Forum Replies Created
Oh Dr X, you are going to hate me. I am a lawyer AND I used to work for insurance companies.
But I’ll redeem myself here. Insurance companies have budgets to meet. Their initial stance (by non lawyers) is to reject all but the most obvious claims. They then (again by non lawyers) try to negotiate to THEIR best outcome. Most clients accept the initial rejection.
Don’t accept the rejection. Dispute it long enough to go through to their lawyers who will then have to do a risk analysis. Is it worth the money they will spend on lawyers to continue to dispute the claim? Usually, if you push hard enough, the insurance company will accept the claim because it is far cheaper than litigating it.
I have made a number of insurance claims for various things and have always ended up having them accepted. I once even got a $12,000 new bathroom when the initial offer was $150 to repair the damaged ceiling in the room below the bathroom.
Just wear them down. Small claims are just not worth their while disputing.
Cheers
K
I’m currently sitting on about 66% but have no problems at all being up to 90% or even higher.
I only buy properties that make me money from day one so I figure that I am better off having some of that equity going towards a new property to earn me more money.
Of course I lose sleep but that’s because buying property is stressful, but having such a high LVR doesn’t add to my stres levels.
It’s all a game. If it all goes wrong then my husband and I will just go back to having jobs -exactly what we were doing before we started buying property.
Cheers
K
I own a property in Mt Isa and I would urge caution.
I have posted on this in the past so do a search on it.
In summary
There is not such thing as good areas and bad areas generally speaking. There can be a good house next to a bad house.
Go and physically inspect a property before you buy it. I get the feeling some owners have a few drinks and decide it would be a good idea to tack on an extra room or two.
Several sales have fallen through in the past year or so because the banks’ valuers aren’t prepared to value the property at the asking price.
Only buy from local agents. The ones from Brisbane often haven’t seen the properties themselves and are overpricing them.
Beware the property managers. I am very disappointed with the job they do but only have a choice between two of them.
I wouldn’t buy there again. There are more important things than the numbers just stacking up.
Cheers
K
Hi grossrealisation
Thanks for the advice.
The units are already strata titled – which almost makes up for the disastrous state they are in.
I have been dealing with the ANZ bank directly as well as with brokers. The ANZ came back to me today and said that they would lend at 80%. Who would believe that a major bank would come to the party? Having said that, I have been quite happy with the work that ANZ has done for us in the last few months.
I’ll keep you all up to speed on how we go with it all.
Cheers
K
I’ve got an excellent accountant. I just do whatever he tells me to do.
I used to trawl around the criminal courts (where of course you don’t need to know any actual law!) but I have just had a baby and have retired. My husband will join me in retirement at the end of next year when hopefully we will live off our property investments.
Ah, life is grand.
K
Thanks for that ASDF
You have just reminded me that, despite having a law degree, I would rather pay an accountant to do all my dirty work!
Steven (sorry about the Simon thing), I have spoken to your mate today and all systems are go.
Cheers
K
Hi Simon
Forgive my ignorance, but what is a director’s guarantee?
K
Hi Adam
A 6% return is not that great in Darwin – especially one that is guaranteed for 12 months. What will the rent be when the lease expires?
We are buying on at 10% return up there at the moment – they are pretty hard to come by but they are still there.
Also, DHA has VERY strict requirements before they least the homes from you – make sure that the DHA want it before you buy it if that is the way you want to go. And DHA management fee is about 16%, which is very expensive.
I think that you could get better bang for your buck up there at the moment.
K
Hi Dazzling
I’m with TerryW. Just quit.
My husband is overseas now for a few months, leaving me and my 10 month old back home. It is killing him when I tell him about new words or new teeth.
He is quitting work at the end of next year and the only reason we are leaving it for so long is because his job is very cruisy when he is at home. THis is the first and last time he will have gone away for any length of time.
You are currently earning more in a couple of months than we earn in a year. Sounds like you have a *&%*load of properties. How much more do you really need. As long as your PPOR is paid off, do you really need to be earning millions?
The way I see it is that if I have a million dollars and I put it into a good managed fund earning 10%pa, I can still live an extremely comfortable life on $100,000 per year.
What about investing full time? You can scale back and do a couple of hours work every day.
Until I had my girl I slogged it out in the corporate world and thought I loved it. Now she crawls up to me and wraps her arms around my legs (after she has eaten all the scraps of food on the floor along the way!) and I don’t want to miss a second of it. I’m now retired.
I would rather live just a barely comfortable existence with the love of my life than do it all without him.
Just my thoughts, but then I do have plenty of them.
Cheers
K
Hi Carl-Vic
One very important consideration is whether your mother is on Centrelink benefits. If she is then accessing the equity may affect her entitlements.
My sister has offered to let us access the equity in her property to buy a commercial property. She receives parenting payment. She contacted Centrelink and was told that if she accesses the equity and lends it to us, the money then becomes an asset. I have looked at the legislation (I am a lawyer) and that is correct.
At the moment we are looking at having her guarantee our loan and having our bank use her home as security. I’m still not sure whether we can do that, but it will avoid the complication of having her PPOR (which is an exempt asset) become a non-exempt asset.
Sorry to bog you down in legalese but if it is an issue it should really be checked out.
Cheers
K
I have an IP in Mt Isa and, to be honest, wouldn’t buy there again. I am having an awful time with the property manager. For the first 6 months I had to call up every month and find out why my rent hadn’t been paid into the account – there was always someone else to blame. Apparently on about month 3 it was my fault because I hadn’t given them my banking details – despite having had two previous payments paid into my account!
But I am in a bit of a bind because if I go to the other property manager, what if they are even worse?
Things aren’t so bad now because I have whinged and complained and threatened to take my business elsewhere, but I am still not happy about 15 minute inspections every 6 months, shoddy paperwork etc.
As to where to buy, I would recommend flying up there and looking at anything before purchasing. We flew up to have a look around and were really glad we did. The mantra of “the worst house in the best street” really doesn’t apply. A really good property can be right next door to a really bad property.
Also, several properties look like someone has gotten drunk one night and decided to tack on an extra room or so.
I personally wouldn’t buy anything there without a visual inspection.
Also, be wary of who you buy through. The local agents (Jays, Ray White) are best. But the agents who live south, even as far as Brisbane, often haven’t seen the properties themselves and fob the properties off for far more than they are worth.
I have heard that contracts from the southern agents often fall through because the valuations often come in far less than the purchase price.
My thoughts only.
K
“Secondly, the lady at the desk told me that the council is currentl rejecting and applications for double story units in back yards, which is a shame because thats what i was planning.”
Currently? What does “currently” mean. Double storey units in back yards are either acceptable under the current development plan or they aren’t. If they are not accepting applications because a new development plan has just been implemented which precludes double storeys in back yards, that is one thing. But if the council just has decided that there will be moratorium on double storey units without being specified in the Plan then you should ask lots more questions and take the matter further.
God I love a stoush! My epitaph will be ” if you don’t like the answer, appeal it”.
Cheers all
K
Thanks for all your comments
I am getting a building inspection next week and you can bet your boots I’ll be walking through the property with the inspector – and the valuer on all future purchases!
I’ll keep you all up to date with how it goes.
K
I think there are still CF+ deals out there – you just have to look widely.
I have been buying CF+ for only the last 18months and have bought 4. Each of them returns at least 10% with one returning 16%. One is in a regional centre of about 20,000 and the other three are in a capital city.
All of them have achieved capital growth of at least 20% in the last year.
You need to do several things:
1. Become educated. Australian Property Investor is an excellent magazine to read. Buy books, go to seminars. Learn everything you can. My law degree cost me over $5000 per year and to be honest, the returns weren’t that great! Education is essential.
2. Find an area with a higher than average return, say 5 – 7%
3. Start researching that area and become VERY knowledgable about it
4. Develop relationships with RE Agents there, preferably in person
5. Think laterally. It is true that there are very few straightforward CF+ deals out there now. Read Steve’s latest book on how to find ways of increasing value. I am a big fan of his saying “problem + solution = profit”.
6. Ignore advice from people who say that such properties don’t exist. People like me are having a field day making money because there are very few of us out there believing it can be done!Good luck
K
Thanks Dazzling
what about a deposit?
When I buy residential I put down a $1000 deposit. What should I offer for a 1 mil + property?
Karen
Hi Kerwyn
Thanks for your reponse.
I’m (obviously) new to this game so I don’t understand completely how that works. It seems like a catch 22 situation to me. Why do work on a place unless the contract is unconditional ( which would mean finance in place) and how do you get finance in place without doing the extra work to increase the value?
Thanks
Karen
Michael
Is there disclosure to the bank?
Does the purchaser declare the extra money as income?
Does the vendor include the total amount (including the amount to be refunded to the purchaser) in their income tax return for CGT purposes?
If the answer is no to any of these questions, then I would be reluctant to post on the internet that my company engaged in these practices.
Karen
I thought I’d throw my two cent’s worth in and give you the definitive answer.
As a former prosecutor I can tell you that artificially inflating the purchase price of a property to get greater finance is, as has been pointed out, a fraudulent act by the purchaser upon the bank/financier. If the vendor is aware of the artificial inflation and assists by writing the cheque, he/she is a party to that fraud and could be prosecuted.
While not directly on point, there is an article in the latest API on what is called a ‘double contracting’ scam at page 38. You should have a read of this article because the legal ramifications are the same.
Karen
I own a house in a mining town. I would not buy another one there.
My house is structurally excellent and I have fantastic tenants giving me about 10.5% return.
BUT the property management is absolutely awful. I have to call every month to find out why the rent hasn’t been paid into my account, the PM told me that she has 15 minutes to do all her property inspections (which explains the one big tick across the inspection sheet!), repair work that I authorise does not get carried out until I call and bug the PM about it. My calls aren’t returned because the PM thinks I am being aggressive, but that’s the only way I can make sure I get paid every month.
There’s nothing I can really do because my options in this town are limited. I have found it far more hassle than it is worth, despite being an ‘on paper’ excellent investment.
This is one aspect that wasn’t covered in Steve’s books and a hard lesson we have learned. Be careful buying in an area where PM options are limited.
Hi Zucan
These are just my thoughts on the questions you have asked. I have been investing for about 18 months and have only residential properties to date.
Commercial property has higher returns but also higher risks. I have found that the location of commercial property makes all the difference in assessing risk management. Unless you know an area inside out, I would avoid commercial because it could sit untenanted for a very long time – meaning that its not a very good investment!
There are lots of trick and traps involved in commercial property. I do not yet feel comfortable brancing out, which is why I stick with residential at the moment. My aim is to buy commercial property in the future though.
Also, most banks will only lend 70% on a commercial property. So unless you have equity elsewhere, $40k will not get you very far.
One of the most valuable things we purchased (apart from Steve’s first book) was his Buyer Beware package. We use the property analysis template for every property we look at. If we have looked at a stack of properties over a very short time, it is an excellent way to remember the strengths and weaknesses of every property (because it is easy to be emotionally swayed by a property!). Jarad fills out each of the reports for consistency and it makes sure that we are comparing apples with apples.
Congratulations. It’s an exciting journey.
Karen
