buying property unseen

I’ve purchased three sight unseen. Find someone you trust and then SHOW ME THE FIGURES. The property is secondary.

Spider

Monkeybam,

I live in sydney, and I can’t afford to buy in my local market :o) Hence, I have to look a bit further afield.

kay henry

PatCatz brings up the following :”ALWAYS check out reports etc.”

I think it would be a good idea to discuss what the word ‘etc’ means in the above statement.

My best friend has recently bought a total of three blocks of units without having seen them first.

He happened to be attending an auction for another property for a client, saw a block of flats go up for auction, thought it was a bargain and put up his hand and finished up buying the property.

The next day he tells me and takes me down to have a look at the property. When I ask him where he would be if there was a structural problem with the block he shrugged his shoulders.

Well he has more money than brains (sorry Jim) because he has since then bought two more like that (during the last three months actually).

He happens to be a happy go lucky guy, a gambler with a ‘who cares about tomorrow’ outlook and he earns pretty good money too.

Now if I tell you that these units cost him a total of $ 7 M where would one be if one is unlucky and just one of them would have had a structural problem which would have necessitated him to pull the building down and rebuild it again.

Here are the possible problems in such a situation as I see it :

1. loss of rent whilst one demolishes and rebuild

2. perhaps unable to service the loan because the income has stopped

3. perhaps unable to obtain finance to complete the purchase if the valuer discovers the structural problem and advises the lender to obtain a structural engineers report

4. perhaps unable to obtain finance to rebuild

5. perhaps unable to build the same number of units as there were before because council may have changed the rules

6. because of possible finance problems and therefore being unable to complete the purchase one could finish up losing everything one owns.

Anyone who doesn’t do due and proper diligence is an idiot.

Chances are in your favour in that most likely there isn’t a big problem but what if there was ? Where would one be then ?

It appears as if many of us may be quite prepared to buy a house sight unseen.

I think we can be pretty sure that if there did turn out to be a BIG problem it would spell disaster for most of these people. (perhaps going broke, losing one’s personal house, having one’s marriage break up etc etc).

Now all these people who are talking about due diligence and talk about asking the real estate agent questions let me ask you this :

If through some mishap you suddenly were robbed of say $ 150,000 (the cost of replacing a house) , or even some mishap costing you a mere $ 50,000, what would that do to your plans and your life ?

Now if we don’t want to be ostriches will we shortly see on this thread a list of due diligence items which need to be checked out ?

Pisces133

Well Kay, you mentioned the obvious things to check for.

Now what about the other items guys ?

BTW Kay, checking the Body Corporate notes of meetings
is a good way to discover some pretty nasty possible problems. I wonder how many people have done that or are actually doing this.

Admin., I wonder whether it is possible to run a thread where people can vote rather than commenting. If that is possible I would suggest that we run such a voting thread where people can register via a ‘yes’ or a ‘No’ vote whether, the last time they bought a unit (or attempted to buy a unit) they, as a matter of course, went to the Body Corporate’s office to inspect the notes of meetings before they purchased the unit.

Pisces133

i have bought three houses so far sight unseen. Photos
– yep, but take them with a grain of salt, because they can be too low rez to show the bad bits. Actually when I show people my houses i show them the ‘agent photos’ and then i show them the ‘reality’ photos (which are a lot worse!).
the agent isn’t lying, but low rez wide-angle photos just tend to look too good.

i get a builder’s report and as well I have long conversations with the builder after. Also I have conversations about the merits of the property for rental with a rental agent who assessed it – one who’s not selling you the house is best because they should be impartial.

Where i live is inner Sydney and if i only could buy where i could physically inspect, (factoring in one’s schedule, budget, etc) it would limit me. i wouldn’t be here today let alone in the property game with three IPS in less than a year, if i hadn’t bought sight unseen.

the first house i bought, i have still never seen – it is full service managed and has rented ever since i got it. it’s a gorgeous villa, had been well maintained (even the builder was surprised!) I spent $800 on it to fix a couple of things and off it’s gone making me money. I value my time too so the less I have to do with the property the better. i was lucky with my first one and probably not as careful with my second.The second one, at 16K I thought I was getting the bargain of the century, and it came complete with tenant paying 90 per week. I got complacent, didn’t do enough due diligence – did builder’s report, but not enough of the ‘how’s the street and the area?’ kind.

problems began on settlement day when the tenant left, and no rental agent would accept it for rental!!! So we went over and did it up, new fireplace, polished the floors, curtains, painted. Looked fabulous. Got a great tenant despite the fact that we also discovered in the meantime that there were gang-members in the same street. OK they were next door! But as I actually went there to do the house up I didn’t notice anything so I am actually not worried about that really.

So if buying sight unseen it can work out good but if you don’t ask enough questions or do enough due diligence, you could have some interesting surprises.

Also while I’d buy houses under 50K sight unseen i wouldn’t buy houses over 200K sight unseen. Then again i would tie them up with a contract just on the numbers and get them building inspected before i bothered to go check them out myself – I’d almost put myself as the least qualified person. I’ve ‘loved’ houses that were total dogs, so now I don’t even bother with ‘love’ really when purchasing.!!

the third house i bought I again bought sight unseen and in the same town as my number two ‘seminar’ house (which has come good. and which i call that because of what it taught me.) and only 3K more at 19K, but in a better area and has been rented the whole time for 115 pw, after i did my ‘standard’ renovation on it. This wouldn’t be a high standard for Sydney or melbourne but it certainly is for this area.

so out of three houses i bought, only one I have actually been inside.!!!!!!! That was the ‘seminar ‘house. The other two, i have still never been inside, although i have driven by, seen good quality pics of the completed renovations, taken the rental manager to lunch twice, and looked for more in person in the area since then!

I wouldn’t recommend buying unseen for everyone but the reason it actually works for me is that there’s a certain style and vintage of house that I am buying in my price-range and actually they are all pretty much the same. they generally all have wooden floorboards underneath and were solidly constructed, and so in a way that’s Steve’s advice – get experience first. Yet my point is that if i hadn’t bought sight unseen i wouldn’t have bought at all.

Also since buying there I have been there and got to know the area so it all seems much less daunting, I trust the builder’s report guy, the rental manager, and even the agent there now. so I feel confident buying there again not to mention getting the same knowledge in other areas.

My next area i am keen on is one I actually visited on holidays and got a vibe for while i was there. I fully expect to ‘buy first inspect later’ as long as i continue to have a full-time ‘life’ and property is just a way to store and grow wealth.

blah blah blah as usual
cheers-
Mini