Forum Replies Created
In some states you can't buy with vacant possession. You have to take over the leases until the leases expire. I don't know what the situation is in Tasmania.
How desirable is the area for rental? Would it be easy to get tenants at $200 pw? If hiking up the rent by so much means that potentially you will have trouble getting tenants, it may be worthwhile upping the rent to $180pw and try to keep the current tenants in.
Tenants are your best asset. Look after them.
Cheers
K
The NSW Trustee will remove all estate decisions from your family and will charge a quite high percentage to administer.
Just get any local solicitor to draw up a will. Most solicitors do this. Just look in the Yellow Pages.
Cheers
K
Unfortunately insurance will not necessarily protect you. If an accident is found to have been caused by your negligence, then, while the insurance company will pay out on that, the insurance company can then lodge a claim against you to recover their losses.
Best to sort out your legal responsibilities as soon as the tenant notifies you of a potentially dangerous issue.
Cheers
K
I've got to say, I think that "PIG's for Chicks" is a terrible name for a group. It just diminishes the merit of what you are all trying to achieve. It is hard enough for women to get out there and set up a property portfolio, without having a silly name for you all as a group. You are not "chicks"; you are women, undertaking a very serious and worthwhile strategy.
I wouldn't get involved in a group called "PIG's for chicks" solely because of the name. I take property investing very seriously and while I am more than capable of having a good laugh, finding humour in belittling myself is not something I choose to do.
K
Sounds like an excellent strategy to me.
K
Lodging a caveat over a property you have signed a contract to buy is a step that has been recommended by lawyers for years. As Terry says, a caveat means that a vendor can't then do anything to the property between you signing the contract and settlement without getting your permission. From a legal point of view, it is a good idea because it protects your interests.
However, from a practical point of view, if someone else slaps a caveat on the property between signing and settlement, all that will happen is that the sale won't proceed and you will get your deposit back. You won't have suffered any losses except the cost of inspections and some conveyancing costs.
I have bought and sold dozens and dozens of properties and have never used a caveat or had one used on a property of mine.
It is probably good legal practice but rarely used in the practicalities of property wheeling and dealing.
Cheers
K
It's a very complex formula that courts use when determining whether a landlord is liable for injuries suffered by a tenant. Some of the issues are: whether the landlord knew (which you do), how easy it is to rectify the problem, the cost of rectifying the problem, whether it is the sort of problem that a landlord would expect to rectify (for example, it might only be slippery when someone walking on the tiles has got oil on their shoes. A landlord isn't expected to fix every single problem arising out of every single unusual practice by the tenant).
It it is easy to fix, then do it. It it is not easy or inexpensive, then get legal advice on your responsibilities.
Cheers
K
It's standard practics in NT too. Action-figure, are you using a conveyancer? I would definitely recommend using either a conveyancer or solicitor. It's not worth doing it on your own just to save a few hundred dollars.
Hi James
We could have used property investing alone to provide cashflow. We had close to 20 properties at one stage, all positively geared and we could have lived off the rents, which were skyrocketing in the area that we invested.
But we liked are both far too young to retire properly and made the decision to sell the properties and throw the money into development, a decision that we don't regret at all.
I don't think you could do what we did in such a short timeframe these days because the market has changed so much. But certainly, if you choose wisely, you can build a successful portfolio that will give you passive income.
K
It's always a good time to buy property.
That's a very interesting question. Since the GFC when properties are getting harder to sell, this issue has become far more common, with vendors asking for evidence of inability to get finance. During the boom, it wouldn't have mattered as the vendor could just put the property back on the market, but it is not so easy to sell these days to vendors are trying to lock in purchasers.
A contract only becomes unconditional once all the special conditions are fulfilled. Once upon a time special conditions such as finance and inspections had a date entered into the contract and after that date the contract was unconditional, regardless of whether the purchaser had actually applied for finance, got inspections etc. However, now some states (ie, NT and SA at least. I don't know about VIC) have changed the finance clause in the standard contracts to stipulate that for the finance clause to be fulfilled, the purchaser has to give the vendor notice, in writing, that finance has been approved. Until that is done, that clause has not been satisfied. The only real relevance of the date is that if finance has not been approved by that date, the vendor has the right to terminate the contract.
So to summarise, if the finance clause says clause doesn't say anything about written approval then the onus is on the purchaser to advise prior to the date specified, failing which the finance clause is deemed satisfied. If written approval is required, the onus is on the vendor to either terminate the contract or to extend the time for finance approval.
However, when the standard contract requires approval in writing, usually there is also a clause that the purchaser must take reasonable steps to secure finance.
So firstly you need to work out whether the contract requires you to provide written approval of finance, or whether the contract just deems that clause to be satisfied by the date specified. If the contract was indeed "unconditonal" then you are bound by the contract. You can't just tell the vendor two weeks after the date that you didn't get finance. So sad, too bac. If, however, written approval was required, then the contract is not unconditional until you have given that evidence, which you haven't.
So, assuming that the clause was subject to written evidence (which you haven't provided), the vendor has two options:
1. To terminate the contract
2. To find out whether you took "reasonable steps" to get finance.If you didn't take "reasonable steps" then the vendor could still hold you to the contract and force you to apply for finance. The vendor could essentially say "under the contract you needed to take reasonable steps to get finance and you can't get out of the contract until you show me that you couldn't get finance".
If you don't want to proceed with the contract, the vendor would have to sue you to force you to proceed or to try to keep your deposit. It used to be that if you terminated the contract without any valid reason, you would have to pay 10% of the purchase price as a penalty. However, there is some case law that suggests that under certain circumstances, you can only be forced to forfeit the deposit you have paid.
Is it worth the vendor suing you? Depends how much money is at stake. The vendor will have to work out how much it will cost to take you to court versus how much it will cost just to put the land back on the market. Only the vendor can answer that question.
You will really need to get legal advice. There are so many issues involved and there are so many exceptions to the basic laws. Speak to your conveyancer or solicitor. I have just given a very basic rundown of the issues involved. I was in a similar situation a few years back but as the vendor. In the end I just put the block back on the market because I could resell it at the same price, But the market has changed now and your vendor might not be able to resell the block.
Good luck.
K
I think they are both much of a muchness. I get API only because I have been getting it for years.
K
Hi Andrew
We are all looking for that property!!
K
JamesSampson wrote:If your 30 and you want to retire at 40, property on its own just wont do it for you, unless you have the capital to go out and buy 15 places very quickly.I saw this many years ago, and as a result started my own business. I can tell you from experiece the true way to financial freedom is working for yourself.
Cash flow as many of you will know is key…property just cant provide that.
Hate to disagree …, but I disagree.My husband and I started investing in property early in 2004, using firstly Steve McKnight's strategy and then adapting it to suit what we wanted to achieve. I never went back to work after going on maternity leave in late 2004 and my husband stopped working for his employer at the end of 2006. We stopped being employees at the age of 34.
We now control a multi million dollar portfolio and have our own property development company. I "work" two days a week doing all the paperwork and my husband works about 5 hours a week chasing up the more technical aspects of our developments.
While the market has changed since 2004 there are still plenty of opportunities in property. Property gave us the freedom to work for ourselves as well as cashflow. It took us 3 years to get there and have been "there" for 4 years now and still full steam ahead.
I get to take my daughter to school every day and sit in her class and read with her and the other kids. I know every child in her class. I get to crawl around on the ground with my three year old boy, playing "tractors". A couple of months ago, I took my 8 month old son to Europe for three weeks and spent the whole time with him in a backpack right next to me. We slept together, ate at cafe's together and explored Europe together. What third child gets that sort of attention? My husband spends his days on our farm building things, growing things and hunting things. Oh, and he spends more time playing LEGO than any adult should!
Property – it will set you free.
Cheers
K
"Guaranteed return" probably just means a rental guarantee. A return doesn't have to make a property cashflow positive. A return is a return, even if it still makes the property negatively geared.
Cheers
K
Hi Matt
Why not do it yourself? I'm in Adelaide and I do it all the time. It is a bit more work than getting someone to do it for you, but you end up with a lot more in your pocket.
Cheers
K
Hi Jules
Your proposed strategy is no dead man walking but it is certainly not a masterstroke either. People have been doing this for years and years and years. In fact, it is about the most commonly used strategy for building wealth using property.
Having said that, it is not quite so simple. Assuming the house is valued at $350,000 on completion, and you have a loan of $224,000 against that property, you would have 56K equity as a bank will only lend up to 80% LVR. Then the ugly issue of servicability arises. Does your income allow you to cover the shortfall in the mortgages? Using this strategy, there will be a point when you don't meet the bank's servicability requirements. Whether that is owning one IP or 10 will depend on your income. Banks are getting tougher and tougher on lending.
Still, it is very conservative (in terms of risk) and time proven method of building wealth, with the only problem being that you can't pull equity out a easily as you could a couple of years ago.
Cheers
K
I think that JacM was talking about paying CGT and stamp duty if you so onsell the property. In most states, even if there is a same day settlement, you have to take ownership of the property before you can onsell it. This means that you will have to pay stamp duty and any capital gains tax.
Provided it is a straightforward sale, you could both use the same conveyancer/solicitor. Offer the vendor's asking price less agent's fees and then agree to split conveyancing costs. That seems a very straightforward solution to me. I'm sure that the vendors would be very happy to sell a property so easily.
Cheers
K
It all depends where the land is. If there is a land shortage, then you will be likely to be able to sell the land prior to settlement and may make some money. If it is in an area where there is a lot of land, then there is a real risk that you will be left with the property and will have to hold on to it.
I did exactly this a few years ago. I bought in an area where there was very little land and sold most of the blocks of land in a simultaneous settlement (I onsold the block on the same day that I settled the block) and made quite a significant profit on the land. Then I got a bit greedy and bought in another area where there was plenty of land on the market and was left on the day of settlement having not onsold any blocks and having to come up with hundreds of thousands of dollars to buy land that was barely worth what I bought it for. Legal action ensued as I decided not to proceed with the purchase of the blocks and it all turned rather ugly.
It turns out that my strategy was really just speculation; great it if pays off (most likely in a rising market or where the land is significantly undervalued) but disastrous if something like the GFC happens.
If you don't settle, you don't just pay the agent's fees. You forfeit your deposit and potentially have to pay 10% of the purchase costs, plus the agents fees, plus advertising costs, plus potentially stamp duty etc etc. The vendor can even try to get specific performance from you. that is, forcing you the blocks. It is unlikely that a vendor would ever succeed in forcing you to buy the land if you needed to get a mortgage to buy the land, but if you had enough assets to cover the purchase cost, you could be forced to sell your assets to come up with the money to buy the blocks.
Tread very very carefully
Cheers
K
