yes, thats one of our options I guess…though it would be havily -vely geared…and I dont know enough about this area, hence the accountant recommendation. I was thinking if we did rent it out, would this then classify the unit as an investment property, and if we sold it then the loss would be a capital loss to carry forward? I know this is probably untrue, so need expert advice.

Hi, thanks for the advice.

We do have enough to buy another proprty i.e. investment, but as you mentioned, the rent would have to cover the mortgage on this one, as we dont have enough flexibility financially (well, I dont believe so, I havent spoken to an accountant yet).

I would be interested in buying a cheap investment somewhere (not necessarily NSW) – which would be break even with rents..I know this is possible, but (and this is a very high level question) – which state is the best? Maybe a 150K-ish unit? (I just pulled that figure out of my ****), WA/QLD?? Maybe Darwin?

Anyway, wherever it is, are there bargains out there to be had which would offset the value drop on my current unit? There must be lots of juicy properties out there..and I think this may be the way to balance things out.

Any advice appreciated – good idea/bad idea?

Hi, thanks for the advice.

Yes, that person is certainly an unlucky sod (it’s me if you havent guessed).

Ah well, you live and learn! Gor to remain postive.

Would your advice be to try to hold on to the unit, until the market picks up again? I’m thinking of renting the unit out in 6 months (as rents are looking to be quite solid going forward), and rent a unit myself. I will fix the mortgage for as long as possible and hope to ride the slump until values pick up again, it may be a few years, but as long as I can affor the mortgage, I think I will be ok.

No point in sitting about crying into my cornflakes, I just need some solid advice as to what to do longer term.

Hi, why dont I put my situation here, I’d appreciate any comments:

To cut the long story short, the vendor originally extended the settlement date on the unit my wife and I are purchasing (off the plan) from June 05 to Sep 05 (86 “rain days”), then 1 week before the settlement date, moved it another month to late October.

The claims were “rain days” (86 days in the first instance – of which they claimed all, 79 rain days in the 2nd instance, although they did not claim all the rain days in the 2nd extension).

Our conveyancer is not a legal expert, and is suggesting we rescind and “See what happens” – I’m not keen on this, although we are desperate to rescind, but would like to talk to someone who can offer some guidance. My query lies around the rain days theory.

They are claiming 79 rain days have occurred since the last extension (20th Jan 05), although they have not claimed all of them. They have “rain tables” showing dates when it rained in the period – but these are for seemingly small amounts of 0.1-0.2 mm per day. The vendor solicitor originally stated the extension was due to a delay at the dept. of lands in registering the strata, but a call to the dept. of lands revealed it was due to an error in the submitted documentation and land boundaries had to be redefined. The vendor then stated it was due to rain delays.

The contract states they can extend the registration date by any delay caused by “inclement” weather (which from many dictionaries states severe weather).

First, I’d like to understand what impact 0.1mm (or the other rain amounts on the days) of rain has on development of the site, both for external and internal work (I would imagine most of the work for the last 6 months has been internal anyway).

I also would like to understand how, if they are stating 79 days of rain, they are claiming the full day as a delay – so for this to happen, it must be raining PRIOR to the start of the days work, and NO WORK AT ALL must have been performed on that day. I find it hard to believe that 0.1mm of rain would stop development for an entire day.

If it rained at e.g. 3pm..then only 2.5 hours delay would occur for that day…its important I understand WHEN it started raining (What time), how much rain fell, what % of the developers work was internal and external etc..it just doesn’t wash with me.

I noticed on a law firms newsletter (internet), the statement:

Where the vendor sets an ambitious, tight timeframe for registration of the plan, the vendor has an obligation to proceed with urgency and must persist in his endeavours even where circumstances turn against him (eg. inclement weather, industrial disputes, etc).

I was hoping to run our situation past a solicitor to give us advice, and to let us know if we have a good case for rescission. They are taking the mickey now, and we are seriously thinking of putting in a rescission. What I dont want to happen is if we put in a rescission, the vendor sues us there and then – can they do that, or do we have to discuss why etc, giving us a chance to withdraw the rescission if they present solid evidence?

Hi there,

You may be right with the onsell idea, although we will have to pay stamp duty on the purchase if we sell before settlement, we will not receive the stamp duty exemption, and we will have to pay stamp duty on the next purchase, so its a bit of a hit aswell, probably about the same according to our recent valuation (this is my understanding from talking to the fhog people – we would keep our FHOG entitlement, but lose the stamp duty exemption, as we have had an “interest” in a property). Do you know of anything different?

Hi Munjy,

You mention depreciation…I understand capital loss, but where would depreciation come into it for a PPOR – I thought that was only for investment properties (or is that the angle you are looking from)?

Cheers,

Hi…thanks for the reply…”love” and “live” – I use them interchangeably!

We are actually in sydney..so I guess the outlook is even worse than Newcastle..? It wont be our last purchase, I am hoping to sell the unit after e.g. 12 months, take the hit of a loss and lay off the market for a while and see where it is going – I’m not concerned with the potential (capital) loss, as I believe the property will drop further in value, so I’m getting out before things get any worse. I dont see any hidden charges with the Perm products, apart from a break fee…but they get excellent cannex reviews (13 products with 5 stars).

i guess if we plan to sell so quickly, then IO is probably best, maybe even a variable..I just dont know!

Thanks for the advice everyone…I also have considered the fact that the banks may value the property at less than we have paid for it..and that would force us into walking away…maybe that would be a good thing. One Q, would that count as a capital loss, that we could offset against future gains? I will be looking for a good property valuer recommendation from someone on this forum, and get their opinion. I do know that if a bank is prepared to lend us the money, we could service the loan, and (if my calculations are correct) we would be down about 6 grand per year after tax refunds etc…this is a relatively small % capital gains per year on the unit (but I suppose that is if it starts off at the price we paid for it and we are not paying catch-up). Anyway, lots of options, stiff upper lip and all that, thanks for the help. I’ll be back for more advice in the near future, of that you can be sure.

Derek,

Thanks for the comment, but that is something I have been aware of for the past 18 months, unfortunately I cannot do anything now but buy the unit, or forfeit the 10% deposit. I am stuck between a rock and a hard place and do not really have a choice.

Property is in N. Randwick, Sydney, near centennial park…we are planning to live in the unit for a while, then rent…to enable us to get the FHB stamp duty exemption/grant.