Hi Guys,
Hoping to get a bit of advice from someone with a bit of experience in this area. I’m 24 years old and have 4 investment properties, every investment I have bought using the strategy of renovating, re-financing, pulling the equity and moving forward onto the next purchase, being a carpenter by trade and having an obsession with research this has worked well for me.
I have now turned my attention to flipping some properties to replenish my cash and pay down some debt. My question is, does anyone here have any experience in getting access to a property to begin renovation works during the settlement period to keep holding costs down? If so, what are the risks/if any associated with doing this.
Any advice will be greatly appreciated.
With thanks, Ben
Hi Ben,
I’ve done it extensively in my own portfolio and some of my clients have been comfortable doing it. Under WA law (it may be different where you are) there are two risks to consider;
The first is that the seller is upside down and the bank will not let them settle, you have improved the property and the bank will keep it with out paying you out. This can be common in a falling market.
The other is that the vendor pass away between the offer being accepted and the contract going unconditional. This voids the contract.A good selling agent will make you sign a condition that you will not make any additional claims once you have possession and will generally try to dissuade the seller from accepting. You would also be wise to insure the property. If you cause a problem and the house were to burn down you will still have to settle.
I have recently collected 3 months rent on one property before settlement (messy divorce where they were playing point scoring) and my previous best was two weeks rent collected before settlement. Both of these properties were renovated before tenanting.
I hope this helps
I have now turned my attention to flipping some properties to replenish my cash and pay down some debt. My question is, does anyone here have any experience in getting access to a property to begin renovation works during the settlement period to keep holding costs down? If so, what are the risks/if any associated with doing this.
Hi there
Yep – I’ve done it before.
It was part of our offer. We required access to the property post exchange/pre settlement to carry out some renovations.
Our solicitor put something in writing to the owners solicitor – the owner signed off on it and everyone was happy.
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]
Hi David,
Thanks for the reply, it was very helpful. I’m in Victoria so Ill have to look a bit further to see if the same rules apply, other wise all looks good.
Nice work with the 3 months rent before settlement! Now that is impressive.
With thanks, Ben
Thanks for that Jamie, Ill have to speak to my solicitor as well to see what he is able to put in writing.
With thanks, Ben
Thanks for that Jamie, Ill have to speak to my solicitor as well to see what he is able to put in writing.
With thanks, BenLet us know how you go Ben – I find a lot of agents/vendors aren’t that keen on access prior to settlement. Unconditional offers with an OK deposit will calm the nerves of some, but it still comes down to the other side what they’ll accept. Good luck!
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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