My wife and I rolled all of our personal super over and started up our smsf. Not long after my insurance broker asked me to do some work at his house. I met his wife and we started talking about property investments. I said I would never buy properties of the plan because of the horror stories that i have read in the papers. She said to me that she just started working for a developer who was building apartments in Melbourne. She said that they were really good friends and that if i was interested, that i would have no problems because they knew each other very well. She came over to our house, we picked an apartment. I received the glossy pictures and paperwork. I took it to my accountant and asked him for his opinion and he said that he had clients who have made a lot of money from these investments and he said that it looked good. I said we are purchasing it through our smsf. We paid the 10% deposit and they said that it would take approx. 18 moths to complete. Completion was due last year in March. They said because of the late start, they wouldn;t be ready until december 2013. I started looking for finance in august. I found out through the banks that I didn;t qualify for a loan because my smsf didn;t produce an income and only had a balance of $23,000 I rang the developer and explained to him my situation and basically said don;t stress. I contacted him on numerous ocassions saying that I struggling and that i was starting to get worried. I got a letter saying that settlement was due on the 26th december but they had to bring it forward to the 19th because of the holidays. I ended up getting a pre approval in our personal names but when the bank got yhe valuation done, it came back $100,000 under valued. They said you need to find $100,000, this i didn;t have. So I sent an email to my insurance brokers wife and asked her to talk to the developer to see what they could do for me. She just emailed back saying get another valuation. This i did and it came in the same. In the end i managed to raise an extra $70,000 and i asked the brokers wife to see it the developer could cover or reduce the property by $30,000 so that i could settle. No reply. My conveyancer received a letter from their solicitors in Jan saying that i was being charged interest at the rate of $380 per day. In the end my solicitor settled on our behalf, we lost our $65,000 initial deposit, had to pay their legal fees and my own legal fees. In the end we lost over $80,000. I transferred my insurance over to financial adviser that i have known for years. When i sat with him he asked me who does my smsf returns and i said my accountant. He asked me did he do a a risk assessment prior to you buying the apartment and i said no. He said 2 questions your accountant should have asked you was, how are going to pay for this investment and how much is your super producing in income. Now as you can see i was dealing with people that i knew and trusted. Burned for good and I will probably end up working way into my late 60 early 70s.
