Strata report issue - Should I buy this investment property - advice please?

Yes go straight ahead and complete your purchase. Your heart is set on this place and while many are saying to let this fish go, you still want to reel it in.

Places with defects can still perfom well. I had a townhouse riddled with termites that still went up in value, however the frustration and working through issues with strata was draining and I would not go through it again.

If it's in a block of 100 I have no doubt there are other better built blocks around but often the heart rules more then the head.
 
Just a quicky from someone who knows very little about property investing, as I am looking for my first PI. Forget this unit as there are so many units on the market and the market is about to turn, don't waste time, move on to the next unit.
 
Novice, if I were you don't do it. Many a red flag has been put up here. Most importantly, do you want your mother staying in a potentially unsafe property? or less so, let her go through the process of going through building works etc.... not to mention finally one day (9years and 360 days you've owned it) the council comes in with an evacuation order because they have finally come to their senses that the building is finally unsafe as the rust finally chews through everything and the builder who was responsible has finally announced bankruptcy due to this matter

I know the location suits you/mother the best.

Is there like one like it in the next street or just down the road that you could look at? Remember opportunities always come about and will be as good as this one.

Couple of take home messages from this thread if you could care to listen:
-You have withdrawn your offer - Move on and don't look back (hardest thing to do)
- Repairs especially warranty claims can take forever and sometimes not come to fruition
- consider potentials with Murphy's law (here the potential downside/risk is enormous and dependent on a lot of factors out of your control)
-Look nearby - there may be/ will be better bargains around the corner
-Always take the agents advice/prompting with a pinch of salt - they DON'T represent you only the vendor and themselves so everything will be done in their favour
- The guys here at somersoft forums are the "frankest" ppl I've met of any forums, they have plenty of experience and a number of them are successful as well (not without reason)
- continuation from above - the best way to learn from mistakes is to learn from other's experiences/mistakes

Hope you manage to find your ideal place for your mom - lastly please move on from this property, its not worth your while from what you have posted.
 
Novice100 I am not sure why you bothered to post on this forum.

It appears to me that despite the quality advice provided by a multitude of very experienced real estate investors and professionals to run a mile, you still have your mind made up to purchase a unit in this complex which has major faults.

Do what you need / want to do but if you don't want to listen to advice that you have asked for, please don't continue to post!!

Are you being serious ? I read in interesting thread without malice and and obvious learning opportunity for some people on the subject of property investment, creted bu Novice100's post & replies. Nowhere have I read Novice100 being disrespectful to people's advice, he/she just asked the qeustions that pop up when in an unsure situations, including quetioning advice you don't understand. Just cause we said a sentence, does not mean it will automatically convince/ make sense to everyone as soon as they hear it, so you should expect them to ask questions, and not the ones you would ask

I think this is very much inline with the purpose of the forum, natural and I'd rather see more of this than some of the stuff we write - relax :), I said "we" not" you"


Novice100 is getting a clear idea on, is what he/she wants for their IP..So I'd be searching for that type of property for sale and inspecting a few... there's other ones out there that can fit the bill without the risks surely !
 
I have spoken with the agent who has indicated the following

1. He has confirmed that there is no current legal action happening. The steel corrosion issues have been reported to the builders within the warranty period and are being investigated. The strata meeting minutes refer to an agreement to hire lawyers IF the builders try to resist fixing the problem

2. The builders are reputable builders and are still around and still actively addressing all previous issues with the building

3. The vendor is willing to cordon off a sum of money (to be negotiated) in a trust to be held for 12 months (or a different period of time to be negotiated) which will be used to pay for any Special Levies that might be raised in that period relating to the steel corrosion issue
- this would cover me against paying any special levies

4. he says that the strata reports tends to exaggerate potential costs of problems in order to cover themselves from being liable if they underestimate costs

point 2 above seems to act as good compensation for the issues reported - does anyone think it is reasonable to proceed with this new clause and if so, how much money and for how long should be cordoned off?

Sounds like a lot of work , I've never done anything like this so my natural inclination is have i thought of everything (and i'm pretty sure I know the answer.
 
Are you being serious ? I read in interesting thread without malice and and obvious learning opportunity for some people on the subject of property investment, creted bu Novice100's post & replies. Nowhere have I read Novice100 being disrespectful to people's advice, he/she just asked the qeustions that pop up when in an unsure situations, including quetioning advice you don't understand. Just cause we said a sentence, does not mean it will automatically convince/ make sense to everyone as soon as they hear it, so you should expect them to ask questions, and not the ones you would ask

I think this is very much inline with the purpose of the forum, natural and I'd rather see more of this than some of the stuff we write - relax :), I said "we" not" you"


Novice100 is getting a clear idea on, is what he/she wants for their IP..So I'd be searching for that type of property for sale and inspecting a few... there's other ones out there that can fit the bill without the risks surely !

Sorry jaycee but I could only get the basic jist of your response with all of the spelling and grammatical errors!

If I am correct in interpreting what you have written - all I was saying was why come onto a forum and ask a question if you already have made up your mind? Why waste everyones time by not taking perfectly good advice from experienced people? And once replies have been provided ignore them and keep down the same path......

Anyway I will let you enjoy.
 
Sorry jaycee but I could only get the basic jist of your response with all of the spelling and grammatical errors!

If I am correct in interpreting what you have written - all I was saying was why come onto a forum and ask a question if you already have made up your mind? Why waste everyones time by not taking perfectly good advice from experienced people? And once replies have been provided ignore them and keep down the same path......

Anyway I will let you enjoy.

For someone who didn't understand what i wrote, you sure understood it pretty good.

How long have you been using the word "grammatical" ?

I believe the questions and the persistence in asking questions despite advice to the contrary from professionals is a natural, normal and a common part of the learning process for many people. Therefore I didn't find it a waste of people's time.


Look mum, no spelling mistakes :rolleyes:
 
jaycee... LOL, CHam..its time to pull your head in son!

Novice...do what you think is right

Rust...its everywhere man, everywhere. Ive bought units with rusty balconies, yep raised special levies (couple gran), got it "fixed". Property value gone up heaps. If the problems persist, get it "fixed" again and again. Brace the walls if you have to. You can still rent it.
 
I have spoken with the agent who has indicated the following

1. He has confirmed that there is no current legal action happening. The steel corrosion issues have been reported to the builders within the warranty period and are being investigated. The strata meeting minutes refer to an agreement to hire lawyers IF the builders try to resist fixing the problem

2. The builders are reputable builders and are still around and still actively addressing all previous issues with the building

3. The vendor is willing to cordon off a sum of money (to be negotiated) in a trust to be held for 12 months (or a different period of time to be negotiated) which will be used to pay for any Special Levies that might be raised in that period relating to the steel corrosion issue
- this would cover me against paying any special levies

4. he says that the strata reports tends to exaggerate potential costs of problems in order to cover themselves from being liable if they underestimate costs

point 2 above seems to act as good compensation for the issues reported - does anyone think it is reasonable to proceed with this new clause and if so, how much money and for how long should be cordoned off?

also, there is another offer on the table for this unit at a similar price level to mine at the moment

i very much doubt that. the agent wouldn't be bothered talking to you if there was and the vendors wouldn't be prepared to do 3.
 
Rust...its everywhere man, everywhere. Ive bought units with rusty balconies, yep raised special levies (couple gran), got it "fixed". Property value gone up heaps. If the problems persist, get it "fixed" again and again. Brace the walls if you have to. You can still rent it.

thanks - this is the sort of thing i was wondering about so glad to see that it does not necessarily have to be a contraindication to buying

purely from first principles i was under the impression that if the property was purchased at a price low enough that factored in the potential downside costs then it would be reasonable to buy
- with the downside costs factored in, the upside would seem good if the builders accepted or were forced to accept liability for the rust issue
- if it were not for the very encouraging recent sales history of units in the complex I would definitely have excluded it by now

numerous others have indicated similar in private messages to me but feel intimidated to speak out against the majority which I can appreciate - i mention this just for anyone else reading purely for learning purposes
 
thanks - this is the sort of thing i was wondering about so glad to see that it does not necessarily have to be a contraindication to buying

purely from first principles i was under the impression that if the property was purchased at a price low enough that factored in the potential downside costs then it would be reasonable to buy

as a bit of speculation, yes. 20k off an already high price is not low enough. with all that risk i would want it for around 500k, to make the speculation worth it. risk must come with potential return.

go ahead, stop posting and just buy the damn thing. all the posts here have been from an investing pov (mine included), but it doesn't sound like this is an investment, it sounds like you are buying mum somewhere to live and will get nominal rent in return. what does mum think of the place?
 
i very much doubt that. the agent wouldn't be bothered talking to you if there was and the vendors wouldn't be prepared to do 3.

yes i am a bit skeptical about the presence of another offer but the agent indicates there is one although i do consider it might be BS - if he turned out to be lying would there be anyway he could be professionally punished?
 
go ahead, stop posting and just buy the damn thing. all the posts here have been from an investing pov (mine included), but it doesn't sound like this is an investment, it sounds like you are buying mum somewhere to live and will get nominal rent in return. what does mum think of the place?

i post these questions because i am unsure about the answer, things are moving fairly fast and I probably will not buy but have not 100% excluded the possibility
- sorry to all those that it offends, there is genuinely no malice intended so please ignore any subsequent posts by me in this thread or feel free to flame me.

for those that are not offended, yes i guess its not strictly an investment as i want it for largely personal reasons (so the short-mid-term impact on value of the property does not concern me greatly) but am keen to think through how likely different permutations are likely to impact me. eg.
- how likely is it that the builders would not be liable?
- how damaging are steel corrosion issues
- how much is a steel corrosion issue likely to actually cost, if its less than $3million then i would be willing to pay the units share of that without complaint (i estimate that would be around $30k - a proportion of which i may be able to haggle off the asking price)

perhaps I'm asking these questions in the wrong place
 
Novice,
Out of curiousity, are you paying for this property, or you helping your mum select a place, for her to buy?

i am paying for this property and will give my mum (who has no money) the money to pay me market rate rent so that i can legally tax deduct the interest payments (i will pay income tax on the rental income) - she is getting older with numerous chronic illnesses and i want her near so that i can help her in the case of emergencies and so she can help with childcare
 
i am paying for this property and will give my mum (who has no money) the money to pay me market rate rent so that i can legally tax deduct the interest payments (i will pay income tax on the rental income) - she is getting older with numerous chronic illnesses and i want her near so that i can help her in the case of emergencies and so she can help with childcare

If the Tax Office gets a whiff of that there could well be trouble. Big trouble.
 
My accountant and financial advisor both assure me that this is a perfectly legal strategy as long as market rate rent is being charged - do u disagree?
 
My accountant and financial advisor both assure me that this is a perfectly legal strategy as long as market rate rent is being charged - do u disagree?

I've heard of the Tax Office deeming free rent as income. If your mum has no income, though, this may well fall under the tax free threshold.
 
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