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It is definately easy to invest in the US if you use cash, but it is difficult to get a return on capital that is sufficient to make up for the hassle and various risks asscoated with investing overseas. There are plenty of opportunities in the US, but i would suggest a lot of caution and due diligence before committing to anything over there.
Hi T,
With a 3 unit development you should have the choice of a resi or comercial contruction loan. While it is the more expensive option, in many cases its better to use a commercial loan, it is more expensive, but you get the benefir of capitalising interest and there being no serfvicing calculation. There are also differences in the way valuers are instructed, which affects the valuation of the land (resi lenders value the land as is, commercial lenders will want a "project related site valuation" which is more a valuation on the project than the land and is generally a higher figure. The result is that you can generally borrow more through a commercial lend that a resi lend, unless you are willing to pay mortgage insirrance on the resi loan.
Regards
AlistairI've referred quite a few clients through to Allan Wise at Cygnet Advisory Pty Ltd and they have all been very happy. They operate on a fee for service basis and are very interested in property. Allan also used to open the bowling for Victoria if you are a cricket fan. Details:
P: 03 9616 2933 | F: 03 9616 2944
M: 0438 002 840
W: http://www.cygnetadvisory.com.au
Regards
AlistairThe options you have are going to be heavily dependent on what you overall financials look like. Having a good accountant should not hinder you if the person organising your finance knows what they are doing, the lender should not look just at the business financials or just at your personal financials, if they are all considered together and you can follow how the money flows, then you should be able to use your real income rathert than just the number on your tax return.
The reason this is so important is because you are going to have a relatively small number of options for the studio, but even less if you can't use a full doc loan.
It's not the job of your solicitor to advice you on finance, its not even an area they would generally be competent in. You need a good broker. There are plenty on here.
REgards
AlistairWe are in the process of setting up a facility for investors in partnership with a company that, at the moment, specialises in handling foreign exchange transactions for sporting people that includes a multi currency bank account ie you can have $US, Pounds etc, whatever you like. The account can be set up from Australia, comes with a visa debit card attached so you can start building a credit history overseas, and all exchanges will be done at the interbank rate with a small margin and no fees.
To give people a snapshot of the cost difference between using this service and a bank I'll put below a real life exchange differential (this is a past transaction and obviously there have been movements in exchange rates, but the differential is important):
Bank Exchange to $US to $AU rate 1.0341 compared to 1.016
Please note my company won't be making any money or charging anything for this service, we will simply be facilitating transactions by passing through qualified leads to the licensed foreign exchange company, who operate under an AFSL and so are are regulated by the Australian Securities and Investment Commission (ASIC).
We can assist people already if anyone has an urgent need, but you will have to inquire through our office by ohone or email as we haven't set up an automated enquiry system, which we will have in future.
Let me make it quite clear that there is no financial benefit to me or my business in offering this service, at the moment, this may change in future but for now it is simply a value add for our own client base, but i am happy to extend it to the propertyinvesting.com community as I'm keen to give this company a volume of business so they will stay interested in the concept. They are far less expensive than any other service provider i have come accross, big or small.
Anybody who is interested need just email me preferred contact details to [email protected] and I will pass them on to a foreign exchange expert to provide you with more information directly.
Regards
AlistairOlli wrote:Commercial Property – love it !!If you like property in general then the benefits of commercial over residential are many – I think that some people don't want to make the jump in into commercial because it is a little more expensive (accountants, lawyers, the banks gouge a little more as well), there are more matters to consider and research and the physical appearance…..funny but I know investors who would prefer a nice 3bed, 1 bath with a hedge and backyard that yields 3% rented to students , then a concrete, industrial shed that yields 9% leased to a national tenant (and you don't have to mow concrete !) – because they understand you need a house and it looks nice, they don't take the time to get into comm prop.
Important – tenant, tenant, tenant…..location slightly less important but certain locations will attract certain tenants, so it is high on the list.
Having a one tenant building is sometimes like owning 1 share – but having many tenants involves more admin (leases, renewals, rent follow-ups etc) or engaging a property manager (another cost here).
The good thing at the moment is that the commercial property market is bouncing along the bottom, which means yields are up and prices down (inverse relationship) so don't be in a hurry, kiss a lot of frogs, take a lot of site inspections, review a lot of tenants financials if you can get them….. on your side, make sure you have the cash or access to it, so when you do see an opportunity you can negotiate hard, so when the comm prop market does turn (and it will) you will reap the rewards.
Commericail LVRs are around 65%, if a company or trust is involved expect a bank to give you a thorough enema and ask for g/tees from everyone over 18 with an interest over 10%. Rates will generally be 1.50% – 2.% over the residential rate. If you looking at bank funding while Int Rate is important, consider the conditions and term as well, as these can have a more onerous effect. some banks simply aren't renewing expiring loans forcing hasty refinances or sales – your best defence is cash in terms of paying off principal or having it available to reduce the loan.
O
This is a great post, aprt from nthe section on finance. 70% LVR is not a real problem, and given yields are pretty strong at the moment can often be done using just the rental income, as long as there is some quality in the lease and tennant. Rates are around 2% over the 90 day bank bill, a lot less for quality applications. Sub 8% is very possible. Non recourse lending is still acheivable below 60% LVR.
Hi Pascoe,
Thanks for your kind comments about our business. You are correct in that both Chris and Stuart have differing opinions, I really like both of them personally and respect both greatly. Stuart recently moved house and business address so this may have had something to do with the lack of communication, he also has a very successful business but that is not an excuse for lack of customer service. I'm going to speak to him about this so that he knows that it happened, I'm sure its an anomily as I haven't had anybody else i know be disappointed in his service.
Regards
AlistairHi Pascoe,
I know both Stuart and Chris Lang very well and have clients in common with both. I'm surprised you didn't have a good experience with Stuart, but you have done well going with Chris Lang. Both are very knowledgeable. If you want to PM me your name and details of what your were unhappy about I'd be happy to speak with Stuart about it.
Tracey, don't get your funding ready before you speak to him because then he'll send you to me LOL!
Regards
AlistairSome of you might find this link minteresting. It's a video of Nigel off this forum interviewing some people from his trip, this must have been masde this week some time. There are some other interesting videos on youtube also.
http://www.youtube.com/watch?v=g_rG87yA4Io&feature=channel_video_title
Hi Will,
If you are looking at the DSE maps you will find on each map a link through to the relevent planning scheme, in the palanning scheme are a list of allowable uses with and without permit and a list of banned uses. These are different for every zone. Industrial land is generally cheaper than Commefcially zoned land. Desirability is more a factor of demand than zone.
Hi Jon,
If you are new to investing one of the most valuable allies you can have is a knowledgeable, investment focused brokers. One of the best has already given you some advice, I strongly suggest you give Richard a call and get some more benefit from his knowledge and experience.
Regards
AlistairSorry, I meant to add that with these financial products, you can simply have the Plan adviser changed without there being any change to the underlying product. The plan adviser, in many cases, has the ability to alter commission levels down. Most of the rebating services remove upfront and contribution fees and make their money from trails, many also rebate part of the trail. For my products i have no contribution fees and receive half the trail back.
If you use them for a loan then you have to refinance and go through the whole process. This is not the case with products such as managed funds and personal insurance. The institution issuing these products has room in their records for a "plan adviser" who receives the commissions that are payable,
The only negative is that you get no advice, but if you don't want any advice then there really isn't a downside. These companies survive because the current way the system operates is that you pay for advice whether you want it or not. I've had managed investments with Rebate Finance for a few years and I get my cheque three times a year as advertised, there is no other way that I know of to get the commissions back.
I saw that article. They were incorrect, commissions on mortgages are not being considered as part of the changes to financial services. It is definately going to effect managed investments and superannuation, they want to include personal insurance but will be coming up against a lot of opposition on this front because Australia already has a problem with under insurance.
Nigel from this forum is over in San Antonio at the moment with a group of clients. From what he has toild me it seems Texas is the place to be if you want to invest in the US. I don't know much about Dallas, but I suspect it is also a good location.
There are a few of these companies. I've been using http://www.rebatefinance.com.au for a few years with my managed investments. Others that I looked at include http://www.investsmart.com.au and http://www.2020directinvest.com.au all appeared in an article last year by Choice magazine and are legitimate businesses licensed by ASIC.
Touche wrote:Hi
I attended a free seminar held by Guests Accounting early this week regarding the latest changes to trusts and find it quite useful.
I'm going to have a free consultation with one of their Accountants next week.
You might want to do the same.
I've seen C & N but I want a second opinion and that is why I am seeing this Accountant.
I've used Guests for years. They are absolutely fantastic, I can't speak highly enough of them.
Harry Triguboff would be the biggest individual residential property owner.
Hi T,
It is far easier to fiannce developments that are held in a special purpose vehicle ie a company or trust with a corporate trustee. If you seperate it from your personal finances as much as possible the lender is able to look at the project in isolation, so if it stacks up you will have no issue getting finance. The main issue you will have is the management of the project, you will have to appoint a project manager as well as a builder. In Melbourne you should be able to lend up to 70% of end value if you are willing to pay higher rates and go outside of the banks, bank fiannce would be a maximum 80% of costs, you would likely get knocked down lower than this though because of you residing overseas.
Regards
Alistair
