Today we settled on our IP. I must say this time around with a good Solicitor and the knowledge I gained from here that is was a smooth, stress free process, although it wasn't an entirely standard transaction. This is our first IP, although we've bought and sold property in the past.
Our situation is that we had paid off our PPOR about 12 months ago, and we'd been looking for our "ideal" IP on and off for about 18 months. When I say "ideal", I mean hubby wouldn't purchase anything that he wouldn't live in (he's a bit of a princess, but I'm working on that for the next IP).
Our work situation dictated that if/when we purchased an IP it would need to be in a trust structure, which we put in place 18 months ago. Mental note for next time, a Company/Trust structure that has 11 words in it is far too long to repeatatively write when signing contracts, so I'll print stickers for next time round and just sign and date the stickers.
For finance, we did a re-finance on our PPOR and have a loan agreement to our Company/Trust which was setup by our accountant, so it was a nice position to go into making an unconditional cash offer.
Our offer wasn't the highest in terms of price, but it had the most favourable terms to the vendor. Once the offer was accepted, it turns out because of the company/trust arrangement we didn't have a 3 day cooling off period, so I learnt something new along the way.
Two weeks after contract signing, the vendors asked to rent back to us for 4 weeks so they can renovate their new home without living in it. After some careful research, we put in place a License agreement for the 4 weeks at market rent, and at settlement adjusted for the the 4 weeks rent, a 4 week bond (held in our Solicitor's trust account) and also negotiated OFI's during the rental and the use of their sales photos for rental listing to minimise vacancy. I'd costed in 3 weeks vacancy given we were not using the selling RE's rental services, and think that I can now reduce that to about 1 week. We completed a condition report during our final inspection (we are going to self manage during the License agreement, then switch to our chosen PM)
Given finance wasn't needed for settlement, we had to transfer our own funds. Because of internet banking limits, it would have taken me 5 days to transfer the funds for settlement, plus a weekend, so I opted to draw the settlement cheques myself and save on loan interest, and with my 8 month old baby in hand, I think I was in the bank for less than 10 minutes, which was a welcome surprise. Our solicitor is local, so dropping off the cheques wasn't an issue.
The biggest challange we faced was the vendor's conveyancer who in my opinion their skills were below par. Their clients, who appeared normal and intelligent asked a range of sensible questions that the conveyancer should have answered. As late as yesterday they called me to find out how to pay the bond and rent (2 days after I'd received settlement adjustments and breakdown paperwork that detailed all of this - I could see from the emails that their conveyancer received this). And initially, there was a 2 week delay from us agreeing to the rent back receiving confirmation to our proposal. Vendor was quite annoyed given they didn't know if they needed to book removalists and arrange other accommodation etc.
So from here, our PM starts looking for tennants next week, and all that's left for us to do is the exit condition report in 4 weeks time, and a couple of small mods to the property (ie bolt and padlock the gate in the fence to the next door neighbours yard).
So thank you for parting your knowledge on me which made the process so calm, organised and stress free.
Celebration dinner is in order for tonight
Cheers
Buddybee
Our situation is that we had paid off our PPOR about 12 months ago, and we'd been looking for our "ideal" IP on and off for about 18 months. When I say "ideal", I mean hubby wouldn't purchase anything that he wouldn't live in (he's a bit of a princess, but I'm working on that for the next IP).
Our work situation dictated that if/when we purchased an IP it would need to be in a trust structure, which we put in place 18 months ago. Mental note for next time, a Company/Trust structure that has 11 words in it is far too long to repeatatively write when signing contracts, so I'll print stickers for next time round and just sign and date the stickers.
For finance, we did a re-finance on our PPOR and have a loan agreement to our Company/Trust which was setup by our accountant, so it was a nice position to go into making an unconditional cash offer.
Our offer wasn't the highest in terms of price, but it had the most favourable terms to the vendor. Once the offer was accepted, it turns out because of the company/trust arrangement we didn't have a 3 day cooling off period, so I learnt something new along the way.
Two weeks after contract signing, the vendors asked to rent back to us for 4 weeks so they can renovate their new home without living in it. After some careful research, we put in place a License agreement for the 4 weeks at market rent, and at settlement adjusted for the the 4 weeks rent, a 4 week bond (held in our Solicitor's trust account) and also negotiated OFI's during the rental and the use of their sales photos for rental listing to minimise vacancy. I'd costed in 3 weeks vacancy given we were not using the selling RE's rental services, and think that I can now reduce that to about 1 week. We completed a condition report during our final inspection (we are going to self manage during the License agreement, then switch to our chosen PM)
Given finance wasn't needed for settlement, we had to transfer our own funds. Because of internet banking limits, it would have taken me 5 days to transfer the funds for settlement, plus a weekend, so I opted to draw the settlement cheques myself and save on loan interest, and with my 8 month old baby in hand, I think I was in the bank for less than 10 minutes, which was a welcome surprise. Our solicitor is local, so dropping off the cheques wasn't an issue.
The biggest challange we faced was the vendor's conveyancer who in my opinion their skills were below par. Their clients, who appeared normal and intelligent asked a range of sensible questions that the conveyancer should have answered. As late as yesterday they called me to find out how to pay the bond and rent (2 days after I'd received settlement adjustments and breakdown paperwork that detailed all of this - I could see from the emails that their conveyancer received this). And initially, there was a 2 week delay from us agreeing to the rent back receiving confirmation to our proposal. Vendor was quite annoyed given they didn't know if they needed to book removalists and arrange other accommodation etc.
So from here, our PM starts looking for tennants next week, and all that's left for us to do is the exit condition report in 4 weeks time, and a couple of small mods to the property (ie bolt and padlock the gate in the fence to the next door neighbours yard).
So thank you for parting your knowledge on me which made the process so calm, organised and stress free.
Celebration dinner is in order for tonight
Cheers
Buddybee
