Forum Replies Created
The profit comes from purchasing the block. If you have paid too much for the land, then you stand a much reduced chance of profitability.
The money is in the first deal, not the onsell.
A couple of points – most houses/loans are rolled over every 7-10 years, so there is a great likelihood that you will sell before the 20 years are out (and the developer is banking on it).
Secondly, are you overcapitalising on the block? a $400k house on a $140k (or $240k) block?
Thirdly, there is very little risk for the developer – ie assuming the numbers are as stated $680k. If you sell before 20 yrs @ $680K, the builder gets $136k back (20% of selling price).
What do your numbers look like at $280k purchase price?
How will the developer know that you have sold? Will there be a caveat? How will the bank lend against this property considering that you have received effectively $140k vendor finance?Uless it later becomes your IP
A QS is a cost planner, typically involved on measuring and quantifying building elements for developers. A land surveyor undertakes physical measurement of land, subdivision work, boundary identification.
Is it stratum or is it company title? These are two totally different things (at least in NSW). Stratum is a 'higher' form of title permitting further development then strata subdivision, whereas company title existed prior to the creation/acceptance of strata title.
Conversion to strata title will require all owners to agree to the winding up of the company and the regrant/registration of new titles including full survey/strata plan creation. This will involve a development application to council and may leave the unit owners to BCA upgrades to current standards (which may be costly) prior to the registration of the strata plan.
You will need to know if all owners are wanting to change, you will need 100% acceptance from the owners and they will need to be committed to any costs in the conversion (DA/surveys/upgrades etc).
That said, it is probably easier to buy the block yourself.
That's fine as long as you like paying the higher rates of interest which go along with an unsecured loan.
To take another slant on the housing crisis – maybe Australians don't get paid enough. If we all earnt more, then housing (if prices remained stable) would be more affordable.
Have a chat to your broker, you may be able to free up some equity in your house (if you're lucky but you are already over 80% – you may need LMI).
You may seek to refinance on the basis that the existing house is only slightly neg geared (and not a drain on your income) and you are already paying rent. Consider what the broker says.
Any interest on the money that you borrow for this house is unlikely to be tax deductible as is is you ppor.
Take on board what Duckster has said however this is a commercial lease and you will need to acquaint yourself with the lease especially:
the obligations of the Lessor and Lessee, the indemnities provided by the lessee in the lease, the requirements placed on the lessee for the provision of insurances, compliance with council/state regulations governing the use, outgoings recovery, any obligations for maintenance, whether it is a gross or a net lease etc.Which state is this in? How old is the premises? How long does the lease have to run? Are there any options? On what terms? What are the rent review provisions? What are the alternative uses for the site? How long will it take to find another operator? Who owns the 'fitout'? Is gst payable or is it being bought as a going concern? Is there a bank guarantee or security deposit?
Will you be enaging a property manager as this will be a more complex investment than say a house or unit?
Generally yes (unless the tenant vacates prior to the lease expiry and has to pay to find a replacement).
1 – yes as the reason you are withdrawing the funds is not for investment but for private use.
2 – put the money into an offset account not into the loan, that way you will not be redrawing on your loan but utilising any spare capital available to you. If you then get the property revalued and draw down this equity for your own use, this too would not be deductible.The letting agent cannot act on the owner's behalf until the owner has signed an agency agreement (for leasing the property). If the agent doesn't have one, they cannot get paid their letting commission BUT can also be investigated by fair trading for not having an agency agreement in place.
If on the other hand, there is a valid agency agreement, then unless the owner has withdrawn or signalled their intention to terminate the agreement, then the agent was acting under the owners instructions – which was to lease the property. As the tenant had not yet signed a lease, it may still be possible to withdraw (if the agent had to seek the owner's consent to the nominated tenant).
The same question has been asked several times including only a couple of days ago. Do a search of this site.
Take your dishwasher with you.
Know how much you can afford, how much you estimate the property is worth and stick to it.
I was under the impression (obviously wrongly) that it was the agent's duty to act in the best interest of the owner. How could the agent have been acting in the vendor's interest if he was able to offload the property to someone else on the same day? How long was the agent working on his own deal instead of the vendor's deal?
My heart bleeds for the agent for having given up his commission on the sale and cutting his agency out of about $10k (more profit for him).
Rent Master see http://www.rentmaster.co.nz for a free trial.
The price you paid sounds like it reflected (or grossly over reflected) the condition of the property. As Linar points out, there is little you can do after you have signed the contract other than to ensure that what you have contracted to buy is delivered eg that the curtains as inspected are still in the house, that the stove is still in the same condition eg not working etc.
If you haven't undertaken to get a building/pest inspection then you must do all that the building inspector would have done on your behalf – check the structure (where accessible), check for termites, make sure electrics/taps work, doors aren't binding, holes in walls/floors/ceilings etc as well as taking many pictures.
A bit more info – a conjunctional sale, lease??
There are many questions that you need to ask when considering this type of investment:
Does the unit have an exclusive management arrangement (ie can you do bookings separately in addition to the managers)?
Do you get a set amount of usage or can you use it as often as you like?
Can you withdraw the property from the 'pool'?
What fee do you pay on each booking?
What other charges apply eg cleaning, council fees, body corporate, power, water, maintenance etc?
How are the charges adjusted?
Is there a marketing levy?
What commission is paid to the managers for each booking? Does this vary between high/low season?
Is the income pooled & split between owners or allocated to each owner based on usage?
Does the manager have a track record? ie specialised holiday management provider or just a no name building manager?
What is the occupancy rate ie no. of bed nights/year?
How much competition does this investment have ie similarly priced/located properties?
Will there be more of this type of development in years to come or is this the last stage which is able to be built in the area?
Are there requirements to keep the unit in a particular level of presentation?
If so, how often do you need to redecorate?
Is this cost paid for by yourself or the managers?
