Devine Homes

[Wealth Creator]

Hello everybody,
Recently I have noticed that Devine homes is really pushing their NO DEPOSIT property investment.
The ads say something like "An investment home with no deposit, you don't even need the equity in your own home"

They claim to:
- Pay you an agreed sum at an agreed rate if you don't have a tenant after two weeks on the market
- Pay your first year's landlord insurance
- Independently pre-valued house and land
- RACV home & contents insurance for 12 months
- you don't have to spend a cent more for a tenant to move in etc. etc.

They then give various examples of clients who have purchased their own home through Devine with no deposit and then another 2 investment properties etc....
Just wondering what your thoughts are on this??

 

[Kris Sheather]

A few quick ideas, how much of a premium are they adding to the price of the house? They say the valuer is indepedant, but if they are appointing the valuer is that truely independant?

I'd say the value is inflated somewhat in order to cover the rest of this stuff they are giving you for 'free'.

 

[qaz]

I'd like to see if they are still offering this in a few years once the market starts moving again.

 

[Twitch]

What area is this been offered in? Size of the land? What is the history of capital growth? What does Residex predict for the future growth of this area? What infrastructure does this area have? Is it close to the coast or the CBD? Train station? I would also be very cautious buying any new property that is specifically marketed as an investment. These are just some of the things you'd want to consider.

There are so many more important items to consider in buying an IP than what included extras there are.

 

[Rolf Latham]

Hiya

Often these types of deals are funded by people like STG who use a subsidy on the interest from the builder to cover the higher LVR.

Assuming all else checks out these things can be an ok PPOR purchase - note im speaking from a finance point of view only.

ta

rolf

 

[michaelg]

Hi,

Just a couple of questions (hehehe)...

1) The phrase "subsidy on the interest", does this mean that the STG finance is wrapped with a rate spread paid for by the builder, so that the combined result (through a structure of a loan and purchase price) is in effect charging a premium to the borrower?

2) What protection does the borrower have if they default? My understanding is that an investment loan is not protected under the consumer credit code?

3) Would the borrower be allowed to keep the property if they could no longer make any payments?

4) What happens if the market slumps, would the builder provide a refund because the timing was unfair and the borrower did not know what would happen in the market?

5) What happens after they sign the contract and a few years later decide they no longer want to do this, can they get a full refund, can a claim they didn't understand the contract at the time they signed be a valid reason for a refund?

As an Investor Advocate, I'm concerned about these things, investors should know the risks!

Regards
MichaelG

 

[Wealth Creator]

Really good questions michaelg.
I'm looking forward to hearing the answers to these also.......

 

[Pablo]

Just thought you may want to know that I have heard some bad things about Devines landscaping in that they dont even bother clearing away ruble and smaller scrap building material before laying down the lawn and that the lawn often dies after a couple weeks.

Also have you thought about defence housing, you will not have to worry about tenants and maintenance for 9-12 years, and all you have to pay is the normal renting expenses and a 16.5% maintenance fee.

 

[alwayscurious]

Devine estates.

I live in one.

They are OK.

Quickly built and cheaply landscaped - sometimes only front lawns.

The fences are usually quickly put up, sometimes with concrete only every second post !!

The standard house didn't come with many inclusions like sarking (under tile card/aluminum sheet to stop water drips)

Few things to note:

I feel they may have picked up their game.

I concur about the crap quality of the soil. I am excavating out my backyard a bit and hauling out broken tiles, bottles, cans, skulls, buried cars, etc etc.

Also:
The people in my estate who signed up for no deposit took out loans at 8.5% or higher fixed rate for five years - that was the deal. Funnily enough - the market intro deal for Standard Variable was 4.5 - 5% at the time and still hasn't got that high.
This had a heavy exit penalty.

So there is a price to pay.

Alternatively, it's a great way to get people into first homes.

The houses seem come up for sale cheap when the people who couldn't afford a deposit, can't afford repayments.

Mass generalisation there,
however, we bought one exactly like this, from a distress sale, divorce due to money & problems (from what we could tell).

House was FULL of lovely furniture (hire purchase). (MUCH better than our crappy second hand hand me down stuff..)

Brand new car in drive. (hire purchase) better than our $5k car!

Then came New baby. Added more pressure, financial probably too.

Car was repossessed. Couple split up.
I bought the house, and got it cheap (so I thought - I negotiated a whole 1000 off the price!!) -
but the stories that filtered in from neighbours broke my heart.

So there are opportunities out there - 2 - 3 years AFTER the estate is built, when the pressure comes on to fill the no deposit house with no deposit furniture and garage with no deposit car.


Sorry about the rant.
I don't really like no-deposit lending, due to the play on people with financial lack of information.

On the other hand. I now like my suburb. Some of the originals stuck it out and are now much better off - as they have a house double what they bought for.

Some of them sold, and people with deposits saved up bought.

The area was traditional "working class" and is slowly changing to mid class.
garages are being filled in to make room for kids.

Crap gardens are being dug up and replanted nicely.
Fences are being painted and graffiti is quickly removed.
Cars are becoming newer.
Pergolahs are being built, and spray on concrete finishes applied.