Forum Replies Created
I agree; as a seller, have the pest and building inspection reports completed by nationally recognised companies who include a warranty in their DETAILED report. Make sure to advise them in writing that you and the buyer will be relying on their report as an investment and that damages will result if faults are not discovered…it make cost a little more up front but you will recover them later.
Then add the reports to the purchase contract…this will provide assurance to any prospective buyer and speed up the entire process.
Have a special clause included in the sale of land contract that provides for he buyer to pay for these reports on settlement. The buyer can get a 2nd report if they wish but they pay for that one as well.
As a buyer, ask that the inspections be paid for by the seller but with a written agreement to pay for the reports (up to a stated figure) if you complete the purchase of the property. Remind them that they can use this report for other buyers if you decide not to buy (for whatever reason). If they are not will to pony up the expense even with your written guarantee of payment, ask yourself if this is the property for you.Love the idea of a deposit bond
I wuld also suggest they the seller that they use the same procedure: this should relieve the pressure on you to pony up the cash.If it is part of an investigation, they would need a warrant to access company records of the power, water, gas etc. Ask to see those warrants. The 'investorgators' would also need to have the power to seek a warrant to be issued. Warrants are not issued willy nilly; they are usually only issued if the party seeking them can offer up evidence of a possible crime and not when they are on a 'fishing trip'. If it can be proven that they had not valid reason to suspect a crime BEFORE the warrant was issued then everything that they gained was the warrant would be inadmissable and unusable (the fruit from the poisonous tree). If a warrant was not issued or there was not a legislative power for an officer of that department to seek the info they say they have, then it is a breach of your privacy. Just because a department has legislative power does not mean that it has been issued to a specified person within that department or that the proper procedure has been followed in granting that power. Find out if there is such a power and how it has to be issued, was it done in the correct manner (an documented) and how they are required to seek info from private power, water and gas companies.
Also confirm with the power, water and gas companies (in writing) who has had access to your records since you purchased the property. Just because a party says that they have records of your usage or that they are basing their decisions on these 'records' does not prove that they actually 'have' these records….it being a bluff, seeing if you blink.Unless they had an investigator sitting on your front door step for 6 months….good luck to them; unless you had your mail forwarded to a separate address or had a separate property with power, water, gas etc in your name??
Remember, its is based on the fact that it is your 'Principal' place of residence and not you ONLY place of residence. I do not belive that they could support a case where say you purchased the property, moved in, then went on an extended holiday or was required to work away from home for a time (ie. a mine worker that works 4 weeks on and 4 weeks off). If this person was to take 4-8 weeks holidays during their normal working cycle they would be 'normally' at home for just 10-14 weeks (4 on, 4 off, 4 on, 4 off with 4-8 weeks leave, then thefirst 2 weeks of their next 4 on). That represents just 38-54% at home; then you subtract time away to visit friends in the country, time away at your girlfriends place etc etc.
Ask the bankl for a rate reduction…they are actively competing at the moment.
Ask for a 'professional package…that will get you at least a 0.5% reduction.
You can turn a negatively geared property into a positively geared property with a little imagination.
This sounds like a perfect opportunity to use a rent to buy scheme where you rent the property to an end buyer.
You usually rent with an option to buy to a buyer that may not fully qualify for a standard bank loan at a figure above the standard market rate.
You can also get them to add value buy adding value to the property with their labour in an effort to increase the valuation of the property.
You can get them to put down a substancial non-refundable option fee (that ensures that they are serious) with an option to buy within a stated period of time (say 3 years) at a fixed price. The rent will be at a rate at say 1-2% above your mortgage rate.
You get the fee as an instant profit.
You also get the 1-2% (on the full selling price) as your profit.
Your mortage is fully paid out every month.
You also do not pay a REA $10,000 so that also stays in your pocket.
They get the option to purchase a home at a stated price sometime in the next 3 years.
They are looking to have the property increase in value above the agreed selling price; this will allow them to use that as their 'sweat' equity, as part of their deposit. They doo all the work, providing expensive labour (themselves, family, friends doing all the heavy lifting). Have 3 quotes done for each of the jobs needed doing and ask the a valuer to value the property 'on completion' of the renovations/improvements. Focus on adding value in the kitchen and bathrooms and adding living spaces in the back yard (pation, pagola etc).
The banks are looking for at least 10% in equity and at least 12 months of regular/on time rental payments. If they are able to pay above the current bank interest rate for at least 12 months, the bank should provide a loan, especially if the value of the property has climbed above the selling price, adding to their equity/banks security level.
Remember, you do not sell a 'home' on price, you need to sell on emotions.
Dress the house to look like a home, show the potential as a family home.Why did the agent get any fee when the property did not sell; they only get a commission on a sale not of a 'nice try'?
And $2,000 sounds like a lot for advertising for just 2 months….RE.com usually charges less than $400/mth for an add and the REA gets a LARGE discount on that price.Always get their side in writing first; that way you are sure of their concerns and it locks them into a single position.
How would have access to your private 'usage' details? This may be a breach of your privacy, an unlawful act.
I assume that the bills are in your name and it was not rented out so there will be no other name registered to that address?
Their suspensions are NOT proof of anything; if they wish to take administrative action, they MUST base their decision on FACT.Solve her problem…she wants to be able to move quickly (within 4 weeks). But she also wants to be able to stay in her current property for between 1.5 and 4.5 months (up to 3 months extra time). A long settlement is good for you if you intend to buy and hold IF the property prices are climbing well.
Are you intending to move into the property or to rent it out (after a quick reno?)?
Your needs will determine your stratagy BUT I am still concerned with regards to making sure that your interests are secured.
She is asking you to look after her needs with extra time AND early/instant release of the deposit money…whats in it for you? What has she offered you to compensate you for your time, expense, exposure and possible lack of income?
Will you have the transfer papers etc completed immediately? Have her pay your fees as well; up front.
My advice above still stands in regards to a lien on both properties AND a BIG discount. Its the only sure way to secure your funds. You could also try and get her lawyer to sign a letter to quarantee the deposit money should the deal not proceed and/or the funds disapear.
Also have the deposit funds only able to be released from an escrow account which requires BOTH your approvals.Scott; Rates are for the running of the council and this includes all expenses and the purchase of land and building.
People who renovate a house should not be charged an additional fee to put into a 'development kitty'.These funds are regularly missused or not used for the purpose for which they are earmarked. I moved into a new suburb of Campbelltown-Sydney where each new house had to pay a $30,000 development fee which was to be used to supply a community centre in the same area plus a shopping centre plus a child care facility. 7 years later, nothing, nil, not one item supplied. When questioned, it appears that the council "has a new focus".As for the $200 non refundable 'permit' fee….can anyone tell me that is a recovery of cost or a money making item. If it costs them $200 is issue a paper 'permit' and to pay the wages of an inspector for a before and after inspection (at an estimated 10-15 mins per inspection) then they need to re-think the way they do business.
If people do not challenge these 'permits' or 'fees' they will continue to impact on developers costs. Ask how these fees are set; what are the cost components…then send a letter to the Minister of Local Govt. to complain.
It is an old fashioned style of legal drafting as evident by the lack of punuation within each of the long sentence structure and the use of terms like "hereinbefore" and "hereby" and "hereof". At the very least its very poor drafting style and is confusing to the 'average man in the street'
The current first clause reads:
""Notwithstanding anything hereinbefore contained the purchaser hereby agrees to release on or after the date hereof and prior to the completion the deposit or part thereof to the vendor (if required by the vendor) for payment out as deposit money and/or stamp duty and/or towards the balance of purchase price payable by the vendor on the vendor's purchase of another property."
A better and simplier form would be:
'Notwithstanding anything contained in this contract, the purchaser agrees to release the deposit prior to the completion/settlement date of Day/Month/Year or part thereof, to the vendor. The released deposit can only be used for the purpose of payment of deposit money and/or stamp duty for the vendor to purchase another property.'I would also include a clause to the effect of:
'Prior to the release of any of the deposit money, the vendor is to have a lien registered against the vendors new property and the property being sold to the buyer, in favour of the buyer. The costs of the lien is to be paid in full by the seller, including but no restricted to all registeration fees and legal costs. The lien is to be delivered to the buyer before the release of any deposit funds.'This should ensure that both properties are unable to be transfered unless and until you have completed settlement and taken possession of your new property. It will also ensure that settlement is effected ASAP.
I would also negociate a lower price for a quicker settlement. It seems that the seller has a need for some quick cash to secure a 'deal' so use it to generate a win/win situation for your both while ensuring your deposit money is secure and that your property is transfered ASAP.
Go and see with the local council; speak with the town planner and get a copy of the approved dwellings/buildings on the property. I would keep the info with regards to a granny flat to yourself for the time being; just ask to see the building approvals; they will tell you what the buildings are listed as (garage, flat, shed, granny flat etc)
You can always purchase the property with 'vacant possession' or wait until the end of the lease period then either terminate the lease or amend the area of the lease available for the people in the main house (while keeping the lease payments at the same level or increasing them as the market allows) then install the 2nd tenants; all creating additional cash flow.-The water and electricity is run directly from the house and hasn't got it's own meter(s), so how would I go about sorting out they're bills etc?
A. Install a water meter;
B. Add and agreed amount to the rent each week as a defined figure-Does the bungalow have to be fenced off completely from the home?
No but that would depend on if you or they have pets or kids that wonder into their private space (which you both need)-Does it have to have it's own carpark area?
No but preferable-Do the tenants in the family home have to agree to some sort of contract or setup to have the bungalow tenanted?
No, you set out a defined area that they are renting and set out physical markers (a wire/colourbond fence is good).-Anything else I may have missed here to anyones knowledge?
You need to incluse a clause in both contracts that set out the requirement for silence and quite enjoyment plus designated parking spaces and the consequences for breaching these terms. It will be a major hassel for the tenant if the other tenant or their guests park in the wrong areas.Whoever drafted that clause needs to go back to law school and learn how to write PLAIN english. That type of legal-ease is outdated, looks 'tricky', sounds 'tricky' and confuses everyone.
The current clause allows the vendor to access and use your deposit (as his deposit on a property that he may be buying) before you settle. If for any reason, he fails to retain access to that money and your deals does not settle, you will loose your money or spend a large amount of time and money trying to recover it.
It sounds like the vendor needs the deposit money to buy a replacement property and is cash poor. Try offering less but negociate on terms…go for a quick settlement as that will release the full 100% of the purchase price quicker and give you a (substancial) discount. Find out why he needs the cash released so quickly; it sounds like he has a deal on the line and needs the cash today.
You are in the drivers seat…as there does not appear to be any other buyers ready to accept the contract as currently written and he needs the cash repleased 'yesterday'. Pay the extra fees for a FASTER settlement as you will recover it in spades with a reduced buying price.
Do NOT sign the current contract as its written; I agree with TerryW to speak with your lawyer in that regard. You can simply CROSS OUT the clause before signing (and write in BOLD across the clause "DELETED", then sign your name in the margins to verify your non acceptance of that clause.Is it a bond that you get a 100% refund or is it a permit, with a defined cost?
If it is a bond, its that the total of your liability or just a 'part payment'?
Seems to me to be just another scam to get more money out of land owners (I refer also to the 'development contribution' for 'alledged upgrade of the community (I was under the understanding that what local rates are for….taking 2 bits at the same cherry.Gumtree/Andrew,
Please email me your contact details….I may have some work for you on my return to Perth in a months time.Regards
Can you add value to the business? Reduce the floor space you need and rent out the remainder.Refinance the loan to an interest only loan; that will reduce your monthly payments by about $2,000/Mth. = cash out reduction of 25%…not to be sneased at. This will also make it more attractive to a buyer if the business cash flow is reduced. Reduce other costs as much as possible. This will also make it more attractive to the banks to provide finance to a new buyer.
Once you have removed the business debt, look at using the equity in your home plus the 'profit' from the sal of your business to really devote your time into property investing. I am sure thatyou can easily replace the $45K/Yr with 1-2 small reno deals.
You need to set yourself up as if you have already lost your $65K/Yr job.
wisepearl / Emma,
Please drop me an email to make contact.I am doing DYI renos in Perth but will not be back for another month. I would love to make contact and see what we can work out.
Why render, why not spray paint? The cost will be less than 25% of rendering.
I am talking about selling underperforming IP then immediately (or at the latest, 2-3 months) to purchase new IP's.
All new properties would be placed into a trust.
The only other way around this that I can think about is to borrow 80% of the equity and use tat to reinvest…as this is not a sale, I delay the CGT and selling costs for a date yetto be determined down the track.
Its not the stratagy that is at fault, its the way the material or the lack of it was presented to the end buyer.
You will note that the story refered to one particular operator and to "some parts of this tenancy agreement are [that 'may' be] illegal". The alledged wrong doing was 'misleading and decpective conduct' (see s52 of the Trade Practice Act).
Drawing a conclusion that VF and Ren to Buy schemes are 'illegal' is wrong.
You should also note that Rick Otton uses 'sweat equity' as the end buyers deposit AND that he gets the end buyer to be pre-qualified so that the 'usual' banks can offer the normal terms on a normal loan.
Great result Anita,
All the best with your future IP's.
