Cease my lease, and buy?

Hi all,

I have finally put myself in a position where i am (potentially) ready to buy my first PPOR.

I have a current lease in Adamstown paying $330p/w rent until May 2010, and am saving around 5-600p/w (only as of last week now all of my credit card / furniture etc is paid off)

So, i have $5000 saved up, $5500 in shares, $11k in a CFS MF, and have found a nice place i'd like to look at to potentially buy.

- I've been told I can cancel my lease with the property manager whenever, as long as they have someone to move in, is this true?

- Some main questions i have are - since i havent bought a house before, what are somethings i should be asking the real estate agent when im inspecting?

- The offer price is $279,950 - whats a reasonable amount to offer in your opinion? What amount to settle on (if we go through with it)

It's been available to buy for a couple of months now, should i mention this?

Any tips would be appreciated.

As for my depsoit, I have access to around $30k, so i should be able to arrange something with a mortgage provider, surely.

 

Yes but you will be paying the rent while it's empty and depending on where the property is it could be 2 weeks or several months

Considering that it's been on the market for 2 months they probably expect to get a price close to asking price. I'd offer $270K

Where did that $30K come from?
Some lenders want to see 6 months of savings
Which bank are you with?
You can approach them and ask for a pre approval

 

Hi Bill,

Thanks for the feedback. I woulnd't think it would be hard to find someone to take this house from me, I was pretty lucky to get it when i did (next to shopping centre, close to town etc..)

- $270k, thanks (im not sure whats reasonable and what not in this game)

- As for the 30k, well - I do have a savings record for well over 6 months of $400 a fortnight to a seperate account. I am with Newcastle Permanent Building Society. I have access to some more money through my parents, so at minimum i could get together:

$5000 own savings
$5000+ regular savings (ongoing)
$5500 (sell shares)
$7000 (first home owners grant)
$10k or so (family)

I am interested in this house to buy, so any tips of what i should be mentioning to the bank, real estate agents etc.. much appreciated.

 

Crusher

Happy new year.

First of all ring a bank and see how much you can borrow then make sure you are eligible for the loan eg ask what documents you'll need etc.
They'll probably ask you for payslips from the past 2 months
and if you don't have any bank accounts with them 3 lots of ID etc.

Then contact the real estate and have a chat and see if he had any other offers. If he didn't then that's good and you should be able to start lower.
Tell him you would like to make an offer and test the waters with $260K.
Tell them that you are willing to come in to sign the contract and put down a deposit.

Remember that if you sign a contract make it subject to passing the building and pest inspection and finance approval, you have a 5 day cooling off period

At this time, you should have found a solicitor or a conveyancer who will act on your behalf and who can organise the building and pest isnpection.
Ask the solicitor if they can do these straight away because you want the all clear before your 5 day cooling off period.
Often old buildings have some issues, ask the building inspector what the approximate costs would be to do the repairs and you could use the findings as a tool to renegotiate the price.

If the Vendor has not been very negotiable to start with, he could be more negotiable when you show that there are defects.


Good Luck

 

Thanks for the advice Bill. Much appreciated. I'm looking forward to getting things moving, whether this is my future house or not. I will contact the bank next week - this should put somethings into perspective.

Thanks mate.

 

No worries, in the meantime, most banks have online calculators which you can use to check how much you can borrow.

You'll also need to find a solicitor/conveyancer who is reasonably priced and is open in January.

If you don't have 1 already find a few from the internet, local paper etc and call them to see if they are open, how much they charge etc.
I pay $1200-2000 (depending on what inspections/reports I need) for each purchase

If you need assistance finding a solicitor call Alan (0407 933 500) who is a buyers agent and he can point you in the right direction.
Allan is based at Tuggerawong and knows the area very well.
Tell him BV from the forum gave you his details and he'll help you out.

Good luck

 

Crusher,

If you wish to use a Solicitor then I highly recommend Chris Ingham on Beaumont Street. After dealing with many Solicitors for the transfers of properties, businesses and estate matters, he has been the most thorough and is one of the few people that actually does what he says he will.

If your home purchase is simply a residential property in your own name then you could consider using a conveyancer. I would recommend HM Conveyancing on Darby Street. I have referred a number of clients to them and have been quite happy with their services.

A conveyancer is a cheaper alternative for simple, uncomplicated residential property purchases. If you are intending purchase and/or fund the property jointly with friends or family then I suggest that you see a Solicitor so that the appropriate legal agreements can be drawn up.

Good luck and always investigate any statements made by the real estate sales agent. Remember, he is working for the property vendor, and not you.

 

Thanks again for this information, I'm sure these are questions everyone has in the initial stages of buying their first house.

I have a friend who is a conveyancer and works at a firm in Maitland, so when the time comes i think i will contact them. Thanks for the contacts in my local area however. I've since spoken to family and friends who have had both good and bad dealings with solicitors / real estate agents, so of course, all of this information is helpful.

It is hard finding the right place i am finding however. My partner wants a nice bathroom and kitchen, and isnt to fussed with the actual size of the property. I don't think i am in a position to spend upwards of 350k just yet, so are there any rough figures you have dealt with in regards to renovations? kitchens.. Bathrooms, etc..? say $15k for each?

Then this brings the next question in - do you buy a house for 280-290, and spend $30-40k on it equalling 320ish... or just spend 320, on a final product?

I guess this is where experience comes into it.. This, i have none (yet! )

Thanks for all of the feedback!

 

I actually have a financial interest in a local building company and I can say that you have quoted reasonable figures but you wouldn't get away with spending any less than $10k on a bathroom or $15k on the kitchen, maybe $20k/$25k depending on the size of the kitchen. Items such as joinery and benchtops can be surprisingly expensive.

The key is to set a budget that is justifiable, relative to the value of the property. For example, you wouldn't spend $25K on a kitchen on a $3M place at Merewether nor would you spend $100K at a townhouse in Broadmeadow.

Have a look at some of the renovation articles at Michael Yardney's website.

I would consider putting as much equity as possible up front into the location and land size. Then in a few years, after pushing down the mortgage balance, spend the money on the kitchen and bathroom to add value. In the meantime, the location will be adding value for you without doing any work. Also, never underestimate the value of the land size when it is located in a good area.

 

Great advice, thanks alot! :-D

I will look into prices etc, i wouldn't know where to start, but you're right - the location is going to work in my favour without doing anything, so this has to be considered - there's no point in buying a nice $300k house in an area when that same house will be worth $300k in 5 years, so i'm sure the surroundings is one of the major focuses to consider when purchasing the house.

I'm going to look into all of this and see what i can come up with - you sound familiar with the area, which im not (i moved here from Lithgow in March) so maybe if i find something i could post the link in here to get some feedback?

I looked at some places and asked some people i know who live near the area and they were quite negative about the place - so i guess, there's alot to consider.

I'm in a hard position - one being that im not from this area (lol) and two, ive never bought a place before - so, every bit counts! :-D

Thanks alot for your time however, much appreciated!

 

For my first home I'd go for the cheapest house in the area I want to live in. That way you have potential for improvement.
I'd then fix the place up to suit my needs andincrease it's value at the same time. Usually 1 $ spent in the house = 2$ of value added to the property price.

A non updated bathroom or kitchen is not a big issue because you can do those later when you moved in and saved up a bit of money.

IMO it's important not to borrow too much
A kitchen and bathroom refurbishment can be done with as low as $5K
so don't be scared if something needs doing

 

Thanks Bill - All of these points are really hitting home with me. It's easy to get scared off from a place with an out dated bathroom or kitchen, but you're right - Its not the end of the world and doesn't have to be a lengthy expensive process to change.

I'm going to go back and look at some houses i skipped over for this exact reason. I work with some builders / electricians / plumbers etc who are good genuine people, so i'm sure if there was something i needed to get assistance on i could get some good information from these people.

It's a good point in regards to not borrowing to much for the initial house, i'm sure in time when I have a few houses on my portfolio this can begin to change, and initially i was looking at houses around 320-350.. Which, is a big ask for a 22 yr old! Not to worry though, I will speak with the bank on Monday and get some idea's of what i can borrow - and continue to look into some places.

Interesting fact about spending $1 to add $2 to the house.

I recently watched something on today tonight or one of those shows about having a 'vision' for renovations - So if i was to decide on a house, it wouldn't take much to picture what you want to do with it - it's just a matter of where to start! ha-ha.. But Good help can be found!

 

Good idea and you should also look past the dirt and the uggly paint because those are easily fixed too.

Location is important although for a young couple as long as you are reasonably close to work and close to transport and primary school you'll be ok for up to 12 years till your first kid needs to go to high school

 

I have come across this one, which doesn't look to bad?

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008148215

any estimates on:

building a 1 car shed? maybe 4-5k?
patio / covered BBQ area.
paint the inside of the house?

These questions are probably stupid, but any info would be good

Also looking at: (please mention anything if you think of it. location / what to look out for, if there is something i should know about strata etc )

Cardiff - $279k CARDIFF, New South Wales 2285 - House for Sale #106185697 - realestate.com.au

Belmont North 275k (i like this one) - http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008021420

New Lambton - 280k http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008160856

New mabton - 260k http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008128780

Then again, if you don't want to waste your time looking, i understand!

 

Having a look at the links, the townhouses/vilas are nicer to live in.
From the space point of view they also look more spacious.

However, I don't know if their location is convenient or what your taste & requirements are.

If you don't like what you see don't rush, there will be more houses listed in February

 

More listed in Feb? Do the real estates stop listening over Christmas?

Will keep my eye out though.

 

I could be wrong but I guess a lot of people go away for Xmas/New year so will put their homes up for sale when they get back?

It then takes a couple of weeks to have them listed which brings us to the end of Jan / early Feb?

 

Yes, not bad land size either, secure this 1 now for $260K and tell your dad to secure the 1 next door which is also for sale so you can do a nice development later on

 

Hi Crusher

Exciting times- buying your first place!

As others have said, make the bank/broker your very first port of call to see how much you can borrow and what you can realistically afford. Don't forget to factor in an extra 2-3% on top of current IR's as a buffer in case things change, which they're forecast to do this year- with rates set to rise.

Once you've established your borrowings, enjoy the hunt but do some research on recent sales first to get a handle on the market and use it for negotiations. For example, the first link to the Kotara property backs onto the Bypass there- not always the most desirable location, but should you wish to purchase you will need to know recent sales in similar locations, not the houses one or two streets away (which I'm assuming would be quieter). You can easily buy data from companies such as homepriceguide, RPData and Residex- all of which will provide you with basic info on recent sales so you can check them out for comparison.

For more detailed info, though, you will need to use a BA or ask your friendy REA if they're willing to share info (remember however that anything supplied may well be biased as they're working for the seller to obtain the best price prossible)

I'd also consider engaging the services of Allan Fox, a Central Coast based buyers agent (I can second Bill's recommendation for Allan Fox from propertunity.com.au) to further investigate and perhaps handle the negotiations for you as well as come up with a maximum appraisal price for the property- it may well prove to be money well spent as most BA's can negate the fee they charge in the savings they make directly to you as buyer. Please note that I say this as a BA myself so there's obvious bias to my opinion

But, to help you in the meantime... I can tell you (from accessing RPData) that this house was last sold in Oct 2005 for $190K, and was bought from the current owners from the Dept of Housing. It certainly has that "Housing Commission" stock look about it, in my experience. However, don't let that put you off as the database shows that all houses in this street are now privately owned. The most recent street sale I can find is no. 34 (across the road and so quieter) which sold May 2009 for $242K. It is on smaller land, however (607sqm) but obviously more research would need to be done before submitting an offer. An asking price on a property is merely that- and may well be tens of thousands of dollars more than it's true worth in the current marketplace. Without knowing the area, or more information, I can't assist further but best of luck whichever avenue you elect to use to purchase, and happy moving

 

Hi Jacque,

Thanks for your details post! By the sounds of it, it would be worth spending $100 or so on a property database to get some info on these houses, i had no idea (still have no idea, haha) about what to look for, and certainly a history of the house would come in handy, maybe in determining condition of the house, under the paint job, etc..

Your right in regards to the bypass house.. I looked at one on Charlestown Road for $320, but i don't want to be right on the bypass - If i stay for 5 years, i might have kids playing out the front someday?

I have an appointment with a mortgage broker on Tuesday, i dont want to borrow more then $300k, and i've been using calculators with around 8% interest, and can comfortably make the payments, so this will all be considered, thanks.

I'm gonna take a look at those websites you gave me as well as on the recommendation of you and Bill , i will call Allan in the coming weeks, sounds like he can help me.

I like the idea of having these professionals pay for themselves, it sure goes a long way - I'm happy to pay a few thousand for service that will pay for itself from day 1.

Thanks alot for the advice