I would be concerned if the agency was encouraging of 6mth leases rather than longer leases, because it costs you big time as you are learning.

I’m going to address the most concerning question here: whether or not your lender will finance this purchase. If not it becomes a matter of losing the deposit and possibly being sued.

For the moment, all energy should probably be put into determining how to finance this purchase if the bank says no. Then worry about everything else after that. Ability to finance the purchase and settle the purchase is the most pressing issue.

That’s it. One logic step at a time. And yes we’d love to hear how you go. Check back in and let us know. Chances are your situation will be similar to other people and this thread will become a useful resource for other people :)

Glad you feel you got the help you need and are on the right track :)

I would be concerned about the following things:

Does the local economy sustain itself?

It is prudent to be clear on the impact to an economy that is heavily reliant on the financial support of other nations. The flick of a pen in the parliament of another nation can change everything in an instant.

It is also important to understand what drives the value of a location. If it is the tourism trade, be clear on the major threats to how well tourism thrives in the area. Currency fluctuations is a biggie. Civil unrest, sanctions inflicted, and decisions by other nations to withdraw consular presence are others. If you are talking about a destination that requires a visitor to have multiple vaccinations to protect against illnesses during a standard visit, one must question how quickly that destination would fall out of favor with tourists if those illnesses escalated into a new strain, or if a new super bug arrived.

Hi Vern

Yes, however a valuer will value your house based on “comparible properties”. So he/she will compare your house to other properties that are in a similar condition, have a similar aesthetic, and a similar location. So if you want the valuer to put a high figure on your property, you want to make your property “similar to” the ones that are selling for higher prices. The real estate agents will be able to comment on how to make your home look like the ones selling for higher prices.

You probably don’t want to tell the real estate agent you have no intention of selling because he/she will rightfully see they are wasting their time helping you with a valuation. Unless you find a friendly one that understands you aim to release equity and you then use that to buy an investment property in the area, and hope to buy from that particular real estate agent. Then he/she would see merit in spending time on you.

Hope all that makes sense.

Hi Vern

The simple response is “whatever adds the most value to the buyers IN YOUR AREA”. Chat to a few real estate agents and ask them to ponder the question of the likely sale value of your house as it is, compared to if you changed the windows. Pose a few scenarios and ask them which will offer the biggest resale difference in terms of $$. Also chat to them about which of the options would facilitate the fastest sale, because that is an aspect that will interest them greatly. Quick turnover.

Perhaps you could spend $1000 to make the place look more modern, and add $2000 of value
or
Perhaps you could spend $5000 to make the place look more modern, and add $50,000 of value.

If you are selling your property, your aim is NOT to make the place look more modern. It is to get the most profit. That’s all. To get the most profit. Ideally which appeals to a big market and thus a swift sale.

If the market in your area likes pretty orange windows, but the profit margin is best just leaving them as they are, then you would do that.
If the market in your area is only interested in houses that have windows that look like they are Swiss, then you’d do that.
If the market in your area only wants sash windows, then you’d do that.
If the market in your area likes a few different styles, but one smashes it out of the ballpark in terms of profit, then you’d do that.

You are not there to make someone’s day with pretty windows. You are there to make profit. That’s the cold hard facts of it. So you simply ask the selling agents what the likely resale value would be with different kinds of windows and work your profit out from that. Remember the highest resale does not necessarily mean highest profit, because the highest resale price might have had an enormous renovation bill that eroded profits.

You cannot ask the agent what will make the most profit, just what will be the highest resale. It is up to you to work out profit. The complexity comes in when you ponder that just changing the windows might not cut it. You might for eg need to render the frontage to change the look of the whole facade.

Gidday Eric

That was indeed a weird week.

You may not have realised it, but Richard was literally on the phone to your lender for 4 days straight. Everything else was shelved to deal with this.

Things that made this possible?
* The processes your legal rep has had a lot to do with things as well. Steps they do not undertake until it is absolutely necessary made this course of action possible (changing name on contract of sale).
* The long-standing connections your legal rep has in the area. Being able to pick up the phone and explain a circumstance and course of action and secure agreement is experience money quite literally cannot buy.
* Your broker’s standing as a highly ranked broker with the lender that can throw his weight around, make demands and dictate how things will pan out.

Richard’s experience combined with that of the legal reps came up with the appropriate solution and quite literally forced the bank and vendor’s legal rep into complying with the plan (ps normally the bank won’t even take the call or care). I would hate to think how such a situation would have panned out without suitable legal and broker representation. It appears to be essential to have the right folks batting for you these days. The conduct of the lenders in this weird new world make it almost impossible for the common man to safely enter into a real estate transaction with the confidence that “it’ll be alright on the night”.

Any other fees charged by the property managers are also claimable, such as letting fees and advertising fees.

You’ll be stuck with the service charge portion of the water bill. As to the water usage, it depends both on the state, and whether the dwelling has its own water meter. eg in Victoria, if the dwelling has its own water meter, the tenant pays ALL the water usage, unless the tenancy agreement specifies otherwise. However if it was a unit in a complex that had only one meter shared between everyone, then you cannot pass the water usage on to the tenant and you would be stuck with it. In QLD there are a few ways of passing on some or all the water usage, but if passing all usage on, you have to have all the wiz bang water saving devices. It is easiest to chat to a property manager in the area you are thinking of buying and just ask them how it works. However water usage itself isn’t a huge fee so doesn’t affect the bottom line all that much.

Don’t forget depreciation. You can tax deduct the cost of getting the schedule created, and then there is the year on year deduction as per figures on the depreciation schedule.

Factor in an amount for annual maintenance costs (a popular figure seems to be 3% of the rental income) and be aware you could end up with a vacancy if your tenant vacates and the new tenant doesn’t move in precisely on the next day. If you budget for perhaps a 2week vacancy and find you could not sustain such a vacancy, then perhaps buying a property wouldn’t be such a good idea. There should always be a slushy fund to cover periods of vacancy or unexpected maintenance costs. A common slushy fund figure is $5k.

Hmm what else. Other bank fees such as annual package fees regarding the mortgage is a common fee too.

As Terry indicates, if they are pushing hard then what’s in it for them is probably substantial, and not necessarily in a strategy that is best for you.

If you are able to comment more on your overall position, we might be able to say something more useful.

As Terry and Richard have said, there isn’t sound logic to this advice. An income-producing asset that produces only 3% per annum is very low return. Perhaps the property will grow in value, perhaps it won’t. If it does then in theory if you need to sell it one day you could crystalize your gain by selling it and live off the cash pile till it runs out. Leverage (borrowing) is powerful in that it doesn’t lock up all your cash but instead uses someone else’s, while you in theory enjoy the capital gains for a while.

It’s hard/impossible to know whether one strategy over another would cripple you financially or just put a tiny dent in your extravagant retirement lifestyle without knowing more about your overall position.