Forum Replies Created
Unlike RAMS, which sold off the most profitable part of its business to Westpac, Westpoint (and the other developers) – Centro has 70% of its investors are Major Players in the property/investment markets ie ANZ, UBS, Citibank, AMP, National, HSBC, JP Morgan & QIC.
It is not in any of these investors interests to see the company fail or $ wiped off their investments – give it a week and there will be an array of buyouts – SMH notes tahat the vultures are already circling.
For your own protection (and for the family's sake/sanity) – prepare a standard residential lease agreement. It will not matter to the ATO if you have a lease or not but the dept of fair trading will. It will also serve to protect your rights if you ever want to have them leave the house in the future (they may not be as nice as they are today) – by all means, you can allow the lease to be very short and allow them monthly tenure beyond that time but the legal protections available to both parties will continue.
My first question is "why can't the neighbour run the pipe through their own property?" Surely the replacement of some of their own paving/landscaping would be a better outcome for yourself. Is this the only solution? (other neighbouring properties, pump out system etc).
Secondly, how was the subdivision approved if you are yet to agree on giving away your rights? This is your block, an easement is a restriction on your block and a benefit to the adjoining block. How much will next door's property benefit by not having a restriction on their site compared to the loss in development potential and value on your own (in perpetuity)?
Thirdly, how much of your block will be affected by the easement? What will you lose (500mm out of say 15m = 3%) – what is your land worth (not your PPOR). How will they ensure that it does not encroach further into your block? Is this the width of the trench or the size of the pipe? It may be worthwhile to consult a registered valuer to discuss your options and effects.
The list goes on……
Will this affect what you can do on your block ie subdivision? Will the pipe be sufficient to take waste/water from any theoretical subdivision of the rear of your block?Will the pipe affect any future construction/development potential on your block eg: zero lot lining or a brick garage on the boundary? The neighbour should pier & beam/concrete encase the pipe so that you can build over it at any time in the future. Will it be at a sufficient depth that P&B/encasement is an option or will the pipeline be constructed out of concrete pipe?
What rights of access must be granted in case of a blockage of the pipe?
Is it for stormwater or sewer or both?
If you are going to grant an easement – this must be documented as it will affect any prospective purchaser of your property (and will reflect in your property value).
Once it is given away it will never come back – tread carefully.
SNM
Check whether the selling agent is also the managing agent or whether it is self managed. Get a rental history from the mng agent (going back as far as they will provide – most should give you 2-3 years sometimes more).
Find out who manages adjoining buildings and speak to those agents as well to confirm vacancy rates, incentives offered etc.
Have a good drive around the area to see how high vacancy rates actually are – count them, quantify it (m2), agent might give you an idea of demand/take up rates, see what new commercial projects/under construction/planned is coming on the market ie check out your competition (refer to council/re agents).The main deterrent that I found when investigating this style of investment was the low nett return. A management fee of around 20% of gross rent regardless of how many DHA properties that you owned. Sure the rental is attractive, increases are set and forget, maintenance is a non-issue.
The things that you must weigh up are the period of time that you are going to have the house 'locked up' with DHA, your exit strategy, potential of the property location beyond the lease expiry (maybe subdivide then relet 2 to DHA at a later date), in the end you must be happy with the nett return on the property.
That would obviously depend on a number of factors: quality of management, fees charged, level of maintenance, length of stay, occupancy rate both in peak and off season.
Depending upon the quality & costs of management, the returns far exceed a traditional rental property.
If need be, have your accountant present at the audit (and prior ) to ask the purpose and extent of the audit. It may cost you a $ but it will also give you more confidence in your accountant/vice versa.
If the bank is willing to loan the additional $65k to cover the deposit/refurb costs based on capital growth, then there would probably be some peace of mind for yourselves that you only owe money to the bank & not your parents – you can call on this favour again later (if they are really nice, they might just let you keep the money, but make the offer to repay first).
There should be no dramas about being able to claim the interest on the new loan as you are only restructuring your finances – I assume that you are currently paying your parents interest and that the loan is fully documented/on a handshake? If it is documented, then proving that it is simply refinancing is much easier if the question is ever asked.
Breammaster
What sorts of costs are there on the holiday rentals? Cleaning, letting fee, management fee, & how are these determined/rates increased?
SNM
If everyone at your current accountancy firm is jumping ship, do likewise.
What are your chances of finding an equity partner for the deal? ie sell 20-50% of the development to another party who is cashed up. You can benefit in a couple of ways: lowered financial risk to yourself , realise profit on the DA/CC (may be able to sell the DA as part of a separate deal), share some of the risk & ownership with a 3rd party.
The cash injection/partner will then give you a better footing with the banks.
Adv: Owning more than one property spreads your investment risk eg if one is empty you are still getting income from the others, if one area is underperforming then hopefully the others aren't, lower management fees (if they are all managed by the same manager)
Dis: Liability for land tax, more holding costs eg rates/strata levies on 2 or 3 properties as opposed to a single property etc
Firstly, shop around for a new financier – take into account any costs for break fees etc for changing from your current lender.
Secondly, make sure that the new bank has a personal lender/business banking section who you will deal with not the grunt from the back office.
Thirdly, check your capacity to pay for the next property, include projected cashflow from all 3 properties and compare with current situation.It 3 – From memory Section E Access & Egress. The formula for design of stairs is shown diagrammatically.
It 4 – Builder could probably shoot a few skew nails into the joists through the carpet.It is easier to justify mileage rate on a logbook basis & get reimbursed by the trust than trying to separate out your private usage of the vehicle unless your business usage is quite high.
Get out the copy of your home warranty insurance – make sure that it is valid (still within the period of coverage). You are only generally covered for structural issues not superficial defects beyond the first year.
If the faults seem to be structural, engage a building consultant/inspector to run through the list and to uncover more. This will firstly set your mind at rest with regard to which are the ones worth chasing.
Armed with this information, contact the dept of fair trading to determine your rights. Your ability to claim against the insurance (this will be virtually nil unless the builder is bankrupt, left the country or dead), You will then need to contact the builder (including a letter) for them to inspect and rectify – give them a timeframe for a meeting, inspection and rectification etc.
If this fails, armed with your letter to the builder, and their negative response etc, proceed to the building disputes tribunal who will waste your time and get to you talk with the builder again or order them to do some rectification works (where they feel that the builder was responsible).
Getting back to addressing your points:
1 – Retaining walls are designed to retain soil, not water. Walls which hold back water are called dams. You will lose soil through the wall. You may have to install something like an atlantis cell drain system to divert the water from the wall back into your stormwater system.
2. Cracks less than 2 mm wide are generally superficial – depends on the nature of the crack, how it travels up the wall etc as to whether it is structural.
3. What do you mean by 'the steps are narrower' – the depth of the going decreases or the width of the stairs (side to side). There is no requirement on the width however there is a formula for the basic design of stairs covered in the BCA.
4. Floors creak, chipboard is generally screwed down to the joists not just glued.
John, keep your copies of the sunday herald (sydney) property section – generally lists all of the last week's traded houses/units incl sales price & size. Keep as many as possible, whenever possible, get back issues if you need. Or pay for a one off from one of the suppliers of the information.
Then it is dogwork – find a few in the area of interest (0.5-1km radius), do a drive by, note condition, size of block & house (roughly), better/worse location, aspect, gardens/landscaping, garaging/sheds etc.
Then compare quality of the house (age, build quality -prestige/basic, size (no bdrms), standard of maintenance. Depreciate each property from its 'new cost' to its current state & deduct that from the sales price.
Check your interest rate Stephen, 8% for half a year is 4% over the period – not an anualised 16% (unless of course you are borrowing at 16%).
Ie – Purchase – $300k + costs $15k = $315k.
Add interest say, 6 months @ 8% = $12.6k
Reno = $30k + interest, 6 months @ 8% x 50% = $0.6k
Gross Profit = (net profit rate + selling costs rate) 14% x (costs) $358,200 = $50,148
Selling Price = $408,348, but say $410k
Less selling costs (incl in gp) = $16,400
Net profit = $410-$16.4-$30.6-412.6-$315 = $35,400 or 9.88%Note that holding costs will affect your profit (council rates, land tax, duration, settlement period etc)
if it is an IP then bc, rates, sinking fund etc are all deductions.
