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QLD Family member didn't take advice

Discussion in 'Where to Buy' started by Greyghost, 23rd Oct, 2015.

  1. Greyghost

    Greyghost Well-Known Member

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    So my family member asked for some property advice and I gave it.
    50yrs old, 65k income.
    450k house paid off. $200k cash

    He wants to acquire 5 properties for some growth in the 15 years before retirement.

    I gave him a strategy but..

    Found out he sat down with some "wealth group" who came to his house and sold him a house and land package in a new estate for $404k (1100sqm)
    In Wyreema ( 10k's out of Toowoomba).
    Newman gardens estate..
    $160 for land
    $244k for build.

    Valuation for finance came back at $370k

    Rental guarantee $311pw
    Agent assured them he will get 380 lol...

    So it won't even make a 5% yield and is in a new estate that is still named under lot!

    These salesmen are slick..

    So I'm thinking about trying to get him to crash the contract on the finance clause due to val, as the purchase didn't sit right with me from the beginning....

    Anyone else thinks that the only ones making a good deal out of this is the agent?
     
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  2. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    He asked your advice, didnt take it. Let him deal with the consequences of his own actions and step out of it.
     
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  3. Biz

    Biz Well-Known Member

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    What was the strategy you gave him out of interest?

    I like strategies.
     
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  4. Greyghost

    Greyghost Well-Known Member

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    Haha.
    It was just looking at his servicing, acquisition period, retirement capital requirements, but importantly his serviceability going forward. Starting off with something like this puts him behind the 8ball and on the back foot in trying to accumulate more in the short term..
     
  5. sandyfeet

    sandyfeet Well-Known Member

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    Out of interest, who was the 'wealth group'?

    'Wealth' as in their wealth, or the clients wealth? :cool:
     
  6. Travelbug

    Travelbug Well-Known Member

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    I had a little chuckle when I read your title. I thought "what else is new". Won't be the last time someone asks you for advice then does something totally different. As Dave said let him deal with it.
    Out of curiosity, is he now asking for your advice of how to handle the situation he got himself in to?
     
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  7. Mombius Hibachi

    Mombius Hibachi Well-Known Member

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    Greyghost, I'm with Dave on this one. As much as you want to help, sometimes people need to learn on their own.
     
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  8. Greyghost

    Greyghost Well-Known Member

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    Their wealth!
    They come round to your house. Tell you about rising markets, missing out. Tax refunds..
    We have in house accountant, solicitor, everything is handled!!!!!
    The best part was, they told him "nothing to pay until settlement"..
    I rang them and said wtf..
    They said no no he didn't understand..
    "He takes out extra equity on his PPR and funds loan repayments on land and construction from this loc or equity draw"..,

    Bloody hell....
    So going to pay interest with capital..
    Great investment...

    Sharks..

    I don't think he wants to put the time in to find a property, but is said, let's back out of this deal and pay a buyers agent to find a metro place for him.. Will cost less than the capitalised interest while this is getting built!!!!
     
  9. MartyMcFly

    MartyMcFly Member

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    I'd do this. He's your family.
    I've been trying to nudge my mother in an investment direction, but with the intention of bailing her out if things went badly for her. It's either her or me who supports her retirement :/
     
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  10. bob shovel

    bob shovel Well-Known Member

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    There is a big case of suck eggs but being family you'll want to help and you would be pretty pissed off with what's happened. But it seems Mr family member wants to get into investing but may need someone with a fancy business card or office to get them started. Going it alone with all the media hype of doom and gloom it would be pretty daunting.
    I guess first thing get them out of the current deal.
    Perhaps get them in an office with a broker and also buyers agent to get the ball rolling. Then your plan will start making sense plus give them confidence with what you suggested
     
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  11. JenW

    JenW Well-Known Member

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    I think it was nice of you to make some suggestions as to which way to go, but ultimately it's up to your family member.

    The thread title 'Family member didn't take advice' could just as easily be rephrased as 'Family member considered options and made their own decision'.
     
  12. dabbler

    dabbler Well-Known Member

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    Yes.

    Advice asked, not obliged to follow though.
     
  13. tomlemke

    tomlemke Well-Known Member

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    http://www.prowealth.com.au wasn't theses guys was it? have a read of their p.m service " if your not happy with our service we will give you one months free management "

    My mate went with these guys ended up buying off the plan in rutherford nsw at the peak paid
    430k in 2012, last val was 380k in 2015 rents at 380 per week.
     
  14. skater

    skater Capitalist Premium Member

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    This!
     
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  15. Kangaroo

    Kangaroo Well-Known Member

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    It is always extremely hard for family members to take advice from other family members.
    The harder you push/advise, the more stubborn they become. Sometimes it becomes a matter of self esteem to listen to you.

    Maybe find one of his friends he trusts and get that friend to persuade your family member in a casual and also long enough session. It may take more than 1 sessions. You pretend not knowing anything. It worked for me once when one of my close friends was sucked in by a cult/brain washing group.

    If TWO of his friends work on him independently, the result is even better.
     
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  16. SeafordSunshine

    SeafordSunshine Well-Known Member

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    I bought a house for a parent... they didn't like it..
    The house wasn't good enough. The 600 m walk to the station, straight to work,, etc etc you get the drift, I felt bad... I offered to renovate.
    Later I realised I had done my best.
    I hope this helps!
     
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  17. RM1827

    RM1827 Well-Known Member

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    :confused::confused::confused:@greyghost I am experiencing the same issue with some friends. The case you presented here is a carbon copy of the deal this "wealth company" arranged for them, even the price is the same.They didn't have enough equity in their house so they asked them to throw all their savings into their ppr so to create this LOC you are talking about. The funny thing is they think they only paid 5k for the service (which is also capitalise in the loan).

    2 years on and houses are selling 15-20% or less that what the paid for. Rent never was what their promised as there is oversupply. Still a lot of land available. Even with all these evidence alarms don't ring. They keep building with this guys because "depreciation is too good" as they describe.. So when they asked about performance, company even run seminar to their clients explaining them that is a window of 10 years to expect growth and that is normal... So basically conditioning them not to expect growth for the next 5-10 years...:confused::confused:o_Oo_O
     
  18. York

    York Finance Broker Business Member

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    Although I'd agree with what Dave said at first glance. The truth is no one wants to see their family or friends burn. It's obvious your friend has been done over regarding the deal. Low val, poor advice regarding how to finance, low yield etc.
    I say speak to them again, let them know it's a sucker's deal and that there are better ways to achieve their goal of 5 properties.
    If they are sincerely interested help set up a meeting with a trusted broker for proper structuring to suit his/her needs and BA (if they need property sourcing/can't/don't know how to find themselves) as @bob shovel said. At least then your friend will have a much clearer idea of how to proceed.
    Then,sooner rather than later find out what the costs will be to exit the current contractual obligation with the 'wealth stealer' group.
    This will be your second attempt to help your friend and I believe should be your final effort. After this if they choose to proceed, then you will know you tried and you both know that they chose their fate.
     
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  19. Tim86

    Tim86 Well-Known Member

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    Makes me glad all my family followed my parents example. My parents split blocks and renovated houses and raised and built under etc... creating positively geared properties. My sister followed their lead and is onto her second splitter block. My other sister followed their lead and renovated a unit block. My brother followed their lead and has a profitable ip they renovated. I followed their lead and have 3 positively geared ips.

    It would be hard for those that never grew up with that sort of example.
     
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  20. MTR

    MTR Well-Known Member Premium Member

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    What scary is this does not even include holding costs while the build is in progress, tack on at least an additional $10-15k