New Investor Needing Advice

Due diligence should be done on every property you look at purchasing. If you are choosing to purchase land, sub-divide and sell then you are subject to capital gains tax. If there is already a sub-division with a high rental vacancy that should put flags up to say it may not be the best area to invest. You need to find an area with demand on rentals if this is your strategy and why it is important a full due diligence is necessary so you avoid major losses and pitfalls.

Our experience with Custodian Wealth Builders has been a nightmare. After initially running our finance numbers through InvestLoan and being assured we were covered to purchase the property, we were advised at the last minute that we were short $18,000 and had to come up with it for settlement to proceed…our first stress but we scrambled and came up with a solution. We had to constantly chase Custodian for updates on our build and never quite knew who we were going to hear from. Once the keys were handed over and we secured our tenants, then the houses issues started to appear. Our tenants kept reporting problems with blocked toilets in the ensuite and moisture through the walls, skirting and carpets in the WIR and master bedroom. We are good landlords so tended to each and every complaint promptly but the issues remained. Eventually we decided this was beyond landlord maintenance and asked Custodian for advice and they said it was our Property Managers job to deal with these issues….something they had been doing. We had our property manager contact the builder and we embarked on a 5 month battle to have these issues rectified. We thought they had been fixed because the issues seemed to subside for a period of time, until we had new tenants move in, a family of 5 so the house overall was being used more heavily. 3 weeks after our new tenants arrived, they reported not only blocked toilets but reported puddles of water in the master bedroom from the ensuite. Our property manager sent out a plumber to investigate and he indicated very early on that the problem could be quite significant. Following our original dealings with the builder, we contacted Custodian directly to enlist their help in dealing with the builder they had contracted. We were advised by Custodian that the builder was no longer trading so we wouldn’t be able to call on them to fix this problem. At this point in time our plumber had identified the issue and it was big, the waste wasn’t connected to the mains and this was causing the water to back up and flood. This defect also accounts for all of the other repairs we had incurred at our property over the years. We would have contacted the builder to fix this defect for us but once Custodian told us that the builder was no longer trading we went with the plumber who had identified the problem and had the issue fixed for our tenants as promptly as possible. Custodian said we could make a claim for the cost of these repairs, which would have been great until WE stumbled upon the builder and found out that they were actually still trading….Custodian had given us the wrong information and we were stuck with a plumbing bill for $6600 which was due for immediate payment….had we been given the correct information, the builder would have fixed the issue for us and that plumbing bill would have never existed. All of this occurred just before Christmas and we, a single income family with two young children, were left in tears trying to work out how we were going to pay the plumber and still give our two little boys a Christmas to remember. We approached Custodian, explained the stress and pressure we were feeling and asked for financial assistance based on our unique situation. Custodian did not offer to help us cover this substantial cost and pointed us in the direction of the builder. We approached the builder directly and they immediately dismissed us and said that despite the defect being present, they were not financially responsible because they hadn’t been given the opportunity to fix the problem themselves because Custodian had told us they were no longer in business. Whilst this was happening, our plumber was then chasing us for payment and so with nowhere else to turn, we were forced to make a claim through OUR insurance company to take the pressure of us so we could pay the plumber. Let’s not forget that this invoice would have never existed had Custodian given us the correct information. We went back to Custodian and they said we would have to take the builder to VCAT and make a claim through the tribunal. The one thing Custodian did was prepare the claim for us, even though we told them that the builder would defend the case by stating they weren’t given the opportunity to fix the problem. We went to VCAT and that’s exactly what the builder did and to be honest, that was fair enough. At least the builder was sympathetic to our situation and could see the mental, emotional and financial impact this situation had had on us and agreed to a small settlement to help ease our financial situation. Custodian knew that VCAT was not the answer for us but they told us to put the claim in anyway. Custodian didn’t even send a representative along to our hearing for support. In fact, once Custodian had prepared and lodged the VCAT claim for us, we didn’t hear from them at all! Following the hearing we were fuming, we had incurred costs as a direct result of Custodian misinforming us and they didn’t appear to care in the slightest. A couple of months later we still hadn’t heard from Custodian, not even to check in and ask how our hearing went. We decided that we weren’t going to be treated this way and Custodian needed to be held financially accountable for their professional negligence. When we originally signed with Custodian we paid a substantial client fee of $12,900 to manage the build of our investment property to meet all building regulations…which it did not….and to become part of the Custodian family as clients. Time after time we have approached Custodian and asked for assistance but not once did they follow anything through to fruition. Following let down after let down, we prepared a letter that detailed our grievances, with any references to emails received from Custodian staff providing us with incorrect information that served as the catalyst for our decisions and actions. We strongly believe that Custodian had mismanaged our build and subsequent client relations and asked that they reimburse our management fee. We felt this would make up for not only the defective property they handed over us, the financial hardship it has created for us, their ill advice but also the hundreds of hours we have spent dealing with all of it. We sent them our letter and it took them 3 weeks to respond, after us again having to chase them for a reply. They hid behind an array of legal loopholes and basically put the blame back on us. They did not acknowledge their role in this horrible situation we have endured for 5+ years and said they would not be reimbursing us any amount of money. So that’s it, because they are big business and we are the little client, they just get to do whatever they want. They already have our money and they just do what they want. I don’t know how John Fitzgerald sleeps at night; I know I couldn’t knowing I have caused a young family so much distress. So this is our story and it could have happened to anyone. Do your research, ask lots of questions and make sure you can trust the person you are giving your hard earned money to.