy to leave, but that'll probably cost you. Just be well aware, though, that if they don't want to move, they have every right to stay until June, so don't get them on the wrong side!

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 24, 2008 - 9:28 pm

Way up at the top right of your screen, in the dark blue band…

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 24, 2008 - 6:51 am

I'm with David, I thought it sounded on the cheap side!

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 22, 2008 - 9:48 am

Sorry that I misunderstood you, James. You hadn't mentioned that there were questionable items in the building and pest inspection. I think that you can't push the line that you had a binding contract with an unspecified timeframe for building and pest – because presumably the copy that you have with no date wasn't signed by the vendors, right? So they hadn't accepted that offer. If the agent added the date prior to the vendor signing, then effectively the insertion of the date constituted a counter-offer by the vendors, which you hadn't accepted (by signing/initialling). Therefore I'm with Jon that you had no binding contract, so you should request for your deposit to be refunded on the basis that there never was a binding contract. Don't take the line that you're terminating; I believe your argument should be that there never was a "meeting of the minds" and therefore never a valid contract.

Then you have to consider whether you want to make a new offer to purchase the property. Bear in mind you'll obviously have to deal with the same vendor and real estate agent, and (I presume) they won't let you make your offer subject to building and pest because you now have that information. It depends whether you think you can still negotiate a worthwhile deal on this property in those circumstances.

And I really don't think that either the agent or vendor intended anything shonky. I think that the agent probably noticed there was no time limit and put one in. I really doubt that he thought you'd have a problem with it. And if you'd had a conveyancing solicitor, they should have made you well aware of this time limit immediately, and the issue could have been sorted out much sooner.

Best wishes, and apologies if I misjudged you.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 21, 2008 - 9:06 pm

Jon Chown wrote:

The contract is dated by the Agent only after all parties (that is Seller and Buyer) have agreed to all negotiable issues and conditions and have initialled all alterations.

Thanks, Jon!

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 21, 2008 - 8:36 pm

James, I also feel that you're trying to take advantage of this situation. As Jon has pointed out, it's unethical to try and enter a contract with absolutely no time limit on getting your building and pest, and you seemed to "gloat" a bit about thinking you have gotten away with this elsewhere on the forum.

What's your problem with the date the agent specified? If you already had your building and pest done by then, and were planning to go ahead, then no harm has been done to you. If not, then either negotiate an extension to building and pest, or pull out.

But I'm with Linar, I think you're just trying to get the price down, without good reason. Either it's a good deal and you proceed, or you walk away. But trying to continue and screw the vendor for a lower price because of some possible dubious action by the agent is unethical on your part.

And incidentally, every purchase contract that I've signed (where I was making an offer) was undated. I think agents have told me it has to be dated when the sellers accept the offer. (This has been repeated so many times that I assume that it's true, but I'm happy to be corrected.) So the date of contract – surely a very important date! – has always been filled in after I've signed, and without me counter-signing. Does this mean I've never had a binding contract, or that every purchase I've made has involved "fraud" by the agent?

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 21, 2008 - 7:39 am

Phil_McRakin wrote:

I presume they would be renting somewhere else for the sam erent they would be recieving from thier PPOR and the advantage is that you mortgage now becomes tax deductable?

Precisely! But you then lose the CGT exemption, so you have to weigh up which tax benefit is more significant.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 21, 2008 - 7:37 am

I'm not Linar but I'm pretty sure that "notice not in the form specified in the contract" (ie in writing by 4pm to the agent or whatever it was) is legally the same as "no notice", and therefore the condition is taken as being fulfilled, and the contract becomes binding. Sorry!

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 21, 2008 - 2:52 am

Oh, that hurts! I would think that because "time is of the essence" that your friend is out of luck… Did your friend have a conveyancing solicitor involved? If so, it is the solicitor's duty to ensure all timeframes are adhered to, and I'd be putting pressure on the solicitor.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 20, 2008 - 10:34 pm

Council rates are paid by the owner, and vary but are usually billed quarterly (ie every 3 months), and a quarterly bill varies from about $400-800, depending on the property's value (amongst other things). You may have a few more fees, such as building and pest inspection, and loan establishment fees, but these only run to a few hundred dollars – you've got the main ones.

I have no idea whether it's a good investment, as it depends on where it is. Is it close to amenities – schools, public transport, shops, etc? Are there people living in the area and is it an area that is likely to continue to be in demand into the future? Is the particular type of property that you're considering desirable to tenants? etc.

As to whether you can get a loan or not, I'd talk to a mortgage broker.

Best wishes, Tracey in Brisbane

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 20, 2008 - 4:43 am

1) Use experts that have contacts – eg town planners, architects etc – and get them to do it. They know who is going to be signing off on your plans and they make sure that they talk to the right person.

2) If you're doing it yourself, make sure that you take good notes. I put them in my computer eg "15 Aug 2007 – 3:15pm – rang and spoke to James Smith in town planning (ph 1234 4431), he assured me that a 1.2m setback is adequate." And say, as you're writing it down, "hang on, I'm just writing that down" so they know that you're going to hold them to it. Ask them to provide you with a reference, eg "Where can I find that written down?" If he refers you to a document, and you can track that down, seems like you're set. If he can't, then take a note saying "James said this is not written anywhere but assured me that other properties in the neighbourhood had recently been approved with 1.2m setbacks" or whatever. Ask for their job title, ask "will you be signing off on this?" and as many questions as you can to give them the idea that you want a definitive answer, you are taking notes, and you will bring it "home to roost" if it turns out to be bad advice.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 19, 2008 - 9:33 pm

Andrew, it's probably OK as an investment, but I'd be very concerned about the way this is set up. You should buy the best property for your circumstances, NOT what their "property consultant" is able to get a commission on selling!

For a start, having vacant land on which you can claim no tax deductions is not a great idea; I think your plan to do something with that should be top of your agenda.

I really hate these kind of property marketing schemes. We were naive enough to get suckered into buying under a similar arrangement about 8 years ago. Thankfully that investment worked out OK, but we paid a ridiculous amount in fees and commissions, and we could have just gone and purchased an IP ourselves and saved all that. And probably found as good or (likely) better an investment. The fees are really just payment for somebody to "hold your hand" through the purchase process. Ask questions here instead, or get a savvy friend to help you. Or join your local property investors group and get somebody there to help you, if you feel you need it. But don't pay these unethical people. I say they're unethical because the commission is absolutely their motive – not finding the best investment for you.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 19, 2008 - 11:57 am

Any place with covenants restricting the age or occupation of occupants (eg over 55s, students) is going to be difficult to get a high LVR lend. Generally under 55s can't live in over 55s accommodation, and they're exempted from age discrimination laws so you can't get around it that way. And non-students generally can't live in student accommodation because the fire safety regulations for student accommodation are not as stringent as for boarding houses that are open to non-students (at least in QLD). Landlords/property managers can restrict who lives in certain types of accommodation, and that will mean that you can only get a 60 or 65% LVR.

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 19, 2008 - 7:11 am

Google SketchUp is free, and is so good that I understand some professional surveyors and building designers are beginning to use it for at least some tasks. You can import items from the virtual warehouse – eg palm trees, or piece of furniture, sinks, toilets, kitchen cabinets, etc. http://www.sketchup.com/index.php?title=2

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 18, 2008 - 8:24 pm

The primary concern is LVRs; I'm not sure whether you can borrow to buy them. Talk to your mortgage broker.

Regards, Tracey in Brisbane

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 18, 2008 - 8:22 pm

Welcome, Joseph, to Australia. I hope this is a joyful and successful move for your family.

I don't know areas of Melbourne very well, but regarding the "rent vs buy" decision, you're certainly better off from a purely financial perspective, week-by-week, to rent. Rents run at about 4% yields, ie a $520,000 property would rent for about $400 per week. But the cost of ownership of a property is mortgage interest (say 8%) plus another 2% for council rates, repairs, insurance, etc. So to own the same property would cost about $1,000 per week.

So the difference ($600 per week) comes out to a little over $30,000 per year. The issues are 1) can you afford to pay the $1,000 per week, and 2) will this additional expense be compensated by capital growth? Growth of 6% per year is lower than the long-term average for all areas over the last 100 years in Australia of 7.8%, therefore I'd be fairly confident that the risk isn't too great. And bear in mind that a good proportion of property investors believe that outer Melbourne is set for a boom in 2008: http://www.somersoft.com/forums/showthread.php?t=38746

So, if you're sure about where you want to live (both within Melbourne, and that you want to stay in Australia for at least a year or two), and can afford to do so, then I'd buy a home. It may also help you all feel more settled and established in your new home.

Sincerest best wishes,

Tracey in Brisbane

[trakkaMember@trakkaJoin Date: 2004Post Count: 257]

January 17, 2008 - 8:40 pm

Pat, I'm not sure which suburbs you're looking at, but the consensus amongst investors is that inner Sydney is ripe for its next boom in the next year or two… so if you can afford it, I'd definitely be buying something to live in yourself.