Don't mean to hog the site but....



From: Donna Larcos

Sorry, I'm chatty today. I introduced a
friend to property about two years ago ad
he has gone from a supporting parent
benefit to controlling about $2 mill in
property in that time, passing me well and
truly. I was talking to him about
off-the-plan and how you could control a
lot of property for a year or two with very
little money and if you choose well make
a substantial capital gain. Unfortunately,
he may have taken this too literally and
has now bought 3 units off the plan for
substantial amounts of money which are
due to complete late 2003. I have warned
him that I thought this was a bit risky
because you may have to come up with a
lot of money in a short space of time and
be unable to offload if there is a downturn
in the market.

Would you be worried about this plan?
Have I created a Frankenstein?

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Reply: 1
From: Rolf Latham

Hi Donna

A lot depends on whether your friend has finance approval for all three properties at completion. If not, and there is a bond securing each of them then all may be well if the market continues to grow, on the other hand he may have a fun time as you say IF the unit market goes to custard.


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Reply: 1.1
From: Astro Boy

Hey Rolf,

is it realistic to have pre approvals for OTP's that are not due for completion for 24+ months - I would have thought that if I took a 2 1/2 yr old approval back to the bank they would laugh at me???

Is there another way to cover yourself on an OTP over the case of an unexpected significant downturn?

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Reply: 1.1.1
From: Rolf Latham


You can get bonds for up to 36 months. So called approvals are only indicative usually for 90 days, which is enough time to get a deposit bond.

The lender would not laugh at you. The would just ask for a new application including income documentation and liabilities. This is why an OTP approval is not worth a whole lot.

Protection, dont know really, if the market goes to custard and youre left holding 6 bonds and you have 600 000 negative equity, then bankruptacy ma be a good option.

Options of some sort may work for you where you can limit the loss, but thereby also limiting the return (hey sounds like insurance)


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