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I am in a bad situation myself in a off the plan purchase… this is what I posted in Feb 2011.
If I were you I'd get out off the deal now or it can financially rouine you.I invested in a property two and a half years ago on an investment property off the plan ($540k). Yes I was a
sucker, no stamp duty and a rental guaranty for two years. Judging by the
drawing and photos I thought great, just a $2000 initial bond and wait until
settlement. Plenty of time to save and let the market rise.After two and a half years the property settled, developers paid the stamp duty as agreed in
the contract, but when it came to the rental guarantee.. they are planning to go
bankrupt. We can't win because it will take more money to take them to court.
Now the banks still require their monthly interest paid and theres a number of
apartments wanting to be rented. The banks have under priced the property, and
we agreed on a price, not knowing, that was over inflated at the
time.Now I have to sell at the risk of hoping to get the price that I
need so to pay the bank loan off and get my 20% bond back. Who's to blame myself
and the realestate agent who sucked me in. I still can't find anything about the
developers. Everone was in on it from the agents, finance company, strata
managers, settlement agents. They all make their commissions and move on to the
next scam.
In my opinion Brunswick seems to have been left undeveloped.
I have been analysing fringe areas of Melbourne CBD for the last four years for
IPs. This is a good opportunity to get an investment property now because it is
only catching on in last the last years.A number of major building projects are in the pipeline. It
is very close to the city, and is on some major arterial roads and transport
leading into the city centre. Especially Brunswick East where it is only 4.5 km
from city centre it seems prime location for more future development.The potential for current new property prices to double in
the next five years is likely due to the current stagnant low prices in the
area. Demand from investment property especially from WA buyers has increased due
to the mining boom.Melbourne prices are lower than Perth and Sydney of similar
quality and distance from cbd largely due to uncertainty of interest rates.
Rental demand in Melbourne is strong and will continue due to new migrants and influx
of overseas workers.Thanks for all your comments. For some time no one made any comments, I started to think my situation was falling on deaf ears. Your comments have been some help and assurance. You have given me food for thought and will look into some of your ideas.
Currently it's on the market for sale, and back on the rental market as well. If it was rented out then it will cover two thirds of the mortgage. Presently it's costing three time as much as my PPOR.
Glenn
Thanks for your comments.
I am angry and am trying to seek some answer or to blame some one. Obviously it's going to cost me money to sell and try to recoup my money. I still think that when these developers were chosen or allowed to develop the property a reasonable duty of care should have been made to maker sure they can fulfill the whole contract. Another words thay had sufficient underlying funds or capital to draw on.
I appreciate all your comments, especially xdrew you are definately right about the time, effort, cost and know how involved in building projects.
I tried to find out the credibility of the buiding company, i know now that they must have been small and did not have the capital base, because the real estate agents would have used it as a merketing reference if they were of some size and had a track record of other completed projects.
Having said this, I thought by having the rental gurantee written in the contract would have ment some asurety.
Someone mentioned that they can do this in every state. Setup shop with a new business name and acn no. and do the whole scam again. I've seen adds in the Perth WA newspaper of off the plan apartment with a two year rental gurantee advertised.
Thanks Luke,
I tried to do at best my due diligence. Unfortunately all parties concerned did not want to disclose the builders/property developers
information.
Glenn
