deposit paid...what now??

Hi Guys and Gals

The exciting news is that after 2 months of property searching and 2 weeks of number crunching on this one particular unit, I have finally made an offer and been accepted on my very first IP. YAY!!!!! I've paid the $1000 holding deposit, have the contract, and am off to give it to my solicitor tomorrow. I am confident that the deal is a good one, but it has only just hit me how much I DON'T know about this whole purchasing process :(

The unit is in the old Grace Bros building on Broadway, Ultimo. It's as old as the hills, but was fully gutted and made into studio units about six years ago. Should I bother with pest/building inspections? My gut feeling is not to considering the size of the place. My solicitor says that stuff should get picked up in her search or by the body corporate...

The purchase qualifys for the stamp duty exemption (First Home Plus) and my private finance deal is sorted. As the place is fully furnished I will be making a detailed list of inclusions in tomorrow's inspection.

Is there anything else I need to know???

Hobbles :D :D

...can't stop grinning, sorry!
 
Congratulations Hobbo,

looks like all that tightarsedness has paid off.

I would definately get a building inspection/report, if only for the piece of mind as I doubt you could use it to void the sale unless you have put a condition on the contract for that purpose.

i am unsure how this stamp duty exemption thing works in NSW, but I would assume that you will be using this as your PPOR, if not, then I would get a quantity surveyor out there real fast, if the joint was tarted up six years ago there will be some great depreciation claims available to you, not to mention the furniture.

Congratulations again, now start working on ways to get number 2, with your life of frugalty, we all should be reading about it in about 6 weeks time.

By the way, if the contract isn't signed then maybe add that condition about obtaining a satisfactory building inspection report.
Just a word of caution on this, make sure that the wording is such that it reads " to the purchasers satisfaction", I know of a situation at the moment where the condition read " a satisfactory building inspection report" and now the vendor and purchaser are arguing over the reported fault with the vendor saying that the fault isn't major but the purchaser thinks it is.
Cuurently stalemate, the vendor wont refund the deposit and wants the purchaser to settle and the purchaser looks like having to take legal action to recover their deposit......Don't know who'll win in this case other than the solicitors.
So make sure correct wording for the situation is used.

regards
 
Congrats

Not sure if the Grace Bros block was also involved , but there were problems with management contracts in ? the Goldsbros/mort building near there.

Something to look at if not already done.

Your solicitor is probably right given it's been around for six years, but I'd get one just in case.

See change
 
Thanks guys. I'm just a bit worried about the cost of such a report given how darn big the building is. I mean, we ain't talking no 3 brm family home here! The building has more than 550 units in it and sits on a block that is 87metres x 91metres.

Anyway, I'll do the ring around on monday....
 
pest and building report

Hi, Pls correct me if I'm wrong somebody but generally, I believe that a pest and building report is not done on strata buildings as the risk is carried by the owners corporation.....I have been told this but it may not be right.

Your main worry is not the substance of the building itsself but whether you will get the return........is the rental vacancy rate low there....it is high elsewhere in the City.

Have you factored in the academic vacation period....I understand that these buildings were redeveloped mainly for use by students (or am I confusing them with Unilodge down the road?)

I wish you every success with your purchase...its exciting buying property isn't it?...especially a first time purchase.

Savanna
 
Hobbling,

Well done.

Just one thought. Some of those units were less than 50 Sqm- and some banks have a problem with lending on that size of unit. Is your finance in place OK?
 
I am pretty sure Savanna is on the right track. Strata title means that you own the airspace within the building whilst the structure belongs to the body corporate. Or as a lecturer advised you own the thickness of paint on the perimeter walls and must apply for permission to pierce those walls, ceiling or floors eg installing aircon, plumbing etc.

Having said that I think all internal walls become the responsibility of the unit owner as well as fixtures and fittings such as kitchen and bathrooms.

There may well be some use in having an expert assess their condition although it will be a quick easy job for them to do so...no crawling through roofspace or under floors so try for a cheap rate!

Hope I am on the right track here and would welcome any other info.

Have a great weekend,
 
Hi again,

The unit I'm buying IS in UniLodge and is 21 square metres. From my past experience with the place - I used to rent there - the smaller units (those under 30m) are never vacant as most students want the cheapest accom they can get. They don't seem to mind living in a shoe box. It's the larger ones that have some vacancy. In any case, the rental pool will be a safety net, unless we decide to leave the pool which we can if we want to. Sydney Campus Apartments who runs the place (8% man. fee) makes all tenants sign a 6 or 12 month lease that coincides with the semesters. So, if a student were to say, go home to Hong Kong when uni finishes in November, they would still have to pay rent until their lease expires in January. Most o/s students have so much money/support from wealthy parents that they can afford to do this. If they DO do the runner, I will have their six week bond :)

On paper, the unit is cash-flow positive from day one. It will be a cash contract (that's how I got the place so cheap) as my partner David is financing the deal with his savings (WOO-HOO!) and I will pay him back. He will effectively be the bank. I don't trust many humans in this world, but I trust this guy. He would be more likely to rip himself off than me.

I'll do further homework about the inspections, but my solicitor pretty much said what Savanna has suggested. I'll keep doing my homework anyway...

Thanks Chookies :D
 
Savanna

One would assume you'd be safe with a bulding that's been around, BUT there have been high profile cases in syd with new buildings where a building report discovered major faults with the building which up to that stage were not public knolwedge.

Not sure if related to the same building , but there was something in the paper in the last 2 weeks about litigation between various parties involved in managing a block in syd CBD and one being bankrupt and a one off levy to remedy the situation.

See change
 
B

brains

Guest
Congrats Hobs, the 1st of many?? Would you mind sharing the numbers with us, if youre not comfortable with that, cool.
 
The first of VERY MANY! Sidney Kidman may have himself a rival one day ;)

Original asking price = $135 000
my offer = $112 500
purchase price = $115 000
size = 21 square metres, fully furnished (quite liveable for 1 person who travels light)
Six years old, depreciation applies
inclusions = proportion of land, studio unit and all furniture
gross weekly rent = $225 (what student tenant pays)
management = 8%
nett weekly rental (after strata, rates, management, predicted vacany) = $135.25
my loan = $52 258 (5.99% fixed for 2 years with private financier)
stamp duty = $0 (first home plus)
Whole building leased by Sydney Campus apartments until December 2007, but owner occupation is possible. Occupation fee = $0
SCA is both the tenant AND the PM, they then sub-let to students.
works out to a positive cash flow for me of $7 per month from day one, before depreciation. With 100% equity, income is $541 per month nett.
with depreciation and my current meagre income, I am still under the tax free threshold.

I will be occupying the unit at some stage, and am not sure about FHOG and FH+, but I do not intend to do anything illegal.

Cheers,
An excited Hobsie
 
Congratulations
Is David able to provide finance to others as well

Just a word about occupying the property yourself, If you intend to claim depreciaition and the interrest on the loan it will become complicated if you as the owner occupy the premises for a period of time

Fredo

Congrats again
 
B

brains

Guest
Thanks for that Hobs. Looks like a fine deal.
Should be ok for future cap. growth being so close to the city and uni. with student accom. demand increasing.
 
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