I've been a bit busy with a 2 week vacation to NZ and getting back into the routine of work and normal life, so I'd had to prioritise the blog a bit.
I'll try and get part 3 up within the next few days.
Stay tuned!
Thursday, August 28, 2008
Monday, August 11, 2008
Travel and buying a house
Since I'm just about to head off on a holiday myself, I figured it would be notable to write some things about purchasing a house and travel.
One of the first excuses people usually think up when they talk themselves out of purchasing is "I still want to travel". This is probably the easiest excuse to debunk, but it depends on what you mean by travel.
If "travel" is spending 6 months in Mongolia feeding children or 12 months in Japan teaching English, then yes, purchasing a house isn't probably for you right now. Assuming, of course, that you are leaving Australia and not coming back for a fair amount of time, you probably don't really have too many commitments (job, lease, relationships) back in the homeland.
But after you've done your year, you'll probably end up coming back anyway. What then? Once you set your life back up, you're pretty much in the same boat. But the excuse still comes back - "What if I want to travel?".
I'll assume now that "travel" means a few weeks in Bali or maybe even a month at Whistler in Canada. With this sort of travel, you'd most likely have those commitments (job, lease etc..) that you had before. You'd also probably be renting too.
So ask yourself, if you were working a fulltime job and renting, would you still go on holidays with your annual leave? Yeah, course. So why not when you have a mortgage? You have the same commitments, the only major difference is that you're paying a bit more for your housing.
The key, like anything to do with buying, is just working out money management. If you're making enough to afford house purchase, there are probably places you can save money. It may take 4-5 months, but 20 weeks x $100 is a tidy $2000. More then enough for a very fun time in Thailand.
You don't have to stop paying bills, or take out second loans, or anything like that. Just funnel money from other luxuries (games, cds, booze, clothes) into a savings account and leave it alone. In 4 months you have cash for travel and you're set to go, without credit. It's simple.
If you think I'm some sort of savings guru, believe me, I'm not. Until I bought a house, I usually spent all my disposable income in a few days. Budgeting is a skill you quickly learn.
One of the first excuses people usually think up when they talk themselves out of purchasing is "I still want to travel". This is probably the easiest excuse to debunk, but it depends on what you mean by travel.
If "travel" is spending 6 months in Mongolia feeding children or 12 months in Japan teaching English, then yes, purchasing a house isn't probably for you right now. Assuming, of course, that you are leaving Australia and not coming back for a fair amount of time, you probably don't really have too many commitments (job, lease, relationships) back in the homeland.
But after you've done your year, you'll probably end up coming back anyway. What then? Once you set your life back up, you're pretty much in the same boat. But the excuse still comes back - "What if I want to travel?".
I'll assume now that "travel" means a few weeks in Bali or maybe even a month at Whistler in Canada. With this sort of travel, you'd most likely have those commitments (job, lease etc..) that you had before. You'd also probably be renting too.
So ask yourself, if you were working a fulltime job and renting, would you still go on holidays with your annual leave? Yeah, course. So why not when you have a mortgage? You have the same commitments, the only major difference is that you're paying a bit more for your housing.
The key, like anything to do with buying, is just working out money management. If you're making enough to afford house purchase, there are probably places you can save money. It may take 4-5 months, but 20 weeks x $100 is a tidy $2000. More then enough for a very fun time in Thailand.
You don't have to stop paying bills, or take out second loans, or anything like that. Just funnel money from other luxuries (games, cds, booze, clothes) into a savings account and leave it alone. In 4 months you have cash for travel and you're set to go, without credit. It's simple.
If you think I'm some sort of savings guru, believe me, I'm not. Until I bought a house, I usually spent all my disposable income in a few days. Budgeting is a skill you quickly learn.
Monday, August 4, 2008
Experiences of a House Purchase - Pt.2
Thanks for all the comments guys, glad to know someone finds all this interesting :)
Part Two: Search and Obtain
Searching for a new home is kind of like searching for the holy grail. You know exactly what you want, and where it should be, but its almost impossible to find. No matter how close you get to the house you invision, it always slips just out of your reach. Either someone gets it before you, or its the dreaded "under contract" (more on that later), or it ends up being just outside of your price range.
You make a list of everything that you WANT. Not that you think you can get, but what you want. Pool, garage, granny flat - whatever. Then when you go out looking at houses you can tick off what they have. This makes it easier to not lose sight of what you are looking for. It's easy to get caught up in the excitement - I did. I saw all types of houses, with all different types of features. Awesome balconies on hills facing the west so you can watch the sunset. Huge double storey houses with huge bedrooms. Entertainment areas, bars.
I must have searched through a thousand listings. Online, in windows, on pamphlets. The sheer amount of properties on the market seems like a never ending tidal wave. You get calls from real estate agents trying to pimp you the latest and greatest that just came into their hands. The second you make it known you're searching its like moths to a flame.
Real Estate agents. Jesus christ, I could write an entire blog just about my experiences with them. I swear that they aren't human - they never seem to sleep, they don't seem to have any emotion and would sell their first born child to get the sale. I've had RE's lie to me through sweet smiles and not bat an eye lid. They aren't all bad though. I dealt with a lot of them.
Note: For the sake of, I dunno, kindness? I won't name names. I'll use generic companies but I'm not out to get sued for defaming anyone yeah?
When I first started looking for houses, there were a lot of areas out of my price range. I didn't know where or how to look, so I started with what I knew - online. I lived and breathed houses for months. I spent all of my spare time looking at houses online, or looking at houses in person. I bored the shit out of my friends with house talk and begged for time off work to meet RE's to do inspections.
I was trying to stay within the Brisbane City Council area, but this was VERY difficult. Areas like Acacia Ridge and Sunnybank were just out of range, the houses that came on in the price bracket were gone before I even had time to ring up. I had to move the bar out a bit furthur.
There were few areas I could afford at this point. Logan and Ipswich. For Brisbanites, most people would know they aren't the most desirable areas. But hey, we all have to start somewhere right? A house is an investment and the areas had (and still have) great growth.
Areas Circled (Click on the map to make it bigger)
I have to admit, I wasn't a fan of either areas. The better parts of both areas are still reasonably pricey and the areas within the range were in areas close to highways, dumps or had higher crime rates. That said, Haley and I were already prepared to change lifestyles for our own house, so it really came down to getting a place that we'd be comfortable living in. In any case, I preferred Ipswich to Logan simply because I preferred the west side.
I started looking around areas of East Ipswich - Riverview and other areas that sound reasonably nice but aren't. Most of the houses were pretty dumpy on in places that were almost completely desolate. One house was on a street with two other condemned places. The others were just tips. One was next door to a council dump.
Don't get me wrong, there are tons of fantastic houses in Ipswich. An extra $100,000 would have changed the game significantly, but at that point that wasn't possible. If I had chosen to invest a few years earlier I would have been even luckier, but hey, hindsight is 20/20 isnt it. There was just nothing safe, comfortable or even resembling a community around.
I spent a few more weeks looking in Ipswich but eventually decided to give up. It wouldn't have been feasible to live further West since both of us worked in Brisbane and it would have added quite a significant amount of time to journeys. I didn't really deal with any real estate agents in Ippy - most of them didn't bother to return my calls and the ones that did weren't helpful.
I changed my sights to Logan.
The market seemed to be larger for my price range there. I found quite a few properties on the web but I learnt my first lesson - houses in websites are almost never still available. The ones that are usually have something wrong with them ;)
Real Estate websites generally leave properties lying around online for weeks, usually to drum up interest so they can get you on to other properties. I'd ring up about houses and find they were "Under Contract" and weren't for sale.
Note: Under Contract is when a purchasing contract has just been signed on a house and its going under preparations for sale (waiting for finance usually). It's not a guarantee the house has been sold but legally no other offers can be put down, although some RE's might take "backup" offers, which are pretty dodgy IMO.
Sometimes the RE's would go all the way to the extent of taking me to a house and THEN telling me it was under contract. That was irritating. Save yourself some time and ask them if the house has any offers on it before they take you out.
I saw about 6 houses in Logan (when I say saw, I mean that I went inside and had a proper inspection. I drove past about 20-25 houses). All of them were with the same RE - she was quite nice. She was unusally honest too. I'd find later once I started looking back in Brisbane that she was the exception to the rule.
The only house in Logan that was remotely decent was in a place called Slacks Creek. Slacks Creek also happened to be right next to Woodridge, possibly one of the worst suburbs in Greater Brisbane. The house was on the market for $210,000 - it was a 3 bedroom, 1 bathroom with lockup garage. Pretty standard first house. Was on a little cul-de-sac with walking access (no direct car) to main road.
The house was quite new - which was different from the other dumps we were shown in the respect that it was built in the last 10-15 years, rather then 30 or so. But, it was small. Extremely small, even for two people. The bedrooms were tiny, the kitchen was even smaller and the living/diner was barely big enough for two pieces of large furniture.
On the flipside, it was in great condition, on a quiet street and close enough to shops and highway. I knocked on a few doors and talked to some neighbours (brilliant way to get local knowledge, since RE's like to bullshit a lot) and got reasonably decent responses. It was ok. Not what I ultimately wanted, but ok.
Haley didn't really like it, and I didn't blame her. We both knew we'd have to make lifestyle changes but this was more then we wanted to change. We'd be far away from everything - work, friends, family. We didn't like the area at all. The street had shopping trolleys and rubbish, junk in people's yards and such. I'd lived long enough in Brisbane to know bad areas and I knew this was one of them. Two of the neighbours said that breakins happened at least a few times a year.
Fantastic.
I mulled over this place for ages. It was a good price, under budget. The house was structually fine. I knew that if it was going to happen, this would be the place. I even had the paperwork in front of me at one point, but I just walked out on it. I just could not in good concience purchase this house. I knew that I would regret it later and everything about it felt wrong.
I gave up for a bit. Then everything changed.
I managed to sort out some creative financing that allowed me to get more money. About $80,000 or so. This basically pushed me into an entirely different pricing bracket altogether, which meant being able to purchase in Brisbane proper. Essentially, without it, I probably would still be renting right now.
I'll take a hiatus from the overall story to talk a little bit more about my experience with Real Estate agents.
I'll be blunt - I cannot stand them. Everything about them is just arrogance, greed, manipulation. There are no ethics or morals in property. In fact, one of them essentially defected and became a quite a famous voice for ethics and change in the industry - Jenman - but I'll get to him later.
RE's live off commission. They don't make any real money until they sell houses. They get salaries, of course, but the big bucks are in % cuts of final sale properties. So, the higher the sale price, the more cash they walk away with. This can be tens of thousands on one sale.
Because of this, they will do anything to secure sales. They will lie about contracts, they will lie about offers, they will push and push you to sign extremely important things without giving you time to think. They are rude - they will tell you that your offers are pathetic. They will offer you things like "backup contracts" incase other potential buyers fall through, and will even offer to call and harass them for you.
For the first house I signed a sale contract on, the RE had seen me coming a mile away. She filled the "conditions" part of the contract with so many clauses it was almost impossible to get out of it. And of course, when I found that place was full of asbestos, the sweet woman turned into a bitch from hell, almost challenging me to find a way out. I did. I also learnt a lot of valuable lessons.
Always remember - the RE works for the seller, not for the buyer. They will pretend to support you but they do not give 10 shits about you, before or after signing. Get a decent solicitor and a good friend who knows about property to deal with them.
This might sound like I'm being a bit crazy. I'm not. Ask anyone who has gone through this process and they will have stories of their own. Same situation with sellers. There are lots of good eggs but they aren't anywhere near as numerous as the bad ones. The guy who eventually sold me my house was a complete asshole, but at the very least he was efficient.
The two things I can't stress enough are these - get legals, and get advice. Make sure that anything you are going to sign is read over by a solicitor first. The RE will usually bitch about this - fuck them. This is your life and your money. Its your right and they prey on the fact you're misinformed so they can potentially fuck you to offload crap houses.
The other thing is not be afraid to bargain - the RE's will bitch about this too. Offer what YOU want, regardless of what the RE says. They may advice the seller not to take an offer, but in the end its up to them. A seller will always bargain - it just comes down to finding middle ground.
On the flip side - make RE's work for you. Get them to find you properties. Get them to take you to multiple in one afternoon. Call them at stupid hours if you need to - believe me, they're paid extremely well for it. Get them to come to you if need be. Take advantage of the fact they need the sale more then you do and
Also, take a look at Jenman's site. Jenman is a real estate agent with, *shock horror* ethics and focuses on customer care. He's written a few books and offers all of his information and help for nothing. His website is full of great advice for buyers and sellers in avoiding getting ripped off or generally fucked over by RE's.
In any case, this part went a hell of a lot longer then I thought! More in the next part - I'll try and get these out weekly.
In Part 3 (and possibly 4 and 5 at this rate!) More on the overall story of my purchase, plus Auctions, Nasty Asbestos, The viewing grind and Solicitors!
In future parts I'll also cover Stratas (Body Corporates), private listings and SPECIFIC things to watch for in contracts and a couple of other tidbits. Probably more rants about RE's too. Bastards.
Part Two: Search and Obtain
Searching for a new home is kind of like searching for the holy grail. You know exactly what you want, and where it should be, but its almost impossible to find. No matter how close you get to the house you invision, it always slips just out of your reach. Either someone gets it before you, or its the dreaded "under contract" (more on that later), or it ends up being just outside of your price range.
You make a list of everything that you WANT. Not that you think you can get, but what you want. Pool, garage, granny flat - whatever. Then when you go out looking at houses you can tick off what they have. This makes it easier to not lose sight of what you are looking for. It's easy to get caught up in the excitement - I did. I saw all types of houses, with all different types of features. Awesome balconies on hills facing the west so you can watch the sunset. Huge double storey houses with huge bedrooms. Entertainment areas, bars.
I must have searched through a thousand listings. Online, in windows, on pamphlets. The sheer amount of properties on the market seems like a never ending tidal wave. You get calls from real estate agents trying to pimp you the latest and greatest that just came into their hands. The second you make it known you're searching its like moths to a flame.
Real Estate agents. Jesus christ, I could write an entire blog just about my experiences with them. I swear that they aren't human - they never seem to sleep, they don't seem to have any emotion and would sell their first born child to get the sale. I've had RE's lie to me through sweet smiles and not bat an eye lid. They aren't all bad though. I dealt with a lot of them.
Note: For the sake of, I dunno, kindness? I won't name names. I'll use generic companies but I'm not out to get sued for defaming anyone yeah?
When I first started looking for houses, there were a lot of areas out of my price range. I didn't know where or how to look, so I started with what I knew - online. I lived and breathed houses for months. I spent all of my spare time looking at houses online, or looking at houses in person. I bored the shit out of my friends with house talk and begged for time off work to meet RE's to do inspections.
I was trying to stay within the Brisbane City Council area, but this was VERY difficult. Areas like Acacia Ridge and Sunnybank were just out of range, the houses that came on in the price bracket were gone before I even had time to ring up. I had to move the bar out a bit furthur.
There were few areas I could afford at this point. Logan and Ipswich. For Brisbanites, most people would know they aren't the most desirable areas. But hey, we all have to start somewhere right? A house is an investment and the areas had (and still have) great growth.
Areas Circled (Click on the map to make it bigger)
I have to admit, I wasn't a fan of either areas. The better parts of both areas are still reasonably pricey and the areas within the range were in areas close to highways, dumps or had higher crime rates. That said, Haley and I were already prepared to change lifestyles for our own house, so it really came down to getting a place that we'd be comfortable living in. In any case, I preferred Ipswich to Logan simply because I preferred the west side.
I started looking around areas of East Ipswich - Riverview and other areas that sound reasonably nice but aren't. Most of the houses were pretty dumpy on in places that were almost completely desolate. One house was on a street with two other condemned places. The others were just tips. One was next door to a council dump.
Don't get me wrong, there are tons of fantastic houses in Ipswich. An extra $100,000 would have changed the game significantly, but at that point that wasn't possible. If I had chosen to invest a few years earlier I would have been even luckier, but hey, hindsight is 20/20 isnt it. There was just nothing safe, comfortable or even resembling a community around.
I spent a few more weeks looking in Ipswich but eventually decided to give up. It wouldn't have been feasible to live further West since both of us worked in Brisbane and it would have added quite a significant amount of time to journeys. I didn't really deal with any real estate agents in Ippy - most of them didn't bother to return my calls and the ones that did weren't helpful.
I changed my sights to Logan.
The market seemed to be larger for my price range there. I found quite a few properties on the web but I learnt my first lesson - houses in websites are almost never still available. The ones that are usually have something wrong with them ;)
Real Estate websites generally leave properties lying around online for weeks, usually to drum up interest so they can get you on to other properties. I'd ring up about houses and find they were "Under Contract" and weren't for sale.
Note: Under Contract is when a purchasing contract has just been signed on a house and its going under preparations for sale (waiting for finance usually). It's not a guarantee the house has been sold but legally no other offers can be put down, although some RE's might take "backup" offers, which are pretty dodgy IMO.
Sometimes the RE's would go all the way to the extent of taking me to a house and THEN telling me it was under contract. That was irritating. Save yourself some time and ask them if the house has any offers on it before they take you out.
I saw about 6 houses in Logan (when I say saw, I mean that I went inside and had a proper inspection. I drove past about 20-25 houses). All of them were with the same RE - she was quite nice. She was unusally honest too. I'd find later once I started looking back in Brisbane that she was the exception to the rule.
The only house in Logan that was remotely decent was in a place called Slacks Creek. Slacks Creek also happened to be right next to Woodridge, possibly one of the worst suburbs in Greater Brisbane. The house was on the market for $210,000 - it was a 3 bedroom, 1 bathroom with lockup garage. Pretty standard first house. Was on a little cul-de-sac with walking access (no direct car) to main road.
The house was quite new - which was different from the other dumps we were shown in the respect that it was built in the last 10-15 years, rather then 30 or so. But, it was small. Extremely small, even for two people. The bedrooms were tiny, the kitchen was even smaller and the living/diner was barely big enough for two pieces of large furniture.
On the flipside, it was in great condition, on a quiet street and close enough to shops and highway. I knocked on a few doors and talked to some neighbours (brilliant way to get local knowledge, since RE's like to bullshit a lot) and got reasonably decent responses. It was ok. Not what I ultimately wanted, but ok.
Haley didn't really like it, and I didn't blame her. We both knew we'd have to make lifestyle changes but this was more then we wanted to change. We'd be far away from everything - work, friends, family. We didn't like the area at all. The street had shopping trolleys and rubbish, junk in people's yards and such. I'd lived long enough in Brisbane to know bad areas and I knew this was one of them. Two of the neighbours said that breakins happened at least a few times a year.
Fantastic.
I mulled over this place for ages. It was a good price, under budget. The house was structually fine. I knew that if it was going to happen, this would be the place. I even had the paperwork in front of me at one point, but I just walked out on it. I just could not in good concience purchase this house. I knew that I would regret it later and everything about it felt wrong.
I gave up for a bit. Then everything changed.
I managed to sort out some creative financing that allowed me to get more money. About $80,000 or so. This basically pushed me into an entirely different pricing bracket altogether, which meant being able to purchase in Brisbane proper. Essentially, without it, I probably would still be renting right now.
I'll take a hiatus from the overall story to talk a little bit more about my experience with Real Estate agents.
I'll be blunt - I cannot stand them. Everything about them is just arrogance, greed, manipulation. There are no ethics or morals in property. In fact, one of them essentially defected and became a quite a famous voice for ethics and change in the industry - Jenman - but I'll get to him later.
RE's live off commission. They don't make any real money until they sell houses. They get salaries, of course, but the big bucks are in % cuts of final sale properties. So, the higher the sale price, the more cash they walk away with. This can be tens of thousands on one sale.
Because of this, they will do anything to secure sales. They will lie about contracts, they will lie about offers, they will push and push you to sign extremely important things without giving you time to think. They are rude - they will tell you that your offers are pathetic. They will offer you things like "backup contracts" incase other potential buyers fall through, and will even offer to call and harass them for you.
For the first house I signed a sale contract on, the RE had seen me coming a mile away. She filled the "conditions" part of the contract with so many clauses it was almost impossible to get out of it. And of course, when I found that place was full of asbestos, the sweet woman turned into a bitch from hell, almost challenging me to find a way out. I did. I also learnt a lot of valuable lessons.
Always remember - the RE works for the seller, not for the buyer. They will pretend to support you but they do not give 10 shits about you, before or after signing. Get a decent solicitor and a good friend who knows about property to deal with them.
This might sound like I'm being a bit crazy. I'm not. Ask anyone who has gone through this process and they will have stories of their own. Same situation with sellers. There are lots of good eggs but they aren't anywhere near as numerous as the bad ones. The guy who eventually sold me my house was a complete asshole, but at the very least he was efficient.
The two things I can't stress enough are these - get legals, and get advice. Make sure that anything you are going to sign is read over by a solicitor first. The RE will usually bitch about this - fuck them. This is your life and your money. Its your right and they prey on the fact you're misinformed so they can potentially fuck you to offload crap houses.
The other thing is not be afraid to bargain - the RE's will bitch about this too. Offer what YOU want, regardless of what the RE says. They may advice the seller not to take an offer, but in the end its up to them. A seller will always bargain - it just comes down to finding middle ground.
On the flip side - make RE's work for you. Get them to find you properties. Get them to take you to multiple in one afternoon. Call them at stupid hours if you need to - believe me, they're paid extremely well for it. Get them to come to you if need be. Take advantage of the fact they need the sale more then you do and
Also, take a look at Jenman's site. Jenman is a real estate agent with, *shock horror* ethics and focuses on customer care. He's written a few books and offers all of his information and help for nothing. His website is full of great advice for buyers and sellers in avoiding getting ripped off or generally fucked over by RE's.
In any case, this part went a hell of a lot longer then I thought! More in the next part - I'll try and get these out weekly.
In Part 3 (and possibly 4 and 5 at this rate!) More on the overall story of my purchase, plus Auctions, Nasty Asbestos, The viewing grind and Solicitors!
In future parts I'll also cover Stratas (Body Corporates), private listings and SPECIFIC things to watch for in contracts and a couple of other tidbits. Probably more rants about RE's too. Bastards.
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