Update on our Gladstone situation

Hi All

I posted a good year ago regarding our Gladstone situation.

Long story short - brought two properties, one in 2010 and one in 2012 (Off the plan unit) We have an insolvency company currently working with us. Both properties are on the market - but are finding it very difficult to find buyers even at half the price we paid for them. In the meantime we have to continue with all the other expenses - rates, insurance, body corp etc which is proving very difficult to keep up with.

The insolvency company has advised that it may be wise to surrender one of the properties back to the bank. The property is currently empty - previous tenants didn't leave it in a good state so we have no rental income and continue with the high expenses. It could be on the market for another year so we are unsure whether to just surrender it now. We have been told there will be fees for this - they can't say how much. Has anyone any advice or has been in the same situation please? I don't know what to do and it is starting to really make me depressed.

I'm currently 19 weeks pregnant and after losing 4 bubs in the last 2 years we are so desperate for this little girl. I know my worrying isn't helping and due to me being high risk I'm unable to work and just feel like such a failure.

Any help greatly appreciated.

 

Hi @Ems, I remember your posts. Sorry to hear that the situation hasn't improved.
Financially I have no idea what is better for you to do. I do know that continuing to worry won't help and I honestly can't see the Gladstone market improving in the next year or so. Has the insolvency company forecast some possible scenarios for you around handing back one property?

Once you make a decision AND take action your stress levels will drop, even if your financial position doesn't improve right away.

Edit: PS - congrats on the pregnancy. 19weeks is half-way there, hope it goes well!!!

 

@Ems- just throwing some out of the box ideas in case any of these might help?
For the property that is empty, can you spend just a little bit of money on it to get it into a livable state and a little bit more money to furnish it and rent it out short term/ on airbnb? If you priced it reasonably you may be able to get some occupancy which would help pay for the ongoing costs and wait out the market?

 

Just be careful of these insolvency companies - many are cowboys.

You can't just give back a property to the bank, you will have to let the bank take possession. Just stop paying the loan and they will do this eventually. There will be legal costs for this to occur - about $10k ballpark. The lender will add costs to your debt and pursue you for it. This is where you can use that insolvency company to negotiate for you.

By stopping repayments to one of the properties you could divert everything to the other. This may be a useful strategy where you have different ownership structures for the 2 properties or for other reasons.

Seek legal advice first.

You might also want to start taking defensive actions with other assets.

 

I know a little a bit these insolvency companies, id be very very careful,

theyre in it to make money, so they will charge you their normal fees, and then they make it easier (or appear) by taking over the communication side of the affairs, so you dont get hounded as much or at all, thus giving you some breathing space, but with assets, they wont be looking for hte best price,

also if it is bnakruptcy situatuion, using these companies still yo uend up wit ha bankrptcy or simialr to so its not a clean break

so if you can handle the paperwork and communciation side of things id avoid them,
but if your SANF is important to you , then these companies might be suitable for you, however i would really really avoid

 

Agreed. I'd rather ditch the debt companies and spend the money on some good legal advice to start the defensive actions on all fronts.

I bet these companies don't even have any legal qualifications.

 

My advice (without any regard for your financial situation)

1. Selling the properties.
If you were to sell down and rid yourself of this debt, how would it affect your life?
Losses of $50K vs $500K. If it's the latter I'd clearly look at holding the properties for as long as possible. If it's the former I may be tempted to sell.

2. Innovative tenancy.
a. Is there scope to start a boarding house?
b. AirBnB was mentioned.
c. Housing Commission?


I know it must be tough, but to break out of the rut you must think differently to everyone else in a similar situation to yourself.

 

Thank you. We have been told we will be charged fees for the bank to take possession and then will then charge our loan to sell it and they will also most likely sell it for less than what we can. No figures have been mentioned. The company believes it will be better if we sell but who knows when or if a buyer will come along.

 

Thank you. The house would need at least $10k spent on it - the tenants did a good job. There are just so many properties in Gladstone available our 1940's house would be bottom of the list (even at $50 a week)

 

We stopped paying the loans back in October 2016 so are quite a way into the process. We thought we had sold the house (twice) but both parties failed to get finance (due to the condition of the property apparently) Due to the fact we aren't receiving any income on the house and that we are still paying all the other expenses we have been told it might be wise to surrender it. I believe the bank would be close to taking possession anyway considering its been 7 months since we've made a payment.

We have set up asset protection on our PPOR

 

Folks with helpful hints at the ready should read this thread first..
most of the ideas have been discussed already.

 

Last thing you want is insolvancy/bankruptcy.

• Rent them out even if below market value. If agent is complaining cant get tennant - change agency.

• Get all your bills and pay them monthly.

• If you have a ppor rent that out too and stay with family.

By the time your baby is born you will have it all sorted.

 

Hope this was done by a lawyer?

 

Hi Ems, your not a failure, no one knows what is around the corner, you need to look after your health and your family, put that first, it is something you cannot get back nor time.

A failure would ignore the problem as if it did not exist.

I do not know what is meant by surrender, if your not paying the bank, you should have told them first & that is basically when they can take possession.

If it were me I would have cleaned the place up by now, and you could have told the bank you are selling, they will usually wait till you do this, but if not sold in whatever time frame they think is ok, they will step in.

They will likely just auction the place, you could do that before they do, it is worth whatever someone will pay, if you did a campaign as per normal, then, that is that.

I would work with them, do not hinder them, keep them informed on what your doing You need to get legal advice, solicitor can prob negotiate better with the bank than anyone, it is a legal process now.

 

Did you read and comprehend the post above yours?

 

Hi Ems, I have been thinking of you a lot.

Congratulations on this Bub, I pray all goes well for you all.

About Gladstone, have you and Hubby been talking with the banks?

Big Hugs xxxx

 

I'm so sorry to hear about your situation. Good thoughts and prayers coming your way. Congrats on the pregnancy and while I don't have a heap of financial advice, if I were you the baby and my physical and mental health would be paramount. Do what you need to to elevate the stress, it does not have to be the best financial outcome but if it helps your health and well being you need to take it. You are young and able you will bounce back to your financial goals one day but right now doesn't seem to be the time to be managing so much.
Another option is if any friends or family members can help, maybe they can help with the immediate payments and you can enter into an agreement to on sell to them at a discount or maybe you can help get it renovated and return that amount with some profit. Do you have anyone or know anyone who can help renovate for much less than the market rates?
I hope you have some positive supportive people around you to talk to. Nothing is the end of the world not even this and you have done very well owning this problem and reaching out. Anyone would feel bad in this situation, that doesn't make you a failure, just a person going through a difficult time and managing it. To me you are extremely inspiring and strong as you are not giving up and doing what it will take to get out of this.

 

I'm guessing EMS was referring to some sort of insurance??

Maybe even just LMI - believing it protects her?

 

I ask because I have reviewed some flimsy asset protection plans which provide no protection at all - some are actually done by people calling themselves lawyers too.

 

On a random side note. What does LMI do if it doesn't cover you in this circumstance? Do you end up bankrupted and the bank is still covered for the shortfall?

 

LMI covers the lender, not you, if they can't get back through LMI they go after you.
LMI cover a certain amount only not everything, any shortfall they go after you
the only way to get out is really bankruptcy and banks just write off the short fall