Forum Replies Created
I would suggest not using any of those banks directly, set up a mult-currency account with Forexsport. You can do it from Australia, have money in $US, A$ and/or multiple other currencies. It costs nothing to set up and you can do everything from Australia. Contact person is
Betty Lentakis 03 9846 8269 [email protected]
Regards
Alistairbenofbrisbane wrote:does the 80% of cost include land – because at the moment i have borrowed around 105% and am looking at another $450k for the build. So around a million all up – does that mean that they will only lend me $800K? Even though it would be worth $1.3++ after construction. This seems rough.They will use land value as part of the cost side of the equation, so if you have had an uplift from getting a permit, that forms part of your equity.
Regards
Alistairbenofbrisbane wrote:hey everyonethanks for your comments.
Allistair
I will keep an eye on the line fee – tks for the clarification re GST. I had been advised differnt things by different people as to whether the 70% is the end product plus GST or not. Just to clarify you say that the CBA will only lend the lower of 80% of costs or 70% of end value – which ever is lower. So if the project is going to say costs $1 million, they will only lend $800K is that right regardless of end value? I had thought that if the project was going to cost a million and the end val was say $1.4 million that they would lend me basically the full million is that not right?
Michael
I see your point re the change – I guess I had naively thought that once construction had finished that I would simply be able to convert the loan to the normal loan and obtain the usual interest rate – is this not the case?
Richard
I am happy to go with a resi loan, but the broker reckons that because there will be four units once constructed that the banks will only look at as a commercial loan. Is this not your experience?
Thanks very much for your time.
Cheers
Ben
You are correct, they will not fund over 80% of costs, and they won't fund GST as part of that. CBA's policy on development funding is quite clear in that it is the lower of 80% of cost, they usually will not go over 65% of end value, but there would be flexibility there because its only 4 units, this figure definitely is net of GST. All of the banks have policies rlating to the % of costs and % of end value and always fund the lower of the 2. NAB is the exception but they will only fund 70% of costs.
Regards
AlistairWith commercial contruction loans the actual interest rate is only part of the equation in working out the interest cost. CBA would be charging you a line fee of the undrawn potion of the loan limit as well, this is called a line fee and likely it will be set at about 2%.The 8.5% you have been quoted is pretty reasobnable, but if you are comparing it to other loans, make sure you take into account what is charged for the line fee, it can differ widely between lenders. Also, CBA charge the lower of 80% of costs and 70% of end value, and the 70% of end value is exclusive of GST.
Regards
AlistairCasaHunter wrote:I am considering using this agent for my next property in the US. Have you had any experience with them? Good or bad, please let me know. Thanks! http://www.888usrealestate.com.au/ They have a new webpage which is http://www.888usaproperty.com.au/You should have a chat with Nigel, who posts on the forum regularly. He has just got back from a buying trip with his clients and is going over agin in November. You can read all about what he does from posts on here.
mjcantrell wrote:I have some clients that are looking to set up US bank accts with out having to appear in person. Does anyone know of an establishment that can help them out?I suggest you contact Betty Lentakis at Forex Sport Pty Ltd [email protected] PH +61 (03) 9846 8269 http://www.forexsport.com
They work mostly with money transfers for international athletes, but are also happy to work with investors. One of their offerings is a multicurrency account, which can be set up from Australia for little or no cost, they are generally based in tax havens, but money can be transferred in and out in multiple currencies from anywhere. They are just the facilitator, there are numerouds banks that provide the actual accounts, it is a very useful service.
Last chance to register, we will be closing the books on Friday. It would be great to see some of you come along, the list of speakers we've put together is outstanding. The topcis to be covered include:
Commercial Property
US Property
Creating cashflow through Covered Calls
Managing foreign exchange risk
Investing in property through SuperannuationThese are all hot topics at the moment and I hyave seen plenty of posts asking questions about these topics. Seminar attendees will have access to experts on all these topics and more. You can register through our web site http://www.perryfinance.com
Regards
AlistairThis company is owned by Chris Pappas, who is a long time and successful property investor, Ascentiv Group is their fianncial planning arm. it is relatively new, the accounting business isn't though, it has been around for a long time. Chris is quite a character.
Regards
AlistairThanks for all the feedback guys. The cartoon was created using a site called Extranormal, its pretty good fun to use and i'll be doing a lot more on different topics as soon as I have some time. Anyone keen on these and other info if you "like" the Perry Finance facebook page you will be notified of any new info going up, we also publish articles virtually every day.
Regards
AlistairLLCW wrote:Hi everyone, hope you are all well!!Have been looking at all the US hype at the moment, and saw the 21st century Property Direct USA DVD – essentially they appear to be offerning 'pre-screened' properties that are turn key – that is, already rehabbed and tenanted with a 10 year rental guarantee and a buyback option at the end of the term. Something about this smells really bad to me, but I was wondering if anyone had made a purchase via this company (this is one of Jamie McIntyre's babies) or had any dealings with 21st Century and was happy to share their experiences, good, bad, and the ugly!
They are offering full rental management and you can choose to go on tours with them to purchase in Arizona and a couple of other places in the US. However, one thing I found very disturbing was on the DVD they also were talking about buying vacant land as a possible CGT play in the future. I would have thought that the excess of land over there would make this strategy a no go?!?! Your thoughts, anyone?
Here is the website if you are just looking to learn a bit more on what is on offer:
http://www.21stcenturyusproperty.com/It would be interesting to know where this guarantee comes from, the guarantee is only as good as the solvency of the entity/person who issues it!
I strongly suggest that for 10 units you employ a project manager first and get them to organise the builder. You can probably tender this out, but the contractual arrangements will be as important as the builder you use. If you want to send me a few details I'd be happy to give you details a some appropriate people to talk to.
Regards
AlistairShazfamily wrote:If i have paid a fee to cashflow cqpital and what they have is also on realesrate.com and i do my own research and negotiation do I still have to pay them a commission.?You will find that a lot of the property Cashflow Capital put up is advertised on the net by an agent. They are buyers agents and only receive commissions if they are selling for a developer. They are certainly not dodgy. I suggest you call the company and speak to them directly about this.
Regards
AlistairKindOfNew wrote:Hi There,I have progressed in my development pursuit and am finalizing Council plans for a 6 unit / townhouse development in Brisbane. Does anybody know a decent finance broker that specializes in development loans (ideally located in Brisbane)? I need somebody who is a straight shooter and knows his stuff – makes life just so much easier.
Regards
This is a little off topic, but I put a link to a cartoon video on this forum which is a mock up of advice given to a client on development finance, for a project approximately the same size as thje one you are looking at. Have a look at it as it will give you some background info on how development finance work. Good luck with the project.
Regards
AlistairA client of ours developed a old hotel into units, sold them off and kept rights to the air space above, which he later sold for a fairly large amount. In this case the body corporate agreement that went with each of the dwellings in the development expressly prohibited the owners from objectiong to development of the air space. I'd suggest it would have been very difficult to build the penthouses without such an agreemnent. So yes, it is possible, but potentially problematic.
Regards
AlistairNo problem at all Jamie, I'm glad you like it.
Regards
AlistairThanks Richard, I'm glad you liked it. I'm trying to think what topic to cover on the next one at the moment. They are pretty good fun to make, hopefully they are a useful educational tool to some people as well.
Regards
AlistairThanks Mark, your feedback is much appreciated.
Thanks Michael, nothing much i can do about the voice overs, they are computer generated. I'm sure they will get better, the actions are pretty funny and it was good fun to make.
Regards
AlistairHi JD,
I don't know what standard returns are on offices in Perth CBD at the moment. I'd suggest what you are looking at is a little low. The Perth office market is highly volatile, vacancy rates went from basically 0% to around 10% when the financial crisis hit and prices plumeted. It seems to have largely recovered now, but you would probably want a significantly higher return to buy over there as compared to buying something in Melbourne, which is a much more stable market. Having said this, everything else looks OK. I don't like tennants having options personally, its great for them but does nothing for you and 2 years is not very long.
With regard to security on the lease, absolutely they should tell you what this is. Is it guaranteed by a $2 shelf company or the publicly listed entity. If there is a bank guarantee or cash in a trust account this is even better. The lease is only as good as the security against it, same as a loan, you don';t want it to be an option for them to walk.
Regards
AlistairHi JD,
The info you have given isn't nearly enough to make even a guess at whether the property you are talking about is a good investment. Some considerations that would come into any decision would include:
1. Is the current lease above or below market
2. How long is it for
3. Who are the tennants and are they good quality
4. What is the security on the lease
5. What clauses are their in the lease regarding escalations
6. How old is the building
7. What expenses does the land lord have to cover
8. What is the condition of the buildingThere are plenty more.
Regards
Alistair
