Purchased a Dud, what would you do?

[stephenb465]

Hi there,
I’m looking at getting same ideas on how one would handle this problem of mine.

Earyers in the year I purchased a property in Clontarf (OLD) via a BA as I spend a lot of my time overseas. (Purchased price: 350k)

Via the buyers agent, I did the usually check, i.e. builders, pest and all went well until I tried to rent it out

For a start it took 6 weeks to rent and so far I have spent:
$1500 on the electric on the house
$1500 replacement of air conditioner
$1200 for the handy man doing odd jobs

Now I have a flooding problem, all the surrounding properties are higher than me, and I receive all the run off, therefore, big flooding problems.
To fix it, 10K (received two quotes)

Mold in the bathroom, probable from the flooding
Handy man just told me the roof probable needs replacement in a couple of years 10k?

All the costs I see coming up, isn't going to add value to the property, for one the new drainage is going to require servicing each year (as recommended by the plumber, electric pumps), and then we have the cost of the roof.

Now keeping all emotions out, what should I do?

I can see I have two options
Sell and purchase another one or spend the money and keep it

Option 1
If I sell it and get what I paid for it, I would have lost 20-30k
(bank fees, Buyers Agents fees, all the repairs I have done, then selling fee)
Then the cost of purchasing another property, bank fees, Buyers agent…..

Option 2
Keep it and spend the money, over 2 years, 20K

Stephen

 

[oracle]

Selling looks like a good option to me.

Cheers,
Oracle.

 

[K_Raheja]

sorry to hear that...
sounds like the BA did not do a good job in selection..

 

[neil100]

What were the reasons the BA gave for this being such a good buy?

Did you agree with those reasons? Do they still hold true now?

Did the building inspection identify any of these issues?

 

[bluestorm]

Sorry to here about you predicament. I would never use a BA. (sorry Propertunity ;-) )
Like anything (superannuation, Storm, etc), when you rely on the "experts" for your financial future, you loose some control.

Anyway, I'm surpised it took 6 weeks to rent out. Maybe the asking rent was too high?. Ours in Redcliffe, QLd has had no issues.

Some of these building issues seems to be things that should have been picked up by the building inspection I would think.

Option 2 for me. The area is still good, with new development (clontarf, woody point, etC). Selling and buying you'll be maybe $50K down. Bringing the property up to scratch maybe less.
Could you do some of the work yourself?, or source cheaper material (than the quotes), and just have them do the installation.

 

[Ausprop]

the hit to your balance sheet has been taken, so I would hold it

 

[Jacque]

Hi Stephen

Sorry to hear this- sounds like it's going to be an ongoing expense which is not what you need!

Was the drainage issue and the poor state of the roof bought up in the building report? I know it's not going to help now but it sounds as though they may have been pre-existing problems?
Given that's there's clearly a history of runoff from neighbouring properties surely the inspector picked this up? Or has something happened with a neighbouring house since your purchase to change the drainage situation? (new retaining wall, fence, rebuild of house next door)

If it makes you feel any better I have a house in Brissy whose pipes have a love affair with tree roots, requiring about $8K in plumbing bills to date and the cost of an electric eel to clean them out every 9-12mths. Drainage issues and I are well acquainted Unfortunately, this wasn't something that couldn't have been forseen by any building inspector as the problems didn't start until about 1 yr into my ownership.

Best of luck with it all whatever your decision- though I'd tend to agree with Ausprop here. Let's hope the Qld market moves upwards enough so you can perhaps consider taking less of a loss (or better still a gain!) in the near future.

 

[wylie]

If it makes you feel any better I have a house in Brissy whose pipes have a love affair with tree roots, requiring about $8K in plumbing bills to date and the cost of an electric eel to clean them out every 9-12mths.

I wonder if you are better to bite the bullet and replace the old clay pipes with poly pipes, once and for all.

We have a place that sounds exactly like yours. Sewerage would spill over in the yard (high set queenslander). We paid for electric eels several times and finally decided to get the sewere line replaced with poly. We moved it at the same time to allow for a development in the back yard one day.

I think it cost us about $3K from memory but each "eel" trip was costing us.

 

[Jacque]

I wonder if you are better to bite the bullet and replace the old clay pipes with poly pipes, once and for all.

We have a place that sounds exactly like yours. Sewerage would spill over in the yard (high set queenslander). We paid for electric eels several times and finally decided to get the sewere line replaced with poly. We moved it at the same time to allow for a development in the back yard one day.

I think it cost us about $3K from memory but each "eel" trip was costing us.

Hi Wylie

Yes already done this but we could only dig up and replace sections as the rest was under outdoor slabs. This will be the next step but (touch wood) so far so good the last 12mths. The cost of an electric eel p/a is a small price to pay right now until I decide to sell!

 

[HomeBuyAU]

Maybe just try to find an alternative DIY way of draining, ask around, research....

 

[Propertunity]

For a start it took 6 weeks to rent

OK, but that can happen. It is rented now, so just move on past this.

and so far I have spent:
$1500 on the electric on the house

OK, so I suppose you did not have an electrical check done? Not many do, and in all honesty sometimes you are better off saving the money you'd spend on the report and fixiing the stuff that arises, if it does. The money is a sunk cost now.

$1500 replacement of air conditioner

OK that can happen.

$1200 for the handy man doing odd jobs

OK, but this should have been identified in the building condition report and/or the BA's report to you.

Now that you have purchased the property, I would take a more pragmatic approach.

Now I have a flooding problem, all the surrounding properties are higher than me, and I receive all the run off, therefore, big flooding problems.
To fix it, 10K (received two quotes)

Is this just a recent thing, or has it been long term? If long term, I am surprised that it did not come up in any of the reports you had commissioned.
In any event, I'd spend the $10K to fix the problem. It would cost you that much just in agents commissions to sell the property

Mold in the bathroom, probable from the flooding

Once the flooding is fixed, this becomes a non-issue by the sound of it.

Handy man just told me the roof probable needs replacement in a couple of years 10k?

Handymen can be a PITA for this kind of comment, I have found by experience. Look he might be right or he might be a drama queen. What did the commissioned building report say about the roof? Is it leaking? Bowed? Tile or colourbond? If you're concerned get a 2nd professional opinion.

Now keeping all emotions out, what should I do?

If the choice of suburb is sound, you have decent tenants, then fix the drainage and budget for a new roof in 5-7+ year's time (maybe) and keep the IP.

It sounds like you've fixed everthing else for the time being. It would be a pity to sell and incur a loss for the sake of $10K worth of drainage and a maybe?? on the roof in some years to come.

 

[stephenb465]

Thanks for the replies, looks like financially it is best to keep the property and get the drainage fixed up.
I’m just a little pissed off, when you think you cover all bases by hiring a Buyers Agent, do a builders and pest inspection you would think you would avoid this problems. If I personally visited the place I probable wouldn’t have noticed the drainage problem, maybe that’s why it was foresale during the summer and had long grass in the back yard.

I think the problem has been there for the life of the property, would be interesting to see if it had changed hands a number of time for the exact reason. But that doesn’t change anything

When the BA found the property; he advised that it was a very tidy place at a good price, below what was the going rate, I had been on the market for about 4 months looking and this was the best we/he found.

There was a couple of errors I made when renting the place, One I asked too much, (the rate advised my BA) and I used a rental company that wasn’t local to the area (recommended by the BA) and there for, access to the property was difficult for viewing.

Looking at the building inspection report, no comment was made about the possible drainage problem; I would have thought maybe the pest inspection may have picked something up. But, really there is nothing I can do now except move forward and fix the problems, long term, I hope the expense can be recovered with the growth of the property.
Never thought about doing an electrical inspection, I guess if I was asked to carry out one, I probable would have said no, but now, I would defiantly ask the BA to test the oven, aircon and flick the light switch. If I had asked for that, some of my problems may have been found. (the expensive ones)

I’ve had a bad run with BA’s, of the four I have used, only one has shown to be professional and look after the clients interest, that’s Jaque from this forum, I’m looking at purchasing next year and again I’m required to use a BA, Andrew Allen has good reviews from this forum and I have already spocken to him, so I may use his services, But at the end of the day, if I want to purchase properties, I have to use a BA there is no other option due to my employment (working overseas)

Looks like from the comments from the forum, most say fix the problem, as the cost of Buy/sell is to much.

Stephen

 

[bluestorm]

I’ve had a bad run with BA’s, of the four I have used, only one has shown to be professional and look after the clients interest, that’s Jaque from this forum, I’m looking at purchasing next year and again I’m required to use a BA, Andrew Allen has good reviews from this forum and I have already spocken to him, so I may use his services, But at the end of the day, if I want to purchase properties, I have to use a BA there is no other option due to my employment (working overseas)

For 3 days, and $2000 in flights, I would think that would be "good investment" to fly back and check what you are buying, given your about to fork out $300-$400K.

Better than wasting time with a BA I would think. Your latest BA sounds useless. I can understand and use mortgage brokers (you can compare the rates yourself), but I would NEVER put my investment strategy in the hands and influence of someone else (BA).

But better to fix up the place and learn from the mistakes.

 

[Peterw]

Like most people, when I am recommended to some one, my trust levels are a bit higher. Beyond that, looking for "non recommended" advisers does help. During the "2 Tier Marketing Craze", I had quite a number of people who had been to the seminars etc, call in and ask me for my opinion. Generally, my opinion fell in much the same view, in so far as it was time for them to have an investment in residential property, however a second opinion on "current market valus" and "current market rent" helped them with the decision. I have a lot of BA's ring me at different times, and I must say, I do feel a slight "mm I'm impressed" feeling at the time. They are trying hard for their client. Thats great. But, should you try to find a way to ... double check their advice ... maybe a good move. A lot of sellers get more than one opinion, so as a buyer, perhaps consider the same. On another thread, some one mentioned how long they had asked a person for advice/opinion before a transaction took place .. I think it was 4 years, so perhaps a local agent or 2, will give you some "free advice" when you make a purchase from long distance. We have a number of long distnace owners, and yes, I know it is not easy. Good luck.

 

[Plumber]

Thanks for the replies, looks like financially it is best to keep the property and get the drainage fixed up.
..... If I personally visited the place I probable wouldn’t have noticed the drainage problem, maybe that’s why it was foresale during the summer and had long grass in the back yard.

I think the problem has been there for the life of the property, would be interesting to see if it had changed hands a number of time for the exact reason. But that doesn’t change anything...

As a plumber drainer myself there is a fair bit of work around at the moment fixing "drainage Problems". It has been almost a decade since the Bris area has had rainfall such as we have had recently. Ppl are finding their downstairs build ins, landscaping and all sorts of changes are causing flooding problems.

I'm curious as to how the plumber drainer suggested fixing your problem. You mentioned pumps - is he thinking a pumpwell or pump box?

From my experience recently there are many other new buyers with drainage probs now.

 

[Andrew_A]

Hi Stephen,

This is a difficult question. Some good advice in this thread already I think. I tend to agree with Ausprop and Propertunity from a general point of view about the sunk costs and expense caused by selling to buy somewhere else. I would suggest you inform the BA about these issues and just see what they have to say.

Plumber.. I'm interested as well about the specifics of this drainage issue, you are spot on about the number of drainage problems at the moment. I've inspected quite a few properties that have overland flow and flooding issues over the last month. Sometimes you can't walk around the back yard as it's a lake, even up to the brickwork and weep holes. Also inspected a house where the agent informed me that the recent flooding didn't quite come up to the floor level (on the 2nd level!)

With our own PPOR we have asked for a drainage quote from our local drainage expert recently and the price was too high for the benefits, so what we did in the end was to buy 4 cubic metres of soil $200 and build up the centre of the back yard so that the problem is pushed towards the fence and garden bed which is an effective solution as we now don't have a marshy middle of the back yard after heavy rain.

 

[stephenb465]

Quote one of two

See below the discription of the quote given to me , second quote had a diagram, I'll try to up load it onto the forum

This price is for the installation of AG drains and a sump pump to alleviate the flooding problems in the back yard of the above address.

The AG drain will go from the North West corner of the house to the front of the rear garden shed.

A 600mm pit with a sump pump will be cut into the line on the South West corner of the house.

The storm water drain at the front sliding doors will be cleared and connected to the new drain.

A new pressure pipe line will be installed from the new pump to the street and a check valve will be installed in this line, in an accessible location.

The check valve is installed to prevent water flowing back into the pit and making the pump work too hard. The valve will need to be checked and cleaned once or twice a year to maximize its performance.

 

[wylie]

Down the street from where we live is a house that is sitting right at the bottom of a gully. It is a queenslander which originally would have had dirt underneath. There is now a concrete slab where they store things and park their cars.

Before houses were built down the street, this would have been the natural watercourse for the immediate surrounds. When we get heavy rain (like this past week) this yard becomes a small pond. I know they have had water over their slab and water can sometimes just sit in their yard until it can get away.

We spoke to them a few days ago and asked how they went with the recent heavy rain. He commented that they had topped up the slab a few years back so that water went more "around" the slab than over the top when rainfall was heavy. It still sits in the front yard (the lowest point of three sides of hill) but at least the slab is higher than it was.

He said council had sent them a letter discussing "overland flow" issues so his house is obviously one that is known to be in the course of water problems. They have discussed removing the house and building a bigger place, but they would have to be very careful of their placement on the block and design.

Is your house a timber place on stumps and I wonder if you could do something similar?

 

[stephenb465]

second quote

I have attached the diagram of the proposed drainage fix, looks like a lot of work and I hope it will fix the problem,
Going from all the feed back, sounds like this year, Brisbane has have more rain than usual and “Maybe” next years I won’t have the drainage problem, however, if I keep the property for 10+ years Probable best I spend now so I can sleep latter with no drainage problems.

You will see the quote is about 8k, I have added on 1-2k for extra expenses such as electrical work and any other unforeseen work that always come up.

Sorry Wylie, forgot to reply, the building had an underground garage/storage made of brick and the house is generally timber

Stephen

 

[Plumber]

I have attached the diagram of the proposed drainage fix, looks like a lot of work and I hope it will fix the problem,


Stephen

It is a bit hard to visualise without seeing the site - but from the plans it seems he is going to drain water from the front of the house down to the back collection pit then pump it back out to storm water drain. ?? I take it the front of property is higher than the back.

Have you had any other quotes / estimates?