Purchased a Dud, what would you do?

[stephenb465]

So far Plumber, I have received two quotes, both are at about the same price so I hope the rental agent isn't playing games.

post 17 is the first quote and 19 the second.

yesterday I was told that the tenant wants to move out early Jan, but now want's to stay for another 6 months, that’s good news for me. Funny how things work in this game, I was first told the tenant signed a 12 month lease, as what I requested, but then yesterday was told its 6 months. How can agents get away with saying one thing then doing something else? Maybe I should request a copy of the lease document.

Maybe next time I'm in Brisbane (January) I'll arrange for a plumber to give me a new quote and talk me through the process. There may be other options that haven't been considered. Is a Plumber the only person that carries out this type of work or is there other trades, can anyone recommend someone to assist, I'm not looking for the cheapest quote, just someone that can do the job without coming back latter down the track

 

[Plumber]

. There may be other options that haven't been considered. Is a Plumber the only person that carries out this type of work or is there other trades, can anyone recommend someone to assist, I'm not looking for the cheapest quote, just someone that can do the job without coming back latter down the track

The trade you need is plumber/drainer. But I was wondering if it would be possible to stop the water crossing your property at the boundary line with hard landscaping.

Possibly a regrading of the back lawn could keep water away from the structure and it could drain into a seepage pit (depending on your soil type). It also may be that neighbouring properties have undirected runoff from guttering that send the water into your yard.

The pumping idea seems a bit extreme to me but if your back yard is lower than the road and is a sort of neighbourhood runoff sump it may be the only solution.

A decent submersible pump - or any decent pump will give only 4 years reliable service if sized and positioned for optimal efficency. It just seems a messy and maintenance prone solution to me for an IP eg the drainage channels need to be kept clear of plant debris, small stones etc that could get washed into the collection pit and sucked into the pump.

 

[Plumber]

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.

Yes the technique you used here works very well in many cases!

I've been out to quote on 6 jobs this past week re water flow and ponding. 5 of these jobs could be solved by landscaping. The 6th was a real nightmare however that the owners insurer wouldnt touch. It was caused by a driveway being laid directly over plastic clay. When the clay got wet it expanded and the driveway actually rose 70mm and directed all the rain water runoff into a downstairs living room.

What a mess !

 

[stephenb465]

update

Just an update what's happening, Have called a plumber recommended from this forum via a private message, but unfortunately he is far to busy to meet me for a quote. I then call the principal of the real estate that is looking after the rental side of things, whom has visited the property, he was very frank and told me it was the worst water problem he has ever seen. He couldn't believe that the BA that I used to purchase the property wouldn't have noticed that the land the house was sitting on was a water course.
He strongly advised me to not spend the money on the property where he felt the 10k would be a waist of money, he said that it would be no guarantee that after spending the money that the problem would be fixed, and besides, I would then have continuous problems with the pumps with rubbish getting into the drains (therefore continuous ongoing expense) he was talking to me about that another option was to lift the house.$$$$$ (I don't think so)

What he did say is that, foolish to sell at the moment as there is to much on the market but instead wait a couple of years and sell during the summer.
The existing tenant has had a lot of water damage to their personal effects and recommended that I drop the rent by 10-15 dollars for week if they sign up for another 6 months.

So I guess, this investment has really gone bad for me, It's really difficult for me to get into realestate as I work overseas, my current roster is work 4 weeks and the have ten days break, the last thing I want to do is run around the country side on my break looking at houses, it's very time consuming, not very relaxing and probable imposable to follow through on the purchasing process in the 10 days and really, after working for 28 days stright, I need a break. Hard to do research whilst I'm at work as the internet is really slow, sometimes not working at all.

So what am I going to do from here, with the view of selling the property in 2 years, I could purchase another property next year via a BA, as long as I get a property below market price with good prospect of growth, I think this shouldn't be to hard as I'm guessing that it's going to be a buyers market, then look into purchasing more shares to balance up my portfolio.

Stephen

 

[pennyk]

I would definitely wait to make any decisions until you've had a plumber onsite that isnt connected with the RE agency. I wouldn't be taking building advice from a real estate agent.
If you don't do something, then for 2 years you are going to be paying for damage to renters property and also run the risk of the building becoming damaged/ termites etc.
If you are around in January, go and visit the site together with the plumber, and see for yourself what needs to be done.
Pen

 

[Propertunity]

..... my current roster is work 4 weeks and the have ten days break, ........after working for 28 days stright, I need a break.

Hi Stephen, are you serious? You work 4 weeks straight OK (I've done that too. Actually I've done more than that - lots more. Last year there were times I was working 7 days a week and 14+ hour days for 3 & 4 months at a time).........and then you get 10 whole freakin' days off
Sure you need a 2 day break after that, but I would be bored spitless after 3 days off, let alone 10!!!

IMO, you have plenty of time to look especially if you are looking to buy in a flat market (although why you'd want to escapes me )

OK so you don't find looking for houses relaxing, I get that and your work internet runs at a snails pace - probably can't look much under those conditions. Hire a BA by all means......but a good one.

 

[tgarthe]

Hi Stephen, are you serious? You work 4 weeks straight OK (I've done that too. Actually I've done more than that - lots more. Last year there were times I was working 7 days a week and 14+ hour days for 3 & 4 months at a time).........and then you get 10 whole freakin' days off
Sure you need a 2 day break after that, but I would be bored spitless after 3 days off, let alone 10!!!

IMO, you have plenty of time to look especially if you are looking to buy in a flat market (although why you'd want to escapes me )

OK so you don't find looking for houses relaxing, I get that and your work internet runs at a snails pace - probably can't look much under those conditions. Hire a BA by all means......but a good one.

Prop,

With all due respect, I encourage you to go do Stephen's job for a month up in PNG and I'm sure you'll understand where he is coming from.

 

[stephenb465]

thanks Propertunity, loved your response. I'm greedy, I'm trying to have everything, work at a job where I get good money, have no permanent address in Australia and travel the world. Paying a BA is a small cost as long as that BA works in my best interest. What would you have me do, cancel my trip to Japan for 10 day to carry out house inspection, How about not going to Thiland becouse I need to negative a propriety deal (borring) or not track through Papua New Guinea becouse I need to carry out a final inspection before hand over

But yes I'm disappointed with my last purchase and at the end of the day it's going to cost me, however, I used another BA in Sydney at the beginning of the year and I was really happy with her services.

So what I'm going to do now is hire another BA and see how we go, if not happy, I'll throw in the towel and have a go myself.

Stephen

 

[mary&mat]

Ummm, aren't these 'boring' deals going to find your early retirement & allow you to travel more?

 

[stephenb465]

Ummm, aren't these 'bring' deals going to find your early retirement & allow you to travel more?

Thats the plan mary&mat, but at the moment I'm single again and need to catch up with the good life.

 

[Propertunity]

thanks Propertunity, loved your response.

I understand better where you're coming from now.

Paying a BA is a small cost as long as that BA works in my best interest.

Yes, agreed. We've found deals for some clients that make them over $200K profit and only charge less than $10K to do it If the numbers work for you, its a good deal.

But yes I'm disappointed with my last purchase

Yeah, I read. That was a real shame.

 

[Rickardo]

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.

When you purchased the property, did you ask your BA whether the area you were purchasing in was prone to flooding? Did you ask for or do any checks to determine whether the particular property was in a flood prone area? For example by using something like the FloodWise Property Report in the Brisbane City Council area - http://flood.brisbane.qld.gov.au/floodwise_property_report/

This wont help for your current property but it will help ensure you don't repeat the same mistake next time.

 

[Angel]

HI Rickardo.

Clontarf is not in the Brisbane LGA region, so it is not on the BCC floodmaps. It will be on OzCoast though now.

It is a mixture of coastal flats and hills with an open drain running through the centre of the flat bits (hint, hint). How could anyone not see potential flooding? Sorry to read of your situation, Stephen. Obviously street-view wont work for you with your internet connection at work. I'd be wanting to sue the BA.

I have been trawling through Clontarf for six months and gave up trying to find a good house with any decent yield. In the end we bought a townhouse instead in Scarborough, high on a headland and 200 metres from the beach.

 

[stephenb465]

Should I sell or tough it out.

I'm a bit of a loss of what to do here, but I think I know what the answers are going to be. should I sell or tough it out.

April 2010 I purchased an IP in Clontarf QLD for 350K
tried to sell it last year, no luck listed for 360K

have had a selling agent say if I list it now, list it for 329k, open to offers above 315K ,if I sell it for 315K that's a loss of 35K

so far it has cost me for the financial year of
2010 10K
2011 19K
2012 projection of 9k

now if I keep it for another 5 years, will cost me about 50K holding costs, +/-5k and the big question is, will there be any growth? (not expecting an answer on that)

I work oversea at the moment and have become a non resident for tax purposes, therefor negative gearing is of no use to me, and probable miss out of getting a tax credit for selling it as a loss.

The property has drainage problem and therefor I had to lower the rent from 330 to 280 pw

Thanks for your time

 

[tgarthe]

Stephen,

I'm in a similar situation with work. A question if I may.

How are you at saving money? If like me, you can burn money without trying, I'd say keep the house as it is a form of forced saving.

In any case I still wouldn't sell, what if you want to re-enter the market in 18 months? You've blown say $20k-$30k just in transaction costs. Things will turn around, I think you just have to be patient.

My 2c

 

[devank]

2011 19K

The property has drainage problem and therefor I had to lower the rent from 330 to 280 pw

19K sounds like you did the drainage fix. Then why do you still have the drainage problem? Is the pump working? Are you having problem because of the water coming from the roof?

 

[BMan]

is there a way you could put some money in an offset against it so its not costing you so much since you cant negative gear for tax reasons, neutral gear it?

have you gone down ad visited the property yet?

 

[Van Persie]

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

Maybe hold it and prep it for the 99/100 years where there's no flood effect(if that's the case). You may be able to get a beter price after renovation and when there's less evidence of flood issues.

Other option is cut losses and sell now if 20-30k loss is not too much of a hit for you now.

 

[Doovalacky]

I took a quick glance over the original posts.

Why is there still drainage issues if you installed the soak well and pump?
I am assuming this is clay soil or has a high water table since just installing a large capacity of soak wells was not recommended.

Are you still using the agents handyman? Might be better to find your own.
Have you actually been to the place yet and inspected it yourself?

I am having trouble understanding why your holding costs are so high even with reduced rent. However unless in the next 3 years you think the issues will be sorted and it will break even I would take the 35k hit.
Look at if giving the place a paint job etc would boost the sale price first.

 

[evand]

But there is no guarantee of that, and i bet thats a very rare occurrence. Its easy to cherry pick one or two deals that fluked a gain.

Yes, agreed. We've found deals for some clients that make them over $200K profit and only charge less than $10K to do it If the numbers work for you, its a good deal.

(

I don't know how much you paid the BA but i'd be asking for my money back. And i'm serious. I'd take him to court to get it.

What did he do exactly to justify his money? What was the brief you gave him and what did he deliver?