PALLARA - H+L Bank Valn < Contract Price

Discussion in 'Investment Strategy' started by Rofel Bernardino, 1st Feb, 2019.

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  1. Rofel Bernardino

    Rofel Bernardino Member

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    hi everyone,

    I need some real and actionable advice from our experts here please. We put a deposit on a block in Brisbane (PALLARA) however bank valuation came short of about $15k from one bank out broker seek finance with. We've signed the builders contract etc subject to finance. Given the current market conditions overall, we're hesitant about this deal and thinking it may not be a good deal after all given that the bank thinks we've overpaid.

    We purchased this HL package via one of the property investment companies. We were aware that you pay premium with anything brand new, which was fine. But now I'm thinking this strategy isn't as great as buying somewhere established maybe even closer to Brisbane CBD.

    Do you think it's a good idea to bite the bullet and fork out the difference? We know long term it will grow, but given the Brisbane market have had slow growth in some areas in the last decade, I'm thinking there are better opportunities somewhere in Brissie and let go of this buying brand new strategy (despite the tax offsets) and stick to good old buy an investment grade property, and hold for the long haul and wait for capital growth.

    Any advice is welcome. Thanks in advance!!
     
  2. Jana

    Jana Well-Known Member

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    Considering the land supply in that area, obviously limited capital gain for next 10 yrs unless BNE see big boom. As I said, there are good old spots in BNE that will give solid gain. BTW, if u have already signed the contract and assumed you put some deposit? If so how to get out of the contract?
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Is it your broker, or the broker of seller ?

    ta

    rolf
     
    tobe likes this.
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    In qld, contracts that are subject to finance that dont obtain satisfactory finance have the full deposit returned to buyer in most circumstances.

    ta
    rolf
     
  5. Rofel Bernardino

    Rofel Bernardino Member

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    It's subject to finance. The bank that my broker went with to seek finance valued it lower hence finance didn't get approved. We only put holding deposit for land $1k. Stockland is building lots of houses there too. Will speak to lawyer and see what they say.
     
  6. Rofel Bernardino

    Rofel Bernardino Member

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    Thanks Rolf. We only put $1k deposit for the land. But the company who we purchased package from is pushing us to go with different lender that will approve valuation at contract price but with higher interest rate.

    At what point can the finance fall through if there are always other lenders that are willing to lend at a buyers expense (High interest rates). At this point, we are happy to pull out if we can. Still buy something in BNE but not build.
     
  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    NO!

    Ohhhh :(

    Take the opportunity to run away and buy something closer in and already established.
    Yes, me too.

    NEVER, invest for tax benefits. Tax benefits, if there are any, can be removed with the stroke of a politician's pen. Tax benefits are the icing on the cake not the cake itself!
     
    marmot, TMNT and tobe like this.
  8. Jana

    Jana Well-Known Member

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    If possible, I would run few kms away without even turning back my head. It is your choice, BNE has very good potential spots...
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Depends how your finNce clause is worded.

    We love the clause to the satisfaction of the borrower, the usual sufficient to complete or a fixed dollar amount with no fixed lender is yuk.

    Ta
     
  10. tobe

    tobe Well-Known Member

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    Land vals come in short all the time in new estates. If you have access to the build contract, get that valued and see what happens. It’s more likely to be the same as the purchase price of the land and cost of the build.

    Like others have said, there may be better opportunities out there, but having the land value short isn’t unexpected. Valuers have to have comparable sales, not by the developer. So it’s resales and old sales from outside the estate. There aren’t many of those for vacant land.
     
  11. TMNT

    TMNT Well-Known Member

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    Cant agree more. Unless you are packer and need to write off billions,

    If you want a tax benefit go buy a car, computer, new office for your business and claim them a tax deduction .

    An investment who's best selling point is a tax deduction is a **** investment