Obviously it would be beneficial if you could access your investment property to start the renovations prior to settlement so that come settlement it is possibly ready to rent out straight away.
For what reason would the current owner allow that though and are the only risks is that you ahve put in reno time and money and the house may not settle (ie you may nt become the owner) therefore the benfits of the improvements go to the previous owner?
ta
Current owner may allow early access to get your money. Sounds like a good swap. Yes you are correct in that if the settlement does not go through, besides the usual financial problems, you will walk away from your renovation and have to pay to get it into a livable condition or back to where it was, plus costs to date.
Sounds grim, but if you've done your homework the above situation wouldn't happen.
The obvious benefit to you is not paying interest on the loan for the time you negotiate and having a property ready to go by settlement. I've had a complete renovation refit done to a 4 bedroom house over 12 weeks and back on the market before settlement. Negotiating early access is common to renovators and the market now lends itself sweetly to it.
Ian
http://www.theblockblog.com
Free Property Information, Tools & Resources for Investors with a Sense of Humour.I try and gain access to IPs before settlement to start renos. The first IP we gained access to was a run down 2 bedroom unit that we renovated over a 4 week period after exchange and before settlement. On settlement day, new tenants moved in and paid $80 p.w more and the revaluation came in $40k higher – we spent just under $3k on the renos.
This strategy does have its risks – but it can work out really well.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
sapphire101 wrote:Current owner may allow early access to get your money. Sounds like a good swap. Yes you are correct in that if the settlement does not go through, besides the usual financial problems, you will walk away from your renovation and have to pay to get it into a livable condition or back to where it was, plus costs to date.Sounds grim, but if you've done your homework the above situation wouldn't happen.
Ian
http://www.theblockblog.com
Free Property Information, Tools & Resources for Investors with a Sense of Humour.Any amount of homework cannot guarantee it won't happen.
The owner (seeing a wonderful house) may decide that they want more and try to pull out. Sure it's not likely but can happen. As long as you are aware of the risks VS the gain.
Great if you can get it but at the end of the day you are spending money on someone else's house. Insurance? on something you don't own? Public liability if someone is injured? A few things to consider.Nice going Jamie renovating in 4 weeks. Good results.
Where do i go to get the insurance for this period?.
Hardest part can be getting it past the vendors solicitor not necessarily the vendor
we've had early access previously on a property – 2 weeks – so we could renovate a property, was tough getting it past vendor's solicitor but it worked.
A good option also is to ask for an extended settlement with early access – I have currently got an offer on a property that i have requested for a 27th April settlement date, approx 9 weeks, but with early access from 6 weeks on. This gives us 3 weeks to renovate before holding costs kick in and as the banks are used to a 6 week settlement period normally, we are guaranteed to have the 100% go ahead and know the bank matters are covered before we go in. We send a copy of insurance policy to solicitors vendor to cover legalities. We do our own renovations except for flooring specialists so public liability issues are limited….
If you get immediate access and use of the property, arent you really just a tenant up until settlement? Or is it not that simple?
You would then need your own contents insurance and the current owner would have building insurance. The owner should have the building insured with or without you in it anyway.
You may need additional cover for the renovation work though.
You are not a tenant as you are not living there and you are not paying rent.
Contents cover will not cover your contents if you aren't living there.
Never assume current owners have insurance. Also they may not want to claim on their insurance if it doesn't involve them.
Always get your own as soon as you exchange contracts.I have found it very difficult for last 2 purchases to get permission to commence renos prior to settlement. However I have included a clause in contract to allow unrestricted access for trades to measure and quote. So although i couldn’t start work, I could use settlement period to plan reno and get quotes so all ready to go on settlement day. I’m hopeful in the future of getting full access prior to settlement but even this compromise works well to save time and holding costs…
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