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Hi Fish,
That’s correct, no cooling off period in Tas which does catch some people out.
There is a standard Law Society/REIT contract which most people use here. There is provision in that to make the contract subject to finance, subject to building inspection etc. If you have special conditions eg pest inspection you can draft them into it as well, but unless you’re confident of your legal drafting skills don’t do it yourself, and don’t let the agent do it for you either.
But be warned there are some agents getting around Hobart (and probably Launceston too) who have been taking the standard contract (with its Law Society endorsement all over it) and rewording parts of it (eg to water down the building inspection clause). Most purchasers rightly assume that the Law Society emblems on the contract mean it is the standard contract and they are protected. However the agents deliberately reword the contract to make it harder for the purchasers to get out of it if they discover a problem with the property during their building inspection.
If you have any doubts I’d suggest sending the contract to me or another lawyer before you sign it. If it’s all in order it will only take us 5 mins or so to confirm this. If there are problems it may need to be redrafted but that’s all the more reason not to sign it without legal advice.
Aside from that I’d suggest getting to know your areas rather than rushing in to buy. There are some nuances to Tassie markets and some mainlanders get lured into various Tassie suburbs that are “only a short commute” by mainland standards, but actually backwaters with no capital growth potential and that don’t appeal to renters.
I’ve used ripehouse.com.au which provides some really valuable insights about where to buy. You’d have to pay for a monthly membership ($97 I think) but it’s definitely worth it when it can make the difference between buying in a market that’s poised for growth versus one which will be stagnant for the next decade.
Let me know if you need any more assistance and I can provide a phone number if you want to have a chat at any point.
Hi Corinne,
I use John Oliver at Solutions to Business. He’s very approachable and helpful: [email protected]
I’m a lawyer down here so can help you with that side of things if you like.
I haven’t used a buyers agent myself but some of my clients have used Rob Zubin at My Property Hunter. They were very happy with him and I think he charged a fixed fee of about $6k: http://www.mypropertyhunter.com.au/who-we-are/real-estate-Tasmania-Hobart-Launceston-buyers-agent.html
If anyone’s interested there’s a Meetup at Customs House in Hobart on 17 Feb. I’m not organising it, haven’t been involved with this group before but just stumbled across it the other day: http://www.meetup.com/Hobart-Property-Investors-Group/events/228604887/
Cheers.
Have a look at Ripehouse.com too
Land tax is payable on rental properties whether or not you are in Australia (except in NT). The rules differ from state to state though so get some professional advice in the state you want to invest.
If looking for a house as an investment, do not confuse it with a house you want to live in. Look purely at the investment potential, the numbers etc. If you look for a house that you would like to live in you risk buying a dud investment.
You can buy while living overseas but may have a tougher time obtaining finance from an Aus bank while you have a foreign income. See how you go, but you may need to shop around. It may also help if someone in Aus (eg your father) is willing to sign as guarantor – but the bank will ask for this if they require it.
Which state are you in? In Tasmania the situation is that if the standard form contract was used then the builder would not be entitled to charge any penalty interest for a simple 2 or 3 week delay, but would be entitled to charge you for any losses he’s actually incurred. Therefore if he’s incurred interest costs to his bank in the amount of $3,000 for the delay he can charge you that. You would be within your rights to ask him for evidence of those costs – ie copies of his bank statements showing how much interest he incurred.
However he is not entitled to delay settlement if you do not pay this. This compensation is effectively separate from the settlement process. Therefore if you turn up to settlement without the $3,000 he will still be obliged to settle. He may then sue you for the $3,000, or he may consider that it’s not worth it. For $3k many people would consider it’s not worth it.
I also agree with @terryw about your bank paying for it.
Therefore it may be worth you asking your lawyer the following questions:
– what if I don’t pay the interest, will he still have to settle on the 18th?
– if he still has to settle on the 18th, what can he do then to get the $3k?
– does the contract allow him to charge penalty interest?
– can we make my bank pay this – as it was their fault?
– is the 10% interest rate written into the contract? If not can we ask him to verify the interest he’s charging?To repeat myself, this is the situation in Tasmania IF the standard form contract is used and other terms have not been incorporated into it. This is not necessarily the situation in your case – your state may be different and even if your contract looks like the standard one it may have had other terms drafted into it (some agents have been doing that lately). Therefore do not rely on what I’ve said here. Use it as a bit of guidance if you like to assist you in talking to your lawyer, but only act on the advice of your lawyer. On that note, are you using a lawyer or a conveyancer? If it’s a conveyancer then you may want to ask them to refer it to a lawyer. Conveyancers aren’t really qualified to deal with disputes.
Hey @paddytaskunas
How did you go with this, did you find a meetup? I just joined the group on meetup.com but doesn’t look like any are currently scheduled.
Hi Nicnacvb,
Have you had any luck with this? I’m in Hobart, know a great guy who’s a property manager I can put you in touch with. I can probably make some enquiries if you need others. I’m a lawyer down here in case you need any assistance on that front.
Hi guys, I’m in Hobart. Ernest, Mauricio, what are you guys up to? What sort of investing are you doing?
I bought in Chigwell last year, renovated and renting it now. Looking for a similar place at the moment. I’m a property/commercial lawyer too so always happy to talk about the legal side of things too.
Thanks Corey,
I’m talking about heating for inside the house (it’s in Tasmania).
Heat pump quotes are about $2,300 – $2,600 installed. Electric is about $1,000.
Cheers.
You have a number of rights and guarantees as a consumer. If a product simply doesn’t do its job then you should be entitled to a refund/replacement. The ACCC publishes a fair bit of useful info:
https://www.accc.gov.au/consumers
If it actually cooled the place to 26 degrees though you might have to have a closer look at what they said it would do, what AC units are ordinarily capable of etc, and check out the settings as Catalyst has explained before going down the ACCC route.
I’ll just add to this Mick, as you’re starting out do some reading to inform yourself. There should be a post somewhere on here about good books to start with. There are a lot of spruikers selling courses or access to positively geared property etc. Don’t pay for that sort of thing. I’ve heard of good training programs too – Steve McKnight, Rick Otton etc but do your due diligence even on the people, products, courses etc before parting with your money.
That’s true DT not much capital growth in Tassie. Manufactured growth and cashflow are possible but the jobs market and stagnant population doesn’t create much capital growth. Is it any better in outback Vic or NSW?
Mick I’m in Tassie, send me a PM if you want to talk about this area
Thanks heaps to everyone for the responses, those are some really helpful answers.
@dtraeger
@superandrew
I’m interested to hear why you are both suggesting staying away from vendor finance? Because you’d ultimately be giving up a cash cow?Hey mate,
I read that too. There’s heaps of info out there but beware one of the biggest online markets is selling products about how to make money online. Kind of like real estate spruikers who actually make all their money selling products about real estate rather than actually making money in real estate.
I haven’t actually made a cent online yet but have poked through a few resources and find it pretty interesting anyway. Here are a few good ones to get started with:
warriorforum.com – forums re affiliate marketing etc
clickbank.com – products to sell online, also has a few tutorials etc
The 4 hour work week – great book, if you haven’t read it you should even just for pointers about how to improve efficiency etc in other areas of your life
Also look up Tim Ferriss (the author of that book) – he has a website/blog with heaps of info and tutorials on it tooGood luck.
@phil44 thanks, I’ll send you a PM now, would love a copy of the ebook.
@pauldobson good on you for fighting the good fight for VF! I might get in touch with you soon, wouldn’t mind chatting to you about it at some point if you have time.
Thanks @pauldobson that’s very helpful. Sounds like some very serious developments regarding lease options so I will have a closer look at vendor finance. Do you buy/sell via VF yourself? It sounds like your organisation does a lot of advising in relation to it?
It’s up to you what you’re willing to accept. Depends a bit on the market you’re in. If this is the only purchaser you’re likely to see for the next 2 years then maybe you’re happy to do whatever he requests. Personally it still sounds really one sided and I’d be negotiating some different terms.
If he actually wants you to take the house off the market for him then he should be prepared to put up more than $500 in the beginning. If he’s concerned about whether or not he’ll get DA approval, fair enough, but he should be required to do everything in his power to get that approval, and should only get his deposit back if after doing all of that the Council does not grant approval. Leaving it too open could allow him to change his mind then just not bother to complete the application process with council and then get out of the contract that way. That would not be fair on you and would cost you a lot of money.
You may wish to include a shorter period clause (that’s what we call it in Tas, may have a different name wherever you are). We usually set it at two days which means if you give him notice, he has two days to go unconditional or else you can terminate the contract. That means you can continue marketing the property to other purchasers, and if a better purchaser comes along you can tell him to either commit or hit the road.
As there are a few unique circumstances here I suggest contacting your lawyer before making the in principle agreement. People can get grumpy if you make a verbal agreement, then speak to your lawyer and learn something else, then have to come back and reopen negotiations.
It does sound a bit one sided. If you draft the conditions properly then there’s no reason you can’t give him all the time he needs while also making sure that he is not just a tire kicker. You risk a fair bit if you hold the property for him for 8 months and then he walks away from it. It’s reasonable for you to ask that he actually put some skin in the game. $500 is a tiny deposit on a property of that value and can not give you any confidence that the developer even intends to see the contract through.
You say he can go unconditional at any time. What conditions are there?
A lot can turn on the actual wording of the conditions, so you should see a lawyer to make sure you are protected. What state are you in?
Regarding the option, there would be a non-refundable option fee payable upfront or in ongoing increments (eg weekly). On residential purchases I understand it’s often calculated to add up to a 10% or 20% deposit by the time the purchaser exercises the option. It would probably be more money than the developer intends to part with at the moment by the sounds of it. I’m still a rookie when it comes to lease options so there will be better people here for you to ask about what to charge him if you do want to go that way. @property-trader Jason Moore was pretty helpful when I asked about them the other week.
The lender’s valuer is not there for the purchaser’s benefit. That valuer’s role is to sign off on document which guarnatees to the bank that if the purchaser defaults, the bank will be able to sell the property for the stated price. Therefore these valuations are always pretty conservative.
Unless you can point to an actual mistake in that valuation (eg a calculation they got wrong, an important fact that they did not take into account etc) you will struggle to convince the bank otherwise.
If you spend a bit of time looking at comparable properties or even speak to real estate agents you could get a fair idea of what your property’s worth without having to pay for a valuer.
