Forum Replies Created
- I just don’t want my name on anything
Why not ??
G’day chookie and welcome to the forum, I hope you glean something useful from it.
Regarding the inheritance you are one lucky sausage…well done.
My parents were involved with a similar deal about 25 years ago when my grandparents died leaving their PPoR to be equally split between the four children. This could have been a complete nightmare, but very surprisingly everything went very smoothly indeed.
The eldest brother got 3 quotes from 3 different REA’s and the median was established and agreed at 38K. Two of the other brothers said it was a complete dive and wanted nothing to do with it, they wanted their 9.5K and skidaddled. My mother and her eldest brother both said they wouldn’t mind it, and resolved that my mother would have it as the eldest brother was really neither here nor there and could do equally well with the cash as the house in other investments.
M&D took out a loan for 28.5K, secured against the property and paid out all 3 brothers.
Any perceived problem / issue fully sorted.
Unfortunately there is a sad ending to the tale. M&D sold the house 2 years later for 42K, and has since grown to be worth over 275K…oh to wind the clock back.
Well that surprised the hell out of me !!! Living in Canberra and all…
I was expecting to read something about being pals with Janette Howard !!! [lmao] [lmao]
Don’t be afraid to walk away if you are not happy.Exactly…it all comes down to how much you want the place.
But then I’m assuming that since you put an offer in on the place, it fundamentally has some attraction to you (location / yield / growth – whatever).
Water stain damage – regardless of how bad it is – is a fly speck compared to these much larger aspects of the property.
If you can get away with it by twisting the Vendors arm…good luck to you…but then they might be prepared to dump you and walk away as well if you ask for a reduction.
All comes down to how badly you really want the title.
Cheer up Mal, I’m not trying to scare anyone. Just calling it like I see it, as asked. Not everyone in the big bad world plays nicely in the sandpit…I’ve found she’s all a big swirling mass of negotiation / wants and needs. The degree to which one party decides to move is dictated by these, as amply demonstrated by your specific example.
we overpaid for a 2 bedroom unit in a relatively good capital growth area. Paid 158,000 – renovated for 15,000, all on 100% lend. So need 180,000 just to cover mortgage.OK – not so good – you’ve got yourself into a pickle. You realise this will cost.
If we sold for a realistic price of 167,000 after agents fees, it will leave us with 15,000 in debt.OK – and what if you get 25 people coming through the property, 3 of which make an offer, all investors who won’t fall into the trap of overpaying – and the highest of those is 145K – before agents costs ??
What’s your strategy going to be then, and if it’s ‘be insulted and reject them all out of principle because you need more’ and carry on holding it, how long can your cash reserves sustain the outflow ??
What has the performance of the asset been, as compared with your fully aware financial expectations and projections when you purchased it initially ??
Seeing as though you are fully aware of all of your mistakes…whatever they all are…I question why this has come up after reading Steve’s book. What exactly do you mean by mistakes ??
Sounds by your response to hrm, you’re both a full bottle on all the solutions and have covered all possibilities, and you’re all on a really fantastic financial deal with hubby being a lender. This makes no sense to me…you should be offering solutions to this you are all so switched on, not asking questions about it.
It appears however all is not as you flippantly describe and now it’s crunch time. You reckon you are more than willing to walk away with a small loss…I think prospective wily and cunning purchasers in this current climate will severely test your resolve and realistically it’ll come down to whether you are more than willing to walk away with a much larger loss.
You have quite a few big decisions to make, none of which look too appealing. But I’m sure you’ve thought of all of those as well and are fully aware of them.
Finally, as you requested, my idea is to…bight the bullet and take the unknown large loss…but then, you would have already thought of that as well.
Postscript…of course you would have fully researched the next acquisition on the horizon and I’m sure it’s way better than what you have already and those financial projections have all been done such that you once again don’t overpay…or is that moving just a tad too far in front ??
I don’t get a warm and fuzzy feeling that you are fully aware of everything as you describe
C@34,
Should be zero mate for your PPoR ??? Is something unusual ??
Great post Richard. Inspirational for all to glean off. [thumbsupanim]
Wizard7001, instead of answering the question “Where are they”….perhaps I can confirm where they are not – if that narrows your search down somewhat – that is straight off the shelf, no work to do, ready to be plucked off from some great long list of any internet RE page.
Rule that option out, and then start your search again…it’ll be a lot quicker.
Hello CoG,
My thoughts are that unless the specific wording in the clauses specifically state that you are allowed to knock off $ xx dollars if yy is found to be deficient, then the clauses are simply “walk away” clauses.
That is, you either tear up the contract and walk away or proceed as if everything is honky dory.
If I was your Vendor and you tried to re-negotiate the price based on any discovered defect – no matter how large or costly, I’d have a good laugh and say that was why I let it go to you so cheaply. If it didn’t have the stain / damage / whatever etc etc the price would have been 1k / 5K / 10K more…
My limited experience has been these clauses, unless specifically worded as such with $ figures mentioned, are all or nothing clauses…no room for argy bargy there.
Hiya Benson,
Haven’t been in the country since writing that post…so no progress that I know of, but my switched on accountant has given our folder to his WA Land Tax specialist and we are waiting back from them. I suspect I’ll have some further direction in late Jan ’06.
We were forced to pay the bills as per the Act whilst we put together a case and argue the toss with the Govt. Happy to spend some on challenging the wording in the Act…it’s very vague and open to interpretation. Well that’s my unlearned opinion having read through it, and also my accountants. I’ll hand it over to the ‘wigged squirrels’ and see what they can argue. The volume of dollars justifies taking it pretty high up if necessary. If other people are interested I wouldn’t mind a hand…if you know what I mean. [jealous]
Anyone else have large WA Land Tax bills that they wish to see reduced – give us a hoy.
Heya me ol’ mate Deb,
Look, dealing in commercial property isn’t some big conspiracy where everyone walks around with heavy trenchcoats on and whispers under their breathe.
Commercial Lessee’s are just normal people like you and I. Go up and have a chat. There’s no law against having a chat with someone.
The agent probably won’t like you doing it, but then so what ?? Be upfront and honest with the agent. Let them know that you do this with all of your CIP prospective purchases, and if they want a sale, they better get used to that fact.
Best to get along with the tenant anyhow, if they are going to be with you for the next 10 years, may as well be happy with one another. You’ll be looking after each other, which is usually very different to what you are used to in ressy, she’s usually all one way traffic in those deals.
In terms of what you can put in a written offer, anything goes literally. Don’t be afraid to put anything down. As you’ve probably read in some of my other posts, I don’t like playing games with my offers though, if the deal is good and alot of value can be extracted from purchasing the property – why muck around, go in low and clean…something that may squeeze the vendor dollar wise, but be very attractive to them in all other respects. They want your cash, not your ‘get out’ clauses. If you really want to get out of the deal, don’t write up an offer – simple.
If a purchaser wrote “subject to the tenant signing up a 10 yr lease”, I’d probably have a good laugh and throw the offer straight in the bin. Others may accomodate it, but I think it’d be rare.
Good luck with your endeavours people.
Hi milnev, welcome to the forum,
I don’t see how anyone can possibly issue you with a sensible answer given the scant 3 lines you’ve offered, with little to no details.
Before taking your husband’s colleague’s advice (his name’s not Dazza is it – like off the TV ads ??) have you had a really good look at why exactly you seem to be having trouble making ends meet. The key might very well lie there, and the drastic action contemplated might not be necessary at all.
A licensed F.A. would rightfully ask you and your husband about 400 questions, describing every aspect of your life…finances / children / ages / ambitions etc before even uttering one word.
Given the details so far, the only possible answer would be only you and your husband could possibly venture an opinion.
Specifically should I have pressed ahead and tried talking to the owner directly with or without his solicitor present to try to uncover the real story. I was happy to sign with the property not meeting the residential services Act as we were planning a substantial upgrade on the property however in no way could we open ourselves to the plethora of nasty possibilities if Clause 1 remained intact.How would you have handled this situation?
Oh…The real-estate agent was not helpful chap.
Ben, this sounds like one of those deals where you need to read the documentation and be involved up to your neck before you can actually comment.
Firstly, if the property sold for what the Vendor wanted, I would suggest that the REA was very helpful. Remember who pays him. If you didn’t get your way with him, that probably means he’s doing a good job.
It sounds like you perceived a risk that was maybe there, and went to your solicitors who confirmed also that it was also a maybe…and then all of these big bad nasty things that can eventuate if a maybe comes up.
You mention clause 1, but don’t detail anything about clause 1. What did it say ?
You had 4 exclamation marks and 6 question marks against the statement that another buyer was willing to purchase with these added clauses, I have no idea what these clauses actually say, except 2a and 2b….but I can only surmise that they were not as scared of the maybe’s as what you and your advisers were….or perhaps they knew something that you didn’t….or perhaps they were the adjoining neighbours and were going to demolish it and use the land for some other purpose…or perhaps they were experienced operators in this field and knew the “maybe’s” that your solicitors were so scared of were a complete load of bollocks.
Best thing you can do, I suppose, is keep track of what the eventual purchaser does with the property and observe as a non-financial bystander whether any of these “maybe’s” that both you and your solicitors are so scared of actually come to fruition. It won’t earn you any money, but then how else do you learn.
Every property one buys has risks…if you continually run to your solicitors they will without doubt take you down the path of least risk. This invariably will translate into the path of least return.
Every investor must at some point (by my definition at least of an investor) shoulder the full weight of the decision to purchase or not. Advice is only advice, you must mull it over and see how it fits with your overall strategy / position.
Ben, you may have missed out on this perceived opportunity, their will be another. Personally I didn’t think the $ figures you presented were that crash hot on a nett level, and it looked like you needed to do a bunch of work and risk to get them.
Also remember that a few of these individuals have been playing these high level wily negotiation games for 50+ years. Their knowledge and cunning is staggering. Our group are mere pups going hardball with some of these guys. Alot of the times we get crushed too, but we dust ourselves off and get back in there butting heads with the stubborn ol’ buggers to close a deal we perceive to be OK.
In terms of removing clauses, everything is up for agreement…if the other party don’t agree, it either stays on or you walk away. I always console myself by calculating exactly what the dirt is worth…if it’s over 90% of the value you are paying, the clauses mean nothing to me.
This is where Mickey Mouse seminar tricks vs real world hardball negotiating separate enormously. We found “NO” to be a very powerful word indeed.
Keep looking mate, something else will come along that takes your fancy.
I am new to subdivisions and need some help.OK – fair enough.
We believeOops – radar is up…there’s that word “believe”
We believe that … Can anyone tell me whether this sounds like a legit figure?What is your belief based on ??
does anyone knowI guessWhat else do I need to think about? What have I missed that is so obvious???Troy,
I agree with foundations sentiments. It appears from your post that you need to do way more research before dipping your toe into the water. You don’t seem to be too sure about anything.
It’s a bit of a chicken and egg thing, you’ll do well with sub-divisions when you have experience, but to get true experience you really need to just jump in.
It’s good that you’ve posted lots of questions, and hopefully you are blessed with very wise and sage responses. I am not experienced at all in the area in which you have chosen so have nothing concrete to add.
Caution, lots and lots of research and make sure those end sales figures are truly achievable.
Good luck Troy.
I had to replace glass and repair front door $250 worth of damageAre you absolutely 100% positive about this ??
If so…why are you subjecting yourself to situations like this ??
If not…why did you do it ??
What the REA wants is 100% of the time completely irrelevant.
They are not a signatory to the contract, they are a mere bystander in the whole transaction.
They generally don’t act like it was fitting their true station in life, and hence less experienced people (in real estate transactions) sometimes get railroaded by them.
In my eyes they are little puppy dogs with no signing authority…and get treated as such in the midst of tansacting RE deals.
G’day JC,
It appears the nett yield is 9.34% which is pretty good. Not mind blowing…but better than 2%…if you know what I mean. [wink]
Can I ask if the property is sitting on it’s own dirt ?? If so what is the dirt worth.
If no dirt, you are buying the lease…which is OK as long as the Lessee is strong.
Best thing you can do is get the Lease and have a jolly good read over a nice cup of tea.
For a comm. prop, this is pretty cheap stuff, so the first clause I’d be checking for is a “First Right of Refusal”. Sometimes these are in Leases, whereby the Lessee (tenant) must be given the right to purchase the property after you have done all of the hard graft in negotiating and signed a contract to buy that has been accepted by the Vendor. If they decide to take the option up…bye bye to the deal…they get it at the price you negotiated with the Vendor. You walk away with nothing.
Next thing I’d look at is the outgoings. It makes no sense that the “recoverable outgoings” is larger than the current outgoings bill. Something squirrelly going on there.
3 year term is OK, bit suss that there is no option. After I’d read the lease and thoroughly understood it, I’d waltz in to the tenant and ask him what his intention is. The other thing I’d ask is, as a percentage of his gross turnover, what is the rent plus GST plus O/G’s worth ?? 15 / 20 / 30 / 50. The lower the number obviously the more secure his business will be and hence your anticipated cashflows. He might tell you to take a flying leap…which is OK…nothing ventured and all of that.
Good luck with your potential deal. [specool]
How do you expect your offer will stand out and be attractive to the Vendors with all of those “subject to” clauses.
They aren’t interested in your future “subject to” anything. This isn’t some author or friendly seminar host your dealing with…they are real people who’ve hired professional help to get the most cash out of the deal as possible. They want your unconditional cash on the table.
You’ve mentioned 350 as the basis for your numbers for the supposed future development. This has absolutely no bearing whatsoever on what the property is actually worth, or indeed what the Vendor will accept.
If you want it, put the Vendors hat on for a minute and start thinking what they want. If it’s too high for your taste, walk away and find soemthing cheaper. If it’s not, pay the price and secure the land.
Asking agents (especially wily ol’ dogs) how many bids have been received will not help one bit. Do you really think he’ll let you know anything at all, let alone the full and honest truth ?? He’s the chap trying to extract as much cash out of you as possible ??
Work out what the land is truly worth and put a bid in for that figure. Simple.
I think the mystery Mr O’Rourke to whom you refer is the one and only Rory O’Rourke, a bit of a wheel over here in Perth flogging inner city stuff and running a seminar and book or two…don’t they all ??
I think he’s also dragged his son Jayson into the “dog and pony” show. At around 25 he’s an expert as well, advising 50 and 60 year olds how to spend their money for retirement when they get a bit older.
We’ve used a pen, paper, calculator and ruler to do the job just fine. These highly technical instruments did us fine for the first 4 or 5.
We then went really high tec and graduated to a computer.
Excel now does us just fine.
