RhettusParticipant@rhettusJoin Date: 2013Post Count: 7
I am looking purchasing my second investment, an apartment in brisbane city.
My first is a little house in the burbs, I am looking for something closer to town and I stumbled across a 2b 2b 1car in the heart of the city.
the issue is…..
The building is currently amidst a law suit that the hotel staff and real estate agents don't really know to much about. They claim the pool cracked and started to leak into the car park and that body corporate has filed a lawsuit against the builder for damages. In the 2012-13 financial year the body corporate charged the owners a total of 10k each to partially fund the lawsuit. It's set to kick off in November.
The apartment brings in a return of a about 670 per week with a purchase price of mid 400s so you can see the appeal for it as an investment.
The original purchase price is 519k according the rp data as an off the plan purchase. The real estate agent is telling me the prices of the properties in that building have dropped due to the negative exposure from the lawsuit. They reckon the prices will pick up when the lawsuit is resolved.
my problem isn't whether the prices will pick up. Frankly the rental return is the most attractive part of this property. I am scared about having to continue to pay legal fees for the suit. I was hoping someone could
a. Tell me if there have been similar situations and what the out comes we're.
b. how do these things work? If the lawsuit is lost do the body corporate charge to get the things fixed and therefore charged the owners?
c. How do I find out what the defects were. I can see the link on the federal court website but can't see any details
Thanks in advance
Rhettwilko1Participant@wilko1Join Date: 2010Post Count: 510
I know your trying to view the property, that if this problem, this issue that everybody has with the property is solved could mean a increase in short term equity and that has a reasonable return. i say resonable because 670 a week is nothing special when your in a lawsuit and you might have body coporate fees of 10k a year coming out to continue to fight the battle. You have to look at whos involved here.
1) They the body corporate have already charged 10k to the owners already
2) lawyers are involved, length of time these disputes take means lawyers come back for more money from the body coporate.
3) Do you want to buy into a situtation where you could be up for another 10k out of pocket expense
If the body coporate wins then they can sue for the damages and have the issue reciftied. They could then try sue for legal costs but if unsuccessful would end up being paid by body coporate.
If the builder wins then the body coporate might get sued by him to cover his costs.
and they still would have to fix the pool
and if your bought there. Your car might end up underwater!
Id just stay away. Because you dont want to buy a 500k headache. when you already know its a headache.RhettusParticipant@rhettusJoin Date: 2013Post Count: 7
Thanks champ. You're right. I guess greed can kick in sometimes and you think you can make a quick turnover on someone else's mess.
Today alone there have been over 30 apartments in this complex go up for sale. Something tells me the ship is sinking and every body's trying to abandon ship.
I think if some one has the patience (and the cash) to fork out for continual legal fees in the long run they would benefit when the property bounces back. Unfortunately I am definitely not one of those people.
I feel like the guy at the casino who (instead of betting on red or black) pockets the cash and goes home.wilko1Participant@wilko1Join Date: 2010Post Count: 510
that is definately a wise decision in this case now that you mentioned the number of apartments that have been up for sale.
I find with buying apartments that i prefer to buy in a group of maximum 4 is possible.
This gives you many opportunites in that yours can be the best out of the 4
and also gives you the opportunity in the future to buy another one in the same block and control 50% of the body coporate and that way can perhaps get renovations done to the outside of the units.