Bankrupt Estate - To Buy or Not To Buy

[Andrew_A]

The land vs purchase price is 64%. Is it too low?

Don't judge on this figure, regularly see good quality houses on blocks that have 70%+ land ratio (Site value/Buy price)

Definitely not too low, it's quite a high figure when talking about a house in very good condition, all depends though on the specifics. Can also get plenty that are 80%+, again it's not enough to judge just on the number by itself.

Check for the usual things, zoning of land and age of house, easements, flood and overland flow, boundary issues and so on.

They can be painful processes, you have a party on the other end of the contract who has as their main concern the idea of preventing litigation and covering their risk, no concern at all about getting the best price or anything you might be interested in, good luck!

 

[mech81]

land vs purchase price

I've been following this thread with interest. Dumb question, so in the ideal world (which never is but just for my understanding) The higher the land:buy price ratio, the better the deal is or vice versa ?

Don't judge on this figure, regularly see good quality houses on blocks that have 70%+ land ratio (Site value/Buy price)

Definitely not too low, it's quite a high figure when talking about a house in very good condition, all depends though on the specifics. Can also get plenty that are 80%+, again it's not enough to judge just on the number by itself.

Check for the usual things, zoning of land and age of house, easements, flood and overland flow, boundary issues and so on.

They can be painful processes, you have a party on the other end of the contract who has as their main concern the idea of preventing litigation and covering their risk, no concern at all about getting the best price or anything you might be interested in, good luck!

 

[Ausprop]

I've been following this thread with interest. Dumb question, so in the ideal world (which never is but just for my understanding) The higher the land:buy price ratio, the better the deal is or vice versa ?

if you get a good house for free (or close to) then it has to be a good thing? they say buidings depreciate but even that is a tough generalisation, at one stage there the value of construction on my PPOR doubled

 

[kkjj]

Thanks for everyone's input on this. We have decided to get a Building & Pest Inspection done first to assess the risk involved before signing. Will keep you guys posted on how we go.

Just a question on the side, since the use of asbestos was banned in the late 80s, is it possible that a house built in the late 70s could be asbestos free as I have heard that it was very widely used for say ceilings, plaster boards and insulation?

 

[Aaron_C]

Asbestos is pretty common it's hard to say if there is an asbestos free house built in the 70s.

 

[kkjj]

Asbestos is pretty common it's hard to say if there is an asbestos free house built in the 70s.

How much we should be concerned about the asbestos problem then if it is that common? Are we just a bit too paranoid?

 

[mattysavager]

Almost all old houses will have asbestos somewhere.

If you are planning on renovating - it will cost more to have it dealt with properly according to regulations, but that will have to be factored in to your costs. No renovations=not a problem.

It won't hurt you unless you release the dust into the air. The building inspector will no-doubt note that asbestos is present.

Also - try to be at the B&P inspection when it is done. If you can't be, call the inspector and ask him to explain the report. If you read the report you will think the property could fall down in a strong wind. A building inspector will tell you "no huge problems with this place, just plaster over those cracks" but the report will always be worst-case scenario to cover their own liability.

Building & Pest inspections scare off buyers all the time when they really shouldn't.

Matt

 

[Andrew_A]

I've been following this thread with interest. Dumb question, so in the ideal world (which never is but just for my understanding) The higher the land:buy price ratio, the better the deal is or vice versa ?

Can't say on this information alone. At the core is the idea that land is appreciating in value whereas the building on the land is depreciating so the higher land value the better. One important consideration is the yield as it's a large component of total return, especially in recent years.