Buying Sight Unseen + Advice Sought

[Olly]

Can I run my thoughts by you and get some feedback please?

I have equity in my home of about $300K and an IP (1 bed flat) worth about $150K and a mortgage of $80K. The mortgage is on my home as I borrowed to buy the IP - my home is worth about $400K.

I'm interested in buying 2 IP's. 1 is approx $120K and is rented for $170/pw and the other is approx $140k and is rented for $210/pw. I get $145/pw for my flat.

The loan I need will include my legals so I'm looking at a loan to take all 3 IP's of about $300K at P&I over 25/30 years and the rental return on them will be $525/pw. I've got no problems getting finance and have something sorted at 6% at the moment.

Questions:
The 2 new IP's are quite a distance away and I can't really get there to see them. Has anyone bought sight unseen? What should I be careful of? Can the local solicitor organise all the inspections etc for me to make sure they are structurally sound etc. Is this a good idea? Can anything go wrong - what?

Can anyone suggest better finance or a better way of doing things in my situation? About the only thing I can say is I would like to actually own something at the end which is why I like P&I loans. I figure even if there is no CG at least I own something worth $$$ that I didn't own before and someone else paid for it for me.

I've done my sums and I think I've done them right and it sounds good to me? Am I right? Does the above sound like a good idea?

You'd think having 1 ip already I'd be more confident but I'm scared to death!! I think I stumbled into my first IP and ignorance was bliss in some respects. Now I've read and read until my eyes have bled (a bit of exaggeration there, but you know what I mean), and now I know there are so may other ways of doing things I'm not sure I'm doing things the best way!!

Help please! If I haven't given enough info - just ask - I'm in your hands



TIA
Olly

 

[Olly]

Originally posted by OllyPomm
Can I run my thoughts by you and get some feedback please?

The loan I need will include my legals so I'm looking at a loan to take all 3 IP's of about $300K at P&I over 25/30 years and the rental return on them will be $525/pw.


TIA
Olly

Ooops! I mean a loan of $360-$400K.

Also, what should I allow roughly for legals or any other costs. I've had a go at a stamp duty calculator so have a rough idea what I'm up for there - but all comments/suggestions/criticisms welcome on anything I've said.

Thanks
Olly
(Waiting with baited breath)

 

[Mrs Bird]

Hi Olly,

I can only give you my thoughts on buying a property unseen but for your other questions I will leave for the more experienced investors on this forum.

We bought a beachfront appartment at Palm Cove unseen!
I bought the apartment after the second phone call from the agent then the fun began. Contracts were then faxed from Cairns that day for us to sign and we then we posted them of to the owners who also lived in Melbourne.
At this point no lawyer had seen the contract, no building inspection, no body corp figures seen etc.

Sounds bad but quite the opposite.
The contract allowed us for so many escape clauses that we felt comftable buying unseen.
But....We were only able to do this for the following reasons..
1. We knew exactly the area and the type of apartment we were buying into.
2. I had been following the prices for these holiday apartments very closely for several months so I was aware of the type of market that was targeted
3. Had finances in order to make a quick deal and prepared to buy after 1 phone call
4. The price was right and I knew I would see CG very quickly because it was timed right.

Building inspections were done after we signed as well as other searches our solicitors did for us....Remembering back there were so many get out clauses we could have made any excuse.

Once we signed, husband then flew up to Cairns to inspect it.(In the contract we did put subject to inspection)

Make sure you know your area even the street you may want to buy into. It is amazing how 1 st to another can differ so dramatically.

We knew the area very well therefore felt confident to buy unseen. After saying all of this I would NOT recommend it normally. We took the risk and it paid of but just look at people on those current affair shows who have not been so fortunate.

The main risk is that you would pay too much and in the wrong area.

Hoped this has helped

Mrs Bird

 

[brains]

Normally you should get up to see your IP purchase, if you cant i would suggest you arrange the building & pest inspection and independent valuation your self. This way theres no chance of collusion with the solicitor, real estate..etc.. or anyone for that matter.

Go to www.yellowpages.com.au and you'll find what you need in your IP area. You should know the values in the area pretty well and the rental returns..etc...

I bought 2 houses in QLD sight unseen last year doing the above and havnt had a problem.

I asked my property manager (different RE to the one i was purchasing through) to give me her opinion on purchase price and rent and take digital pics and email them to me.

I also asked the building/pest inspector to take digital pics...no problem.

After you purchase get on the phone constantly to everyone involved to make sure they havnt forgot you and to stop things dragging on.

 

[Brenda Irwin]

I bought 3 earlier this year from internet photos & to this day still have not seen them for real. Am about to settle on another 3 in early July.
The contracts were all subject to pest & building, finance appro.
I know the area, I know the prices, I know the rents. I have telephone interviewed the prospective property manager at length and the returns are & willbe in the area of 11% return.
The pm knows full well that if the deal is likely to cost a mint in maintenance then it is she who has to apply for me to finance it so usually an assurance from her the place is fine & the existing tenants are good or she's got good tenants on her waiting list for the house is good enough for me.
I fall in love with the deal, not the house. My several other houses I might driveby once or twice a year but I consider them investments not possessions & so long as they look Ok & rent is being paid to pms on time what do I care? Exception is if I can increase value with a new fence or carport or a bit'o'paint to increase equity so I can buy some more.
Cheers Brenda