Good investment gone bad

Tom and Susan owned their own home, and decided to use some of their equity to buy an investment property. Unfortunately the property investment company they chose to work with did not have very high standards of care for their investors.

After three years, the brand new brick & tile house they bought had been trashed, the tenants had fled and the property management company were threatening them with a $5,000 penalty payment if they chose to sell out.

John got involved and, after looking through the contract Tom and Susan had with the property investment company and consulting with their solicitor, negotiated a release for them from the contract without a penalty payment. It sounds easy when I write it like that, but in fact it took weeks of hard work to get that result.

In the meantime John got pest controllers into spray the house and every week before the open homes he vacuumed to remove the dead cockroaches.

The property company had arranged for cleaning, but the damage to the walls and doors could not be disguised.

John eventually found a buyer and Tom and Susan were able to move on. A little poorer, but at least they were relieved of the stress and burden that their investment had become.

John's advice is to always have an independent solicitor check everything before entering into any kind of investment deal like this. Tom and Susan used the solicitor recommended by the property investment company - and therefore he was not truly independent. If in doubt, call John for some truly independent advice. He has nothing to gain but your respect, and that means a lot to him.

Testing the Market

People sometimes use the phrase 'testing the market'. This means placing the property on the market without saying how much you want.

The concept involves asking buyers where they see value, and encouraging them to give you feedback for the vendor. An example of where this worked to the seller's advantage is with Sam. Previously a market gardener, Sam and his family had moved into Totara Heights. However a change of heart and a change of career path meant that Sam needed to sell.

The property had a large three car garage, plus a granny flat built in as part of the house. These are not that common in the area, so it was difficult to know what price to put on the property.

Sam was not comfortable with an auction as he was afraid it would be too stressful. Going to the market without a price and asking for offers seemed the most cost effective way forward for Sam and his family. In the end a satisfactory offer was achieved and Sam was happy.

We couldn't help but wonder if an auction process may have secured a better price in the timeframe. However, we work for the seller and must always follow their instructions.

Too much debt

John Reid is most definitely the man you want on your side if you have financial difficulties. The following is a story about a woman who owned a property in Flat Bush.

Mary was a middle aged woman with grown children. She owned her own home and had generously allowed her children to borrow against her equity. However Mary could no longer afford the repayments and her children were not paying their share. So she was behind in the payments and a mortgagee sale was close on the horizon.

Mary called John in to appraise the property's value. John always wants to know why people are thinking of selling, and soon found out the full story and decided to do what he could to help. John contacted a solicitor who also agreed to help for no fee unless the property was sold.

Some of the debt was to 'third tier' lenders at a higher interest rate, so John arranged for Mary to see a mortgage broker and get a registered valuation. Because John always puts his client's interests first, his goal was to try and save Mary having to sell her home at all.

The mortgage broker was able to arrange for finance, and Mary was pleased to be able to save her home. The only cost to Mary in the end was for the valuation.

Mary was doing what she thought was the best for her children, but in then end it nearly cost her her home.