My daughter's section - how can I help?

[KevinR]

My daughter has a property problem, and I'd love to be able to help since it has given her a lot of worry over the past several years.

She owns a bare, sloping property, FMV of around $30,000 based on the value of other adjoining properties with homes on, with a 95% mortgage fully utilised.

There have been subsidence and development problems with the land which has made it very unattractive to buyers. However, I understand that with another $5,000 or so to shore up the slippage, the land would be able to be built on.

There have been no offers for several years - probably due to these problems. A stream borders one side of the property.

The neighbor next door has prevented her from building on it - I'm not sure how - but at one point had gathered other people in the street together in opposition. Exactly why, I don't understand... they seem to be an unusual lot.

So the question is, how does she get out of this predicament without a loss, and with as much money as possible?

This requires some creative thought and input, and I'd appreciate some help.

My first idea was to use the property as a trade for a deposit on another house and section, but since it is heavily encumbered, this really wouldn't be workable.

Other ideas are:

1. Get a go-go local real estate agent, and offer them double commission for a quick sale. As well as the normal advertising and selling activity, ask them to visit the neighbor next door and say that the section will be put on the market shortly, and offer them first option. Since this neighbor has also bought the property on the other side of his house, he may want this one to guarantee his privacy. Maybe the possibility of a house being built after the sale will act as an encourager.

2. Buy a removable house to put on the section, and sell land and home together. This is not the best option, since it involves spending more money than my daughter has. Even if she was to do a deferred settlement on the house purchase, the risk is too high of it not selling later anyway.


So now we're stumped, and it pains me to see her worried like this. Any ideas gratefully appreciated.

[NZGEMS]

Hi Kevin
Why doesnt your daughter ask the neighbours herself rather than using an agent that is my first thought.

Also sometimes we are better to take a loss and move on being grateful for what we have learned from it, maybe she hadnt done her homework on it properly in the first place and paid too much for it, if she has had it a few years which i thought you suggested she should have enjoyed captial growth not loss.
IF you put a house on it what makes you think that would sell it anyway, (that is if the neighbours dont stop you) BUT if you did would the rent cover the cost? It might be a thought to make it help pay for itself.

You should find out what the problem with the neighbour is or was they may be the real problem, i take it he lives there.
While she is dwelling on her problem it wont go away so she needs to try thinking of a solution rather than feeling down about it.
It is good of you trying to help her with it.
Lets hope she gets the answer soon, I am sure you will get more answers as time goes along. So maybe she can make a decision from that.

Really though selling at a loss sometimes is a smart thing to do, I did it some time ago and what I learned from that has helped me make many many times that loss many many times over since. Beleive me dwelling on a problem gives it energy and helps it hang around.

Best of luck looking for your solution.
Robyn

[KevinR]

You should find out what the problem with the neighbour is or was they may be the real problem, i take it he lives there. ...

Hi Robyn,

Thanks for your comments. The issue with the residing neighbour seems to be quite complex, and probably more tied up with my son-in-law's past actions than with my daughter. But from my talks with my daughter, I gather that the neighbour just doesn't want a house near his boundary.

Assuming we can overcome that problem, I discovered we can get a reasonable three-bedroom house from a local removal firm on the site for $30,000.

The section owes my daughter $40,000, a cost which includes some previous work to make the area habitable.

So we have total costs of $70,000, plus whatever it takes to put in power and water - maybe $20,000.

The average RV of houses in the area is $140,000. Assuming (a very negotiable word!) that we can get 110,000--220,000 for ours, this leaves a positive balance of $20,000-$30,000. For the sake of a general plan of action, I'm leaving out the usual transaction costs.

If this profit could be obtained, my daughter would be delighted... far better than a loss of $20,000 which she is faced with at the moment if she had to sell a section at RV.

Plan B: if we can't sell immediately, then a lease option (house and section) might be the answer.

How does this look so far?

[KevinR]

Just come across Ivanhoe's ideas in another thread which gives an excellent range of options to consider:

- We'll assign it to an investor or a doer-upper;
- if that does not work we'll advertise and do double-settlement with first home buyer;
- if that does not work we'll find handyman tenant/buyer (weekly payments will be rather low and they keep sweet equity);
- if that does not work we'll fix it and onsell;
- if that does not work we'll rent it out;
- if that does not work we'll move into it and will rent out current house.

[Laurie]

Major Hassle

If this was me, I'd sell it cheap, take the 20k loss on the chin and move on. Building or neighbour hassles make it a stressful project and the time to complete such works will only add to the financial burden and stress.

Take the 20k Loss and go straight out and buy another property 20k below value..... net result... equal and no stress

Laurie

[KevinR]

If this was me, I'd sell it cheap, take the 20k loss on the chin and move on...

I think that might be the best idea.

After I looked at the quality of house you get for $30,000 (rubbish), and then tramped over the section trying to see its appeal, and then checked out the file at the local council offices this morning... there is an awful lot of development to go through before a profit - if any - can be made.

On the bright side, even if we sold it at half the current market price, there's still a little profit in it.

My only reservation is that if we can't find a way to profit from it, how will someone else? But it's a big sea with plenty of fish.