Anyone tried to help a friend find a place?

Fiends of ours want to buy a home for their family. They asked my wife and I for help as they knew we had been keeping an eye on the Darwin Market.

So we've been keeping an eye out, gone to a few inspections with them and all good. Its been fun and they've now got the hang of it.

This weekend the deal of the century came up. Stupidly cheap 4br house on huge, sub-dividable block, renovated and ready to go. It was 20k over their price range. I explained that they could probably access more money with a decent broker and the extra repayments would be more than made up by not having to renovate, extend the house etc. Essentially it was much cheaper to buy the 20k more expensive house than the cheaper doerupperer..

They won't do it. Fair enough. It's ultimately their call and everyone has different needs/mindsets.

But i'm thinking I might be wasting my time helping them now....This was quite literally the best bargain seen in Darwin in the past 4 years. It'll be hard to find another one.

You can lead a horse to water....

Anyone else ever helped a friend buy a home? Did they take your advice?

 

Personal experience is, when you invest more in other's outcomes than they would for themselves, they are unlikely to listen. People sometimes feel that one has an agenda to be assisting or going out of their way. Don't apologise for the work they have to do to come up the curve and let them learn from experience.

 

Keep in mind that they're shopping for their home, not for someone else's home or an IP. Getting the house that suits them can be more important than getting a bargain.

 

Purchasing an owner occ is very subjective - there's probably more than the extra $20k that's causing them to give this one a miss.

I'd keep helping them if they ask.

Cheers

Jamie

 

I think the opposite is the case here. They're so focused on getting a bargain that they're failing to see the value in paying 20k more.

 

You've done all you can; found them a (good) deal.

Leave them with it, and don't lose any sleep if they decide not to follow your advice.

 

Is it because they simply can't afford it?

 

A renter I knew was looking and I saw a cute house for them to buy.. 4k above their budget.
I wanted to help and offered to loan them the 4k. They declined, and bought a 1 br unit instead.. 400 m away on a busy road..
... What Bayview said....

 

Or, but it yourself as an UP
Same boat, got a friend looking, offering all the help and advice
But
Only true way for them to learn is by making their own mistakes

 

To truly help someone you can only point out the advantages or disadvantages of any particular property.

Then leave the decision up to them. Everyone has different likes and dislikes. And budget. Some may be comfortable going higher, some may not.

It is not realistic to expect your friend to buy the property you identify as the best deal.
Marg

 

Similar situation here. Cousin (makes 50k pa) and her hubby (makes 150k pa) has a ppor mostly paid off and planning to buy their first ip. I, being an chartered accountant with multiple properties, suggested that they transfer ppor to her name, (this was before VIC changed the stamp duty law), and buy the ip under his name.
They wouldn't do it, which is fair enough, maybe the husband doesn't trust the wife enough to do the transfer.

They also insist on paying off the ip first rather than the ppor, as they don't want to make a loss on the ip. With the time spent on explaining negative gearing and non-deductible interest, I would have convinced a chimpanzee.

Then they also rejected my suggestion of using a broker, correction, they couldn't even bothered to talk to a broker first. They just want to use CBA where they get the first loan from.

Sigh. I don't think I want to talk about investments with them ever again. Their mindset is really the only hindrance prevent them from achieving success.

 

From a tax perspective how will transferring PPOR from one to another help them in anyway?

I am a Chartered Accountant myself - so curious to find out.

 

Ah should have mentioned, the ppor is joint tenant so transfering the ppor to one name only, and also buying ip under one name only, is for saving land tax. Also a few years down the track if they want to turn the ppor to an ip, it will be positively geared, so it would be more tax effective when it is under her name.

 

Fair enough. So it will be beneficial when / if they turn it into an IP.

 

I was literally begging some good friends in 2013 to buy units in Bondi and Rose Bay for investment and their PPOR which they wanted. 2 bedders were going for 550-600k, There was hardly any interest at the time in auctions. I saw the value and added more to my portfolio. Friends still thought the market was going to slide more backwards or stay stagnant for longer so didn't buy.

They lost probably 1.5-2mil today.

 

You're right. No doubt about that.

They are going to buy an even cheaper property which won't be a bad deal by any stretch of the imagination, but they'll have to do a lot more work on it and over time it will be more expensive....(PPOR maths here, not IP maths). I don't think that they can see that now.

But hey, they got a place and still bought below market value. It will still work out to be a great decision in the long term. At least they're doing something!

 

What a wonderful result.

And even though it will cost more in the long run, they may be happier with a smaller mortgage.

They are lucky to have a friend like you to help them.
Marg