I'm in the throes of kicking off a long-term buy-reno-hold strategy with our first IP. Numbers stack up for a property we've found however there is an easement across the back of the property and there's a garage built on top of it.
Agent tells me the current owners bought the property sixteen years ago and the garage was there, and my checks with council and water board show that there was no permit. So there are two issues with the property:
1. Garage would need to be pulled down if water board ever needed access to the pipes (though the person I spoke to indicated that nowadays there are ways to work around dwellings, ie. inserting PVC pipe into the existing concrete pipe at one end).
2. Easement would prevent subdivision of the block and possibly, extension of existing house in the future.
Neither of these concern me in terms of our planned use for the property, however the impact the easement may have on the long-term capital growth and resale needs to be considered.
I'm interested in the thoughts of experienced investors – knowing the above and our plans, would you buy the property? Do you think we're in a good position to bargain and offer a lower amount?
The agent indicated $185 – $190K was ballpark (and I think this reflects the market), but I don't think i'd want to offer any more than $175K knowing these restrictions.
Would really appreciate any thoughts or input!
Depends on the area but easements are a common point for people to negotiate.
I purchased a property in a very affluent area simply because it had an easement running through the front. It just happened to be located in an area where I wasn't going to build anyway.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi bella
I do believe I know the property you are takling about
Such pretty walls it has hey!I'd strongly recommend figuring out how much it would cost you to relocate the shed if you had to. Remembering to factor in cost of a new concrete slab, permits for the repositioning of the slab, tradies to move the shed…. not to mention whether or not the shed would survive the dismantling and reconstruction process. Also factor in electrician costs associated with getting power to the new garage location.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
bella84 wrote:I'm interested in the thoughts of experienced investors – knowing the above and our plans, would you buy the property? Do you think we're in a good position to bargain and offer a lower amount?
The agent indicated $185 – $190K was ballpark (and I think this reflects the market), but I don't think i'd want to offer any more than $175K knowing these restrictions.
Would really appreciate any thoughts or input!
Use the easement as a point of negotiation.
Also look at comparable sales and choose some that support your case for the offer you put forward – mention them to the agent. Your broker/banker should be able to produce some property reports that give you an idea of how much similar properties in the area have sold and/or selling for.
Also find out their motivation for selling. That can assist in the negotiations as well. For instance, if they're committed to another purchase elsewhere, offer a flexible settlement period that coincides with them moving into their next home.
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]
Thanks Shahin, that's good to know – the way I see it, it can be more attractive as it's leverage for negotiation and limits the market somewhat (ie most developers).
In that case you sure do know the area backwards! Isn't the colour scheme lovely?! I don't know what they were thinking
Thanks for those suggestions – a new shed of that size would be $5K (Colorbond) and the slab expensive, so I think it's pretty reasonable to bring up these points in the negotiation. Hadn't considered electrician costs, good point. Do you think I need to allow for the impact on capital growth or in this area do you think that would be negligible? (and probably difficult to put a figure on?)
Thanks for your input Jamie, those are great suggestions too. I definitely need to do a bit of work to build my case. It's an IP and currently vacant so I'm guessing they'll want a quick settlement – i'll be proposing 60 days though as our first baby is due in 3 weeks so we'll be a bit preoccupied!
Muddying the waters a bit trying to factor in capital growth.
If I were building a shed in that suburb I'd also be putting in a sink. For obvious reasons. In that suburb there are lots of tradies and blokes that spend ages doing goodness knows what in the shed. If you pay attention, "Attention tradies" is used on the real estate ads of a lot of the properties that boast double garages.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
bella84 wrote:Thanks for your input Jamie, those are great suggestions too. I definitely need to do a bit of work to build my case. It's an IP and currently vacant so I'm guessing they'll want a quick settlement – i'll be proposing 60 days though as our first baby is due in 3 weeks so we'll be a bit preoccupied!Exciting times! My wife and I are only three weeks behind you.
Best of luck with the offer.
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]
Thanks Jacqui, thought that might be the case.
Will keep the sink in mind too!
Jamie M wrote:Exciting times! My wife and I are only three weeks behind you.
Best of luck with the offer.
Cheers
Jamie
Sure is isn't it! Thanks and all the best to you both.
Hi Bella,
Don't know the area and have tried to get a picture of what is considered 'normal' from the otherside of the country.
But reading between the lines it would seems as if a slightly larger shed with, maybe 3 phase power & water might be the go.
I now look at normal sized shed and think, "Is that it?"
Now I must admit I don't know whether or not you would get a return for your buck doing something along the lines of my suggestion might be worth investigating further.
Such pretty walls it has hey!
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