Forum Replies Created
You have you solution looking you right in the face. If the tap was leaking, the tenent is under a legal and contractual obligation to immediately report any and all repair needs, especially ones that cause damage (rotting benches). They would also be required to point the leaks out to the agent at the 3 monthly inspections at the very least.
Still go after the agent via:
1. lodge a letter of demand for the damages caused with the REA/PM due to their failure to perform their obligations under the contract ie. a fundamental breach of contract that resulted in a specified amount of damage, (NOTE: if the REA is a company you can seek to have them declared 'trading while insolvent' under the Corporations Act should they fail to pay a letter of demand for a debt).
2. Lodge a claim thru the small claims tribunal (this will ensure that legal costs are not incurred) for the sum lost due to a breach of contract re failure to complete inspections as per the contract terms.
3. Lodge a complaint with the state RE organisation,
4. Lodger a similar complaint with the state Gov department that issues a licence for the REA/PM.What program did you use to generate the vdo?
Can you give me the link so that I can generate a vdo for my businss as well please?Re rejecting/accepting any application…you are ALWAYS able to justify your decision torent to ANY person based on;
A. THeir ability to pay on time, every time, AND
B. THeir ability to properly maintain the property at an acceptable standard. If the person appears to not have that ability, for whatever reason, then you are withing your rights to reject them. This goes for an applicant that has a spotted employment history or little/no rental history.
You are NOT a charity nor are you a bank or a state based housing authority; you are a business. If the state housing authority wants to take them on, then let them tak ethe risk.
I do not think that the VCAT would be able to overturn your decision based on past DEMONSTRATED ability to pay and to maintain a property to a proper standard.
You would not be discriminating against their application based on their disorder, rather you are basing your business decision based on demonstrated ability and future potential to properly maintain your property and their ability to pay on time.Do you have rental insurance? That is a VERY cheap option, usually less than one weeks rent. My rental insurance covers me for up to 12 months rent should the tenant cause more than $1,000 in 'deliberate' damage.
As for th REA/PM:
1. lodge a letter of demand for the damages caused with the REA/PM due to their failure to perform their obligations under the contract ie. a fundamental breach of contract that resulted in a specified amount of damage,
2. Lodge a claim thru the small claims tribunal (this will ensure that legal costs are not incurred) for the sum lost due to a breach of contract re failure to complete inspections as per the contract terms.
3. Lodge a complaint with the state RE organisation,
4. Lodger a similar complaint with the state Gov department that issues a licence for the REA/PM.This 'sundary and postage fee is just another cash scam to claw more money out of you to do the job you are ALREADY paying for.
7-10% of rent is more than enough to cover all expenses; if not, then are you just paying them the 7-10% to 'just' recieve money everytwo weeks which is usually done via an auto bank transfer.
And do they also charge the same 'postage' fee if they sen their accounts via email (with no postage costs incurred)?OK, accepted….so why not include a clause in the REA contract that the "commission is due and payable within 24 hours of settlement"; = no settlement, no commission.
This should ensure that he REA agent moves the deal long to closure ASAP as only then will they be entitled to any commission.
Any other clause would have the effect that a REA would be entitled to their commission once the contract is accepted, even if their is a 6 month deplay in settlement which (for a variety of reasons) may never be settled on that buyer.
Without a 'settlemt' clause, it would also have the effect that a REA would be entitled to a commission on any subsequent sales contract should the first one fall over.Forget about a 'new' home; they cost more than an older home to start with. If you dump all your cash into a home, you cannot claim any as a tax deduction either. make sure its placed into a trust so that you can use it as an IP at a later stage.
Building a new home will also tie you up for at least 12 months with your stress factor going thru the roof with delays, council approvals, rain holds etc etc.
Make sure any IP you buy is a POSITIVE income property.
Use as small a depsoit as possible and buy as many as possible.
Place them ALL into a discretinary trust so you never limit your borrowing capacity.
Look at doing the buy, reno, rent as an easy start to building your wealth.
Get them all revalued every 6-12 months then use the additional equity to build futher.
Sell off any non preforming assets ASAP as they occur and use the released equity to buy in a better area (close to the CBD ~10km's).
Another good method is the Rent-to Buy/Option method where you take over the sellers mortgage (at say $3,000/mth) and then move it onto a 'buyer' where they do the reno themselves (over say 6-8 weeks) with the bank accepting the added value as their 10% depsoit with you negociating a higher price to start with (say a 10% profit margin). The GREAT advantage of this method is that you can handle 10-12 deals AT THE SAME TIME! making ~$25K on a basis $250K rent/buy option deal; AND you never have to pony up the stamp duty (as you have not purchased/transfered the property to yourself.REMEMBER: You are looking to make the most amount of money in the least amount of time and NOT making the most amount of money in every deal.
Ask them (in writing) how much commission they recieve from each property they sell to investors; re 'secret commissions'. RUN (do not walk) away if they refuse or are reluctant to provide a direct answer (in writing).
I would also go as far as to do the same with the seller to cover both ends.I would ensure that you instruct your REA (in writing) that EVERY $ offered be accepted as a deposit (just $1 is all that is required to show 'consideration') to form a finding contract )once you 'accept' the 'offer'.
If the REA forces a buyer to pony up 10% deposit will proberbly frighten the buyer away, especially if they are making several offers at a time (with the intention to go with the first one accepted).
The first home I purchased, I held with a $10 deposit.Do I need a Certificate IV in Financial Services (Finance/Mortgage Broking) to do Lease/Rent/Option deals?
Which is easier to use?
Do they both include download ability direct from the bank?
Which produces the best reports?
Which produces the best control features ie: additional payments etc?
Which software do you recommend and why?If you want to delay further, sack the conveyancer the wait for the seller to contact you directly. They MUST communicate that to you in writing.
I would also suggest that their 'appears to be a conflict of interest' with the seller recommending the conveyancer (they must have done work with them before and wish to do work with them again in the future). You need somebody working for YOUR interests, especially if you are paying them out of your pocket. Ask them (in writing) how many other projects they have dealt with, with the same seller; over what period of time, how many millions of $'s in projects has that involved? If they refuse to tell you (due to a 'conflict of interest' or 'privacy issues' you have your answer. If you suspect a conflict of interest, you may have grounds to NOT pay them any fees at all, including costs incurred (search fees etc).
By sacking them, they whole process starts again from scratch…delaying the process further.Forget going thru their lawyer; as you see, they do not appear to be dealing with you in good faith.
The seller has an obligation to contact you and to provide ALL the material matters withing the contract BEFORE you have any obligation to pay.
Before they can make any attempt to 'take away' your deposit, they must do everything to abide by the terms of the contract; it required three parts to complete:
"Settlement Date shall be:
A. the date upon which vacant possession of the Property shall be given by the Vendor to the Purchaser namely…
B. …upon acceptance of Title and…
C. …payment of the purchase price in full.
If each of these three things do not happen, then the settlement date has to be postponed.Stick to your guns in regard to the 'representation' that the seller's reps mad you you, that the project would be completed in stages with yours completed last. This MUST have also been set out in writing in their sale to you?
If they were to change the timing of settlement in a major and material way by the change of stage timings, they should have informed EVERY buyer at the time of that decision in writing. This would be easy to prove in a court of law via minutes of directors meetings, council applications, communication with their builders etc.
As for the 'deposit', is it a 'part payment' or a 'deposit'? There is a difference and will have different effect as to the handling of the return of the funds if the sale is not settled or they wish to retain the funds.
If memory serves me, a 'part payment' may be retained (but only up to the value of the difference between your buying price and the eventual sale price to another buyer; which they MUST make every effort to get the MAX price so as to reduce your losses) v's a 'deposit' that must be returned in full to you.Before they can terminate the contract, they would also have to send to you a 'notice to complete' within 14 days (usually, read the contract). This will again give you additional time, time that they do not want to waste as itmeans additional legal costs and lost interest and possible los of additional bank financing to complete the last stages of the project.
What does the contract say in regard to the time frames to make good settlement after they have registered the project etc?Only deal with the seller direct (in writing). Write only to the CEO, the person that has the power and authority to make decisions, anyone else is a waste of time and effort.
If their lawyer contacts you by phone, refuse to talk with them but ask them to put their communication in writing. Always keep a diary of anything said; write it down immediately the call is completed noting the date and time (start and finish). Use words like…"They said 'words to the effect of'…."I said 'words to the effect of'. It is NOT possible to remember 100% of any conversation.
Always follow up any conversation with a written record (by 'snail mail') to the other party as a record of conversation (for possible later court use). This will ensure that things do not get 'lost in translation'.
Notify the seller that all communication must be sent to you by POST, specifically excluding email as a means of communication; this will slow the process up further as 'postal' delivery isassumed to have taken place 2 days after posting but email is instant. This will add at least 4 days to any communication (almost a week each time).At the very end, offer to settle immediately BUT with a $15-20K DISCOUNT, noting that you have incurred additional costs due to the MISrepresentation of the seller (in that your property would be the last to be completed). This is your trump card; play is hard, play it often, stick to it.
Accountants are about recording the past and not about planning the future. Nor are they usually property investors themselves.
NEVER EVER cross-colateralise any of your loans. That is an 'all in' loan. If for some reason one property needs to be sold or HAS to be sold, the banks can sell off any or all of your other properties as well as access your bank accounts. They can also freeze your credit cards if they are linked to the savings and/or investment property accounts.
Make sure each investment property stands alone, this is a MUST.I would think the tax deduction would depend on who PAYS those expenses = tax deduction in their tax return.
You coulkd claim some of the rent as a business expense (home office space, based on floor area plus storage costs of tools etc = garage) plus a % of power, water, gas, rent.
The Govt has just passed a new law in regard to exit fees (meaning NO exit fees are now allowable)
I would also compare the costs of holding (continuing to pay morecosts than it earns over the next 2 years v's any (possible) exit fees on the current mortgage.
You can ALWAYS ask to renegociate a loan (with your current lender or a new lender. The price may go DOWN, making this more +CF.
You could also seek to add value on the property and therefore increase the rent, again making this more +CF.I would also suspect that the interest 'lost' on this fixed loan is far less than the cost of paying transfer taxes just to move it into a trust.
You could also offer the property (at an increased price) to a 'buyer' on a 'Rent to Own' deal to a person that is unable to get a bank loan (but DOES have the capacity to pay rent (mortgage) for at least 12 months (so they can then prove to the bank that they have the capacity to pay and therefore qualifying for a loan.
You set a price ABOVE the current market (based on at least CPI increases every 3 months. ie: Current price = $400K; in 3 months its $408K ($400 plus 2% [using an 8% pa increase in value divided by 3/12 months]; then at 6 months is $416,160 etc etc.].
They can do this via a set price/set date contract or have the OPTION to purchase the property [at the stated increasing price] with the agreed time frame. They will have a desire to properly maintain the property and to add value as they know that is will be their property in a short space of time.If you have a current 50/50 split and wish to change it to 70/30 (and assuming that stamp duty IS payable; which I suspect it is NOT, but must be confirmed by ringing the state stamp duty office) a seperate contract can change the % entitlements without transfer taxes. To ensure that your additional interest is enforcable, you lodge a lien against the property so that if you eventually wish to sell (and you are the 70% holder) the settelment can only go ahead if you release the lien (after recieving your 70%).
Its a messy way to do things but it should save transfer taxes (of ~$15,000+ on a 'standard' priced property) less the additional legal costs and the cost of the lien.If you MUST transfer the property AND you have to pay transfer taxes, consider having the property transfered into a family trust; this will improve your future borrowing capacity. The banks will proberbly require you (both) to sign a personal guarantee (which is an UNREALISED debt).
Make sure you have access to measure up and to allow tradesmen in to quote for you and you are ready to go the same day that you get the keys.
I would also ask for immediate access (again) and enter a contract setting out EXACTLY what you wish to do (paint, carpets, curtains etc). They are concerned that you may damage the property and then fail to complete the transfer leaving them with the mess to pay for. Remind them that with the work you are doing, they would only benefit if you fail to complete the transfer (with new paint, carpets etc).
Offer them an extra $1,000 in cash to sweeten the deal if that helps. At $300 to $500 lost rental income per week, it will take just 2-3 weeks to recover the additional cost.
Did you the bank to provide an 'end valuation' (after reno)?Keep the +CF properties and sell the negative CF property. Thats makes far more sense than selling you better performing properties.
As or your own home, have you considered moving out and leasing your PPOR and leasing/renting a similar style property for less money? You will find that renting a property of the same standard is usually cheaper and you can pay for it from the increased income from renting your current home PLUS you may be able to release the trapped equity in that property as well to generate additional properties.
Do not be fussed about negative gearing, you should be looking to pay as much tax as possible….as this means that you are earning HEAPS of money = cash IN after all expenses. In addition, the banks LOVE +CF properties AND will allow you to borrow more = buy more +CF properties and make more cash IN = more tax = better investments.
When you do your cals, base them on figures that do NOT include tax deductions as this will give you a truer +CF v -CF comparison. You MUST assume that the property can provide +CF if/should you stop work (due to loss of a job or a desire to stop work). If you base your figures on tax deductions, it assums that you will have additional employee (plus other income) against which to deduct that figure. If you stop work then is nothing to deduct the tax deductions…even thu you can carry them forward for a number of years (7 I think).
So, to recap:
1. Sell the negatively geared (non performing) property.
1a. Pay down the other mortgages if you see fit to increase the +CF effects of the better properties.
2. Move out of your current home into a similar property and pay less (in rent v mortgage) per month.
3. Rent out your current home to gain additional rental income and gives you the ability to claim that properties tax write-offs whci are currently not allowable).
4. Borrow against the trapped equity in your current home to purchase additional POSITIVELY geared property.
5. Place the NEW purchases in a trust.
6. Do NOT transfer the +CF geared properties into a trust so you save the transfer fees which can be better used elsewhere.
7. Buy ALL future properties with a trust so you retain the ability to borrow with the banks, who will usually require a personal guarantee. (NOTE: the banks view a guarantee as an UNREALISED debt, as such, it does not [yet] form a part of any [current] obligation to a debt (mortgage).Not sur about stamp duty? As you are not selling to a 3rd party, I would suspect that duty 'may' not be payable. However, if it is, what about a seperate contract setting out the change in financial arrangement supported by a lien on the property (costs less than $100 in most cases) plus any legals.
For the sellers: I would think that the REA MUST offer reduced commissions as their costs are reduced, that is YOUR costs of the auctioneer is being divided between various sellers. If not, then ask them for a SUBSTANTIAL discount. If they will not offer it, go elsewhere.
