Forum Replies Created
- Daryl wrote:Hi Xenia:
The clause specifically states…
'indicates within 7 days of receiving a contract'.
I often here from people about the wordings of contracts they are presented with in r/e deals, and how they are unfair, or restrictive etc.
There is nothing wrong with simply crossing out any terms and/or phrases that you don't like on any contract. Of course, most people don't realise they can do this and are often intimidated by the contract itself, or the people handing it to them.
The problem is getting the other party to agree with the changes you wish to make. In the above case, I would cross out "receiving" and change it to "on the date of signing of contract by the Vendor " or words to that effect.
You can even extend 7 days to 14 days if you want.
Contracts are simply agreements between two parties written on paper. If you don't agree with the terms, change them. Do business your way.
Good work F;
as I read that last post I thought I was listening to myself talk. We are definitely the minority you and I and most of the forum – sad, I know.
Over here we buy as much of our shopping at the 99c store as we can, and whatever else is left on the list we go to the local supermarket with the rewards schemes.
We are not cheap though; our lifestyle is very fulfilling. If I can find a way to save another ten bucks I find it. But you know what; those savings pay for our trips around the U.S – something almost no L.A locals ever do. Go figure.
You are right about the blasphemy that is talking about money. As much as we would love to, we cannot talk to any of our family about it (not bragging; we have achieved the most wealth and with no help) but do you think any of our family ask for help or advice, or "how did you do it?". No; instead they talk about us behind our backs.
This sort of falls into the old cliche of "a dollar saved is a dollar earned" and a concept my economics teacher in year 11 (a hundred years ago) called an "opportunity cost".
If your PPoR is never used for investment purposes then the interest you pay on the loan is money down the drain – a bit like rent I suppose. The more you can pay off your loan above the minimum repayment, the quicker you pay off the loan and the more interest you save. In this sense, there is no cut-off point for paying too much off the loan in my opinion.
Say, for example, you can pay double your repayments, you may cut your 25 year loan down to less than half, and maybe save $100k in interest. As per the cliche; it is money earned.
As my eco teacher would try to explain; the alternative to paying down the loan quicker is to pay the minimum repayments, and put the difference in the repayments into another investment vehicle (say; shares).
Say you make $80k in after-tax profit on your shares over the time you would have paid off the loan had you put all your spare cash into it and saved $100k. The "opportunity cost' of the shares option is $20k. It has cost you $20k by going with shares rather than paying down your loan.
This is a very simplistic example, but I hope you can follow my meaning. In the long run, you will do well either way as to pay down your loans quicker increases your equity and enables you to reinvest sooner, thus exposing you to more cap growth and so on.
meatgroup wrote:Hi There,
Well we think we have finally found our first home….. very exciting. Did it through a letter box drop and out of approximately 250 houses targetted – this has been the one and only response and we've struck a deal.
My question lies in the payment of the deposit. On the contract they have put the name of the vendor as the entity to whom the deposit should be paid …… I was thinking this is not very secure. I thought a deposit went into "trust" or "escrow" or soemthing to that effect only to be released on settlement….
What can I do here? I am thinking that I will call the owner and tell them I would like to give the cheque to their solicitor in trust.
Whats the norm here guys ?
Thanks in advance
RyanBe Alert – The world needs more lerts
Not very safe to give any money to the Vendor directly ever. The usual procedure is the agent takes the deposit and places it into their trust account. They are called the "stakeholder" in the deal.
As you don't have an agent (well done!) the deposit should be deposited into either your solicitor's or the Vendor's solicitor's trust account, or you can open a joint account with the Vendor that needs 2 signatures to withdraw the money – yours and theirs. I don't know of anyone who has actually don eit this way though.edwardc2 wrote:Hi and thanks for that reply L.A. Aussie. Just give me a few days to absorb what uve written [smiling] Just got myself into a negatively geared property recently – guess ill be broke for a while. By the way how does one access equity for their next deposit? Cheers EdTo access the equity, you need to restructure your housing loan so there is a Line of Credit, or some form of redraw facility attached to it.
The new, or restructured loan, is based on the valuation of your property and the lender will allow you to borrow up to 80% (some will allow even higher but I don't recommend it; especially if your L.O.C is on your PPoR), minus any outstanding loans.
EG:-
Your PPoR is worth $300k.
80% of this is $240k. So the Bank will let you use $240K
You still owe $200k on the loan.
Your available equity that you can use is $40k for a deposit on another property (this will also have to include purchase costs which normally run out to approx 6% of the property purchase price).This principle can be applied across all you properties, but usually results in cross-collateralisation which many feel is a no-no. This means that the combined equity of more than one property may be enough to allow you to purchase again, but using only one property maybe you can't.
From my recollection most banks will class the deal as commercial when it goes over 4 dwellings (units etc) and thus will offer a lower LVR. 4 and under is classed residential and they'll go up to 80% (or higher with LMI)
We bought a unit a few years ago which we wanted early access to for the same reasons as possumpal.
We included in our 'conditions' on our offer early access on XYZ date. The vendor said yes and away we went.Originally posted by rejoice:Interesting reading. The reef at Nias is now above the water due to the Tsunamis.
Get 7 Free Lessons from the Teachers of “The Secret” http://rejoice.theofficialsecretseminar.com
Hang on – the reef is now “ABOVE” the water due to the Tsunamis? Was the reef above the water before them, or only since? Where did the water go?
I am now confused.
I thought the sea levels were supposedly RISING (due to Global warming)?
Next we’ll be hearing that the Tsunamis are caused by Global warming as well.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hey Julie;
I think you’ll find that if you purchase at auction it is unconditional (may differe in some states) with no cooling off period. Another reason why agents like them.Kim;
Have a look at the Neil Jenman site and read what he has to say about auctions; he was an agent himself.The reason why the Public Trustees have auctions is because they need a result by a certain timeframe. Auctions do this; good or bad. This is the same reason why agents like them – they get a result which means they get a commission. If they don’t get a result you sell the property by private treaty anyway. May as well start there.
If you have had the homes valued and know what they are worth, then advertise them at this price and you will sell them by private treaty very quickly. If you ask top dollar you may get it, but chances are they will sit there for longer.
Do not do an auction.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by rejoice:One of the best surf breaks in the world “Nias” is now no longer surfable which brings tears to most surfers with any idea as this used to be the one of the best waves in the world before the tsunamis. If the sea level rose, it could once again be or maybe there are bigger and better breaks now? I guess I’ll have to go and find out!
Get 7 Free Lessons from the Teachers of “The Secret” http://rejoice.theofficialsecretseminar.com
As a surfer myself I wondered what has caused the break to become unsurfable? How has it changed?
I did a bit of a ‘surf’ on World Temperatures for the last 10,000 years; here’s an article I found:-
http://math.ucr.edu/home/baez/temperature/
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
O.K….he TALKS a lot; but what has he DONE?
In one year he will have DONE this – used 12 times more energy than my household (not including his air travel in those pollution-free jumbos).
He has also made a lot of money from his film. He didn’t need the money before the film. Is he using all the profits for the Good Fight?
My evidence of water levels not rising is based on my eyesight. First-hand, non-edited and non-biased evidence. No agenda. I don’t believe in Global warming – I just report what I see.
What’s your evidence based on? Is it non-biased and without an agenda?
Here’s an interesting article from Andrew Bolt in the Herald Sun:
http://www.news.com.au/heraldsun/story/0,21985,21232790-25717,00.html
Also read Michael Crichton’s “STATE OF FEAR”.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hi Ed, welcome to the forum.
The money you put into a property has not gone forever; it is sitting in the property in some form – usually as a deposit. Of course, you can’t get at it all that easily unless you have a loan with a re-draw facility or if you sell.
The purpose of a CoCR is to find out what your investment return would be when compared to a deposit in a bank. In the case you mentioned; $20k @ 6%. Incidentally, a $20k cash deposit on a $100k property will easily kill any comparison on a bank deposit at 6%.
For example; the property under-performs and only increases in value by 5% per year for 10 years. By this time it is worth $150k. Assume you have also purchased a neg geared property, but it only costs you $10 per week AFTER TAX. At the end of 10 years your CoCR is:-
$150k (property value)
– $ 5,200 ($10 p/w out of pocket)
= $144,800
$20,000/$144,800 x 100 = 13.8% per year approx.In comparison, the $20k bank deposit is subject to tax on the interest earned, and bank fees. The true CCoR would be struggling to keep up with inflation.
It is true you can’t rely on cap growth in any property, but with experience and careful selection you can virtually guarantee it in the future. Historical figures prove that property goes up, on average, 7-10% per year. This is only an average. You can do much better than that with the right properties.
I agree with you that to make your portfolio grow you need more than cashflow. You need some cap growth and/or debt reduction as well. Obviously, the higher income earners can accelerate their portfolio quicker, but someone on a lower income can still do well if they maximise the cashflow, cap growth and work at reducing debt/increasing equity all at the same time. This is a learned skill.
Once you have one property, your equity can increase through adding value, cashflow, tax returns, cap growth and debt reduction.
You can be ready to buy again in a very short time. Then you access the available equity to use as a deposit on your next property. Now you have 2 properties (hopefully well selected to maximise returns) gaining in value for you. Your wealth can grow exponentially if you don’t watch out!
There is no need to sell and then buy again – this can end up being fairly expensive due to selling costs and cap gains tax.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by micheled:Hi Everyone
This is my first form, so please bare with me. Does anyone know how to calculate the Median House Price for a two-bedroom unit, as the average seems to be three-bedrooms.
Looking forward to increasing my knowledge.
Cheers
Michele[biggrin]
Welcome to the forum Michele.
The calculation for a median is to add up the total number of all sales of that type of property. The property price that falls exactly halfway between first and last is the median. For example; there are 100 sales, and sale no. 50 is $250k. This is the median.
The average is the total number of dollars for a particular type of property, divided by the total number of sales. For example; there are 100 sales and the total number of dollars is $20 mill. The average is $20,000,000/100 = $200k
You can get some of these stats for the area that you are interested in from Residex, Australian Property Investor Magazine, Australian Bureau of Statistics and probably the Real Estate Industry in the state where the property is.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
This product, or a similar version of it, has been widely used in the USA since I’ve been here. It is, in my opinion, a very dangerous product. Many people here took these loans because they couldn’t afford to buy using traditional, safe options.
Some took them to take advantage of the booming market here in L.A; which ended about a year ago. Now there are many thousands of people who are locked into loans where they owe more than their house is worth, and they can’t re-finance as they won’t qualify for other loans.
As it stands now, there are many sub-prime lenders (lenders who loan to those who struggle to qualify for traditional loans) going bankrupt (along with their clients) here in the USA . As the housing market has contracted, the loan period has ended and the clients need to refinance and can’t, and the houses are worth less than they paid, so they are forced to sell at big losses.
As the link says, you pay part of the interest now, and the rest gets tacked onto the loan as you go.
You are relying on the property to go up in value over time to eventually create the equity.
Pros;
good cashflow in short term
possible pos cashflow while intro rates are low.
allows you to secure a property and refinance later as finances permit.Cons;
property may not go up in value as you expect.
property may go down in value, leaving you with neg equity if you need to sell
neg equity in short term could be disastrous should you need to sell for any reason.Are you 100% sure your property will go up in value by more than the interest tacked onto the loan over the honeymoon period? Are you sure you will have enough income/cashflow to start paying principal PLUS extra interest at the end of 5 years?
This question asks;
“Q. I understand there is no offset account, however I could put back more into the loan and hence creating a line of credit or I can reduce the principal. Is there a fee for this? Is there a max limit?
A. Extra payments up to 50% of original loan permitted within 5 years. The client has the ability to redraw the additional repayments with 2 Free redraws per month (min $500).I think the reality is people take these loans because they are struggling with cashflow, so paying off more than the repayments allow is probably unrealistic.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by banked:This is interesting LA Aussie….
I noticed last night that the agent has increased the adverstised (+) price by $20,000. Seems to me that they’re just after some hype around the property, they’ve advertised it for a low price, got people interested and want a bidding war at auction. Surely this can’t be legal?
I was thinking about dropping a note in the vendors letter box after the open on the weekend. Any thoughts on what I should include? Initially I didn’t want to get the agent off side…but he’s not doing me any favors so…..I’m not sure that re-advertising at a higher price is illegal. Prices that are achieved outside of 10% either way of the advertised price can attract a fine, but rarely do.
This whole scene is an old r/e agent trick; advertise the property low, get lots of interest as there are always more buyers in the lower end of the price range and if the property seems like it’s going cheap.
The agents go back to the Vendor and tell them “the market is telling us” that there is interest, but not at the price we would like (wonder why?). This hopefully encourages the Vendor to think of lowering the price and of course, the property sells at the Auction for a lower price.
The flip side is that the property sells for the price that the Vendor wants or higher, but in the mean time the agent has collected lots of names and numbers from the interested buyers at the lower end of the price range who never had a chance of buying the property and who have had their time (and possibly money) wasted.
You could say in your note that;
1. you are very interested in the property, but;
2. don’t like auctions and and/or can’t get there so won’t be there to bid, and;
3. my highest, and once only offer is $…………..
4. my contact details are…………..;
5. casually mention that the agent told you that he/she (the Vendor) wasn’t accepting offers prior to the auction. Were you aware??If you are trying to get the property for a low price this strategy won’t work, unless there has been no interest, but seeing how the price has been increased I would say there has; you may be better to go to the auction and hope the property gets passed in to you. Is this an I.P or PPoR? Totally different mentality for purchasing.
Don’t worry about getting the agent offside; his/her focus is commission and money and……money. You are the person with the cheque book.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by blogs:Originally posted by dacium:How close is it to auction? If it is within a month then the seller usually has to go through with it no matter what now.
Never heard of this before? I myself bought a house just a couple of weeks ago 4 days prior to auction!!! What are you basing this comment on?
From my experience the reason they dont accept any offers is because they most likey have a fair deal of interest and are confident it will reach top dollar by going to auction. A month ago I attended an auction that was listed as $280+, I offered $320 and was told no offers, got to auction day and it went for $395k!!!!
This is a fine-able offense these days. If you feel like it; report the auctioneer and the agency to Neil Jenman (send him an email via his site) and he will deal with them. He loves this sort of stuff.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by banked:The agent is now stalling with the section 32 which adds to the thought that he’s just trying to get the house to auction. Does anyone know how long the section 32s usually take to prepare? I understand that it would vary a lot, but is there an average time?
Thanks guys.
If the conveyancer is on the ball; about 3 days, but allow a week.
Have you approached the owner directly yet?
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Landlords are responsible for the maintenance and repairs to the property. Termites will affect the property, so this is a repair and/or maintenance pest.
All other Pests are not related to the above.
I have heard of white cockatoos eating cedar windows, but this doesn’t affect the tenant’s lifstyle especially – just the ugliness of where they have been chewing.
Tenants’ problem.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Talking about Global Warming is almost as dangerous as talking about religion and politics, but…
My belief is that much of the Global Warming platform is simply scaremongering by so-called ‘green’ corporations, whose real agenda is to profit from money coming their way from donations and supporters.
The more media hype and fear they can generate the better their cause is, and facts and truth are the casualties of their work. Look at Al Gore; spends hundreds of thousands of dollars and hours in toxic fume belching Private Jets to spread the word on Global Warming, and his house uses more energy in ONE MONTH than the average American house uses in ONE YEAR. Is he turning off the lights, or riding his bike to different cities to spread the word? He has enormous support from Hollywood as well, but do any of them trade in the stretch limos and the Hummers for a Malvern Star? It’s all about money and raising their profile to get more of the lovely greenbacks from you and I.
I have lived near and played in/on Port Phillip Bay for most of my 46 years on this planet. The water level has not moved one millimeter in that time. The fish are disappearing however; that’s another argument.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
I’ve been of the belief that the aged care facility is a good investment for a few years now. The aged is a growing industry and as people can be kept alive for longer (not always a good thing) we have more older people needing part and full-time care for longer.
But my goal is not buy into one one apartment at a time; I want to build and own one (or more) complex outright;
I think it is probably more a cashflow than cap gain investment, and I wonder as an owner of just one or a couple of theses apartments how good the cashflow would be?
I also think that the purchase of these apartments when new could be like buying into new apartment developments – the first purchasers usually get stitched up in price to cover the developer’s costs.
My fear is that the industry will become (like the apartments) one where the rents are set to satisfy investors who think that 5or 6% rent return is good. It’ll become a “packaged” investment, sold with rental guarantees and wonderful depreciation benefits ra ra ra, to uneducated investors and the only winners will be the developers.
I reckon as the owner of the whole complex the investment would be worthwhile.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
