Forum Replies Created
I'm not so keen on that clause. If you ever got questioned by Stamp Duties or the ATO would you be able to swear a Stat Dec to the effect that you really expected the vendor to carry out $30k worth of improvements?
I also wonder whether the banks are becoming more aware of these kind of clauses and are starting to question them. One of the problems with this clause is that normally failure to carry out promised works would mean a reduced purchase price, not a rebate after settlement.
I think that it is inevitable that both banks and Govt bodies will start to question these types of clauses and if they do and you write in a stat dec or affidavit that you really believed the improvements were going to be done, you have committed fraud.
What about getting a 6 month settlement and getting in just prior to settlement and doing some renos?
Cheers
K
This all looks very sus to me. These sorts of things happen all the time. Why the need to post on a public forum? And why, in particular, this one?
With all respect
K
Hi David
Ask a local REA whether this would increase the valuation. Often a two way bathroom can be just about as valuable as a separate ensuite. I know that is the case in my area. If you are going to spend $10,000 to only have the house worth another $10,000 then it is not worth it, in my humble opinion.
Cheers
K
Yes I got it too
I know an excellent builder in Adelaide. PM me for details.
Cheers
K
And no, there shouldn't be any costs to extend.
A reasonable vendor would allow you an extension because of the Christmas break. Just get your conveyancer to tell the vendor that there have been delays with the bank. Your conveyancer should be aware of this because there will have been delays with everyone.
The vendor would be silly to refuse an extension. It will have been off the market since you signed the contract so he/she would have to put it back on the market and run the risk that it will take a long time to get another offer.
CHeers
K
Since her name is not on the property title, how could I make sure that she won't lose out (ie she'll at least get back the money she put in) should anything happen to me or if our relationship goes pear shaped?
The best way to make sure that she won't lose out is to not try to shaft her if the relationship goes sour. The only reason that she would lose out is if, when things go pearshaped, you forget that once upon a time you cared about her financial position.
As an ex family law solicitor, I can say that this is the sole reason that property settlements become protracted and ugly.
If, on the other hand, what you are REALLY asking is how to protect yourself if things go wrong, then you need to see a lawyer and get an agreement drawn up.
Cheers
K
Hi duckster
What page in the API is that story on? I looked but couldn't find it.
Cheers
K
Hi C2
We only use Focus First National. We did use a different agency when we first started out but they were a disaster and Focus have been excellent. I wouldn't use anyone else.
We did sell early and could have made more money but we put the profits straight back into property and have done quite well. We now develop. While if we had held on to all the property we would have had over 10 positively geared properties, I prefer not to look back at what "could have been". My husband and I quit our fulltime jobs over 2 years ago, after just 3 years of property investing. If we had held on to the properties we wouldn't have been able to quit work.
We have more properties on the market at the moment. Some people have asked me why I am selling positively geared property, especially in a market that is still rising. But for me, cashflow is king at the moment and I can make more money from the money I have in the bank than any capital growth I could get from holding on.
I'm happy to give more details in a PM if you are interested.
Cheers
K
The contract will set out whether "days" means just days or whether it means business days.
If it is just "days" and you are not able to settle in that time, a reasonable vendor would allow an extension of time without penalty because of the Christmas period. Even if the vendor doesn't allow an extension, if you aren't able to settle on that date the vendor must first serve you with a notice of default and then give you a certain number of days to rectify the default, that is, settle on the property. The number of days you have to remedy the default varies in each state but will be set out in the standard contract.
As jaffasoft said, ask your conveyancer. This is a pretty straightforward question and your conveyancer will know the answer.
Cheers
k
I had units all over the place. Over the past few years I have sold out of Nightcliff, Coconut Grove, Moulden and Darwin Central. I still have a few in Stuart Park.
Yes, I would agree with C2, except that undesirable tenants/neighbours aren't restricted to areas: they are all throughout Darwin. For example, you can have a $1M house in Fannie Bay, right next to a Housing Trust block of flats. I would definitely recommend physically inspecting any property before you buy it. I have had a REA agent tell me of giving "undesirable nieghbours" a carton of beer prior to an open inspection at a nearby property on the proviso that the neighbours get out of their house during the inspection.
I also agree with C2's comment about REA and PMs. I had a disastrous PM when I first invested up in Darwin, but the one I have now and have had for the last 4 years is golden.
K
Darwin all the way. Inpex has just announced a $25billion gas plant will be built in Darwin starting in 2010 that will require 4000 workers. That is an immediate 4% increase in population and there is already a very low vacancy rate. Darwin is rapidly becoming a capital city with stores like Harbourtown being built. Rents are increasing at a rapid rate and, to my mind, Darwin is the place to be investing.
Cheers
K
Hi eldredi
I'm happy to go into more details if you want to PM me. This post has rapidly gone off the subject and degenerated into what just about every post degenerates into these days – doom and gloom and market crashes.
Cheers
K
It depends what is says in the contract. Different states have different provisions. In the NT for example, there is no penalty to the vendor if the vendor is not ready to settle. However in some states I know that the vendor has to pay default interest.
If your contract says that you, as purchaser, are entitled to default interest because of the vendor's delay, that is all you can do. And then you are only getting two days' of interest. You can't make them pay for your inconvenience or any costs you incur.
Property investing is full of inconveniences. A two day delay is pretty low on the scale of things that can go wrong.
Cheers
K
Its a block of flats. That's the bank valuation.
You are wrong you ignoramus.
I sell my positive cashflow property all the time. It all depends on whether I can make more money by holding onto the property or by using the money to buy something that is going to make me more money.
I bought a property 3 years ago for $540,000. It currently rents for about $1200 per week. I've got it on the market at the moment. Why? Because it is worth $1.2M now and I can use the money from the sale to pay off the loan and a line of credit and leave a cool few hundred thousand in the bank. So I miss out on the theoretical $100grand in capital growth each year (on the presumption that property doubles every 7 – 10 years) plus the $10 – 20,000 pa in income, but I can use the money in my account to develop properties that will bring me a 100% cash on cash return, making me well over $300g per year.
Does that make sense?
It is all mathematical to me. Where will I make the most money? By holding on to the property or by realising some capital gain and putting it into something else that will make me even more money.
Cheers
K
The mortgage brokers may correct me on this but I think that if you discharge a mortgage early, there are two lots of costs:
1. deferred establishment fee or early discharge fee, which is normally a percentage of the loan amount,
2. Break costs, which is the difference between what the lender would have gotten if you had stayed in the contract and what it actually got due to you breaking the contract,. In short, this is the loss incurred by the bank because you broke the contract.
Think of it this way. You grow tomatoes and you enter into a contract with a supermarket chain who wants to buy your tomatoes for $1.00 per kilo. This contract is for three years. 18 months into the contract, there is a tomato glut and the supermarket decides not to buy your tomatoes any more because they can get them from another grower for 50c per kilo. You, as a grower, are left with all these tomatoes and you are not going to get the money that the supermarket chain promised you. You are therefore able to sue the supermarket chain for the money you would have received if the contract had continued.
In the same way, the bank is able to claim from you the amount of money it loses because you have exited the contract. Now the bank can only lend that money at a lower interest rate than it loaned you the money so it has incurred losses. It is these losses that it has claimed as part of the discharge of your mortgage.
You could go to see lawyers or the ombudsman but I expect they would tell you that there is nothing you can do, unless you can prove that you never got the document that contains the clauses about break costs.
Arguably you could sue the mortgage broker for damages because of his/her negligent advice, but at the end of the day, mortgage brokers are not financial advisers and it would be unlikely that a court would find that the morgage broker is liable.
Good luck though
Cheers
K
Ouch!!
