Forum Replies Created
Hi Mccoz,
I took today off to take my daughter to music today, so i haven't received your message yet. As it in Melbourne you have a lot more options than in other cities, as there are several specialise constuction funders who have money, but only operate in Victoria and mostly in Melbourne. It is possible to get loans against end value from some of these, you'tre looking at a maximum 70% including GST, rates and fees are higher than resi, but if there are good margins this will equate to a lot more money.
I'll call you tomorrow if you left a number with my office.
Regards
AlistairIf they are quoting % returns on an investment i hope they have and AFSL and are issuing a prospectus.
As Richard suggested you will only get 80% land value and 80% build cost with a resi facility. Why do you want a resi facility though? It doesn't cost much more to go commercial and, depending where the development is you may be able to get more money, and you can capitalise the interest during construction.
Regards
AlistairChris Lang has been helping people form private syndicates for years. If you Google his name you will find him easily enough.
Regards
AlistairHi Tiffany,
I would suggest RESULTS Mentoring, which is marketed through this site would probably be a better option. I'm sure you can get feedback from a lot of people on here who have been through their program.
Regards
AlistairHi Propertyboy,
I agree with the previous posts. I would add that your concern is about the wrong thing, a 0.1% or 0.2% isn't going to mean a lot to you at the moment in dollar terms, where there may be potential savings and what can make it easier to get to the 20 properties mentioned by Richard, or whatever else your goal is, is to make sure that you have an optomised loan and payment structure. If the loans you have are not set up well, or do not have features that allow you to minimise tax then that would be a good reason to look at refinancing.
Regards
AlistairThis strategy is definately one that should be considered by anyone who is self employed. However, it must be implemented properly, there have been some recent private tax rulings which have disallowed certain tax minimisation strategies, so it is important to seek proper advice from a competent tax accountant, but for the most part the strategy mentioned should work well. It is already widely utilised and there are few strategies that can turn non deductable debt deductable with anywhere near the speed that this strategy can.
Regards
Alistairbb8 wrote:A financial planner recently briefly mentioned that I could convert non-deductible debt of a PPOR to deductible. I hope I heard this correctly but since then I can't work out how this is possible.
Basically my understanding from them was:
1. If I own a PPOR the interest on the loan is non deductible. I will be paying the loan using my self employed income (operating through a PSI trust).
2. However by having a "business line of credit", which would pay my PSI trust expenses (deductible), the business LOC can pay the interest on the PPOR loan which then make this interest payment tax deductible.
Thanks for your comments!
bb8
Hi BB8,
You should take advice from a tax accountant on this, as should anyone implementing such startegies. But, generally, you can lend a business money through a LOC to pay business expenses and interest on the LOC will be tax deductable, if this allows you to increase dividends, wages etc. then this increased income can be used to pay down the non deductable debt more quickly.
Regards
Alistairksun1985 wrote:Interesting. What would you be expecting to pay for this sort of development. This architect came recommended to me. She has lots of experience with townhouse developments and has been very informative with my questions and design so far.Not saying she's no good as I don't know her. If she is good she should be charging more as this is well under market. One of my businesses is consultant town planning, and we charge $4K. We don't design, but this usually costs considerably more than what we charge.
ksun1985 wrote:Fees to design 2 x double storey dwellings are $5700. These are fees ONLY for planning permit stage which include planning meetings with Council if required. Additional fees during this stage include planning report ($800), council fees & advertising and landscaping ($600-$700). Just want to see if this is about standard.That's so cheap I would have serious concerns about the standard of the service they are offering. If they bare good, then its a great price, but I find it hard to see how anyone who was any good would price so inexpensively.
Terryw wrote:APerry wrote:Aqeel wrote:I am qualified engineer and has got a new job in mines ($ is twice as what I was earning last year).I do own my first house which I brought in 2009.
If I want to buy as many investment properties by myself (quick) and safe. What structure would be best? Bcos from Steve's book I see that 'family trust' has…
1. Asset protection
2. Tax minimisation
3. Borrowing capacityMy question is, can one person open 'family trust'? Or how is it created? Like what are the steps?
Cheers and thanks for your help!
AqeelIf you are the only potential beneficiary I can't see how a tust would have any tax benefis to you. With this structure you would need to set it up with a coporate trustee, as you can't have a family trust with the one trustee also being the only beneficiary. The use of a corporate trustee would give you a level of asset protection, but increases costs and reduces your lending options when it comes to residential finance.
Regards
AlistairI have to disagree with Alistair.
Even a single person can obtain tax benefits of using a discretionary trust – 2 ways at least:
– By setting up a company as beneficiary and capping the tax at 30% (this can usually be done later).
– By having future family members come into existence and become beneficiaries – spouses, children, mistresses (in that order).And although you cannot have a trust with the beneficiary the same as the trustee (you can't hold assets on trust for yourself) you can have a trust with yourself as trustee and a whole range of family beneficiaries – eg future spouses, children, grandchildren, step children etc.
There has to be net income to distribute before it can be used. As this is unlikely at first and there seem to be no current beneficiaries it is pretty debatable whether a structure is warrented or not. I wouldn't bother, I'd ratgher use the short term tax benefits and savings on expenses, but can also see why some people would choose to use a trust in this situation.
Aqeel wrote:I am qualified engineer and has got a new job in mines ($ is twice as what I was earning last year).I do own my first house which I brought in 2009.
If I want to buy as many investment properties by myself (quick) and safe. What structure would be best? Bcos from Steve's book I see that 'family trust' has…
1. Asset protection
2. Tax minimisation
3. Borrowing capacityMy question is, can one person open 'family trust'? Or how is it created? Like what are the steps?
Cheers and thanks for your help!
AqeelIf you are the only potential beneficiary I can't see how a tust would have any tax benefis to you. With this structure you would need to set it up with a coporate trustee, as you can't have a family trust with the one trustee also being the only beneficiary. The use of a corporate trustee would give you a level of asset protection, but increases costs and reduces your lending options when it comes to residential finance.
The one area where I disagree with the above comments is in the area of servicing. It is true you will not get any assistance with servicing in the short term. But there is potential to have lenders assess only net profit from a trust in future, rather than puting the individual properties and debts into their calculator. It used to be pretty easy to get some lenders to do this and it had a marked affect on borrowing capacity, it is much more difficult at the moment although we have been able to get lenders to assess this way a few timnes recently. Regardless you would need at least 2 tax returns showing profits from the entity.
Regards
AlistairGiven the First Home Owners Grant, and stamp duty exemption in some states, I don't think there is any question that you would be best off buying a PPOR to start with, even if it bacame an IP once you've fulfilled the requirements of the FHOG scheme. Your problem at the moment is your equity position, I would be more concerned with fiing this than the cashflow you can receive from any property.
Regards
AlistairHi Husky,
It is the same person. Neil Jenman has something against Nigels former employer as he does against pretty much anyone involved in the real estate industry. You should probably do a google search on Neil and see what people have to say about him. I have known Nigel for some time, and have a number of clients who have used his service. I have never had anyone complain or express views in line with that article.
Regards
AlistairHi Cathy,
Using a percentage of income for interest is not going to get you an accurate picture of borrowing capacity. Living expenses are calculated independently of income (using a margin over the Henderson Poverty Line, as Richard stated). Because of this you can use a lot higher % of income if you earn more. I suggest you get yourself a broker and get them to send you a sample of a lenders servicing calculator if this really interests you.
Regards
Alistairhusky0108 wrote:interesting speedy, thanks for the information. do you think its worthwhile holding off for about a year or so before getting into the us property market. sounds to me thats there is no rush to get into it yet.anyone care to comment…
Every State is very different, there are some areas that are going to perform terribly but others that will probably do well. The Texas market is apparently pretty strong, so if you wanted to invest there then waiting might not be such a good idea, in other areas waiting forever might be the safest bet. You really need to get an understanding of the specific market you want to invest in before you make a call on when to jump in. As with Richard, i suggest you speak with Nigel Kibel who posts regularly on here.
Regards
AlistairThanks for the kind words Richard. Wendy, the simplest way to explain capitalised interest is that you don't have to make monthly payments, the interest charge is just added to the loan amount. Lenders allow you to do this with commercail construction loans because there is debt clearance at the end of the contruction period through sales.
On the figures given, unless you get a decent uplift in the value of your property once you have a planning permit, you may struggle to meet the equity requirements of most lenders for a commercial contruction loan. It is very possible this will occur, but its hard to comment further without knowing more about the project and borrower.
Regards
Alistair3 units you can do as a commercial development and capitalise interest, so servicing is not such an issue. You can borrow up to 80% of the overall costs, including the land. As you already own the land, if you have sufficient equity to cover your 20% contribution it wouldn't be all that difficult to finance.
Te wrote:Thanks for the replies.When we bought our private residence, a while back now, we used Mortgage Choice, I felt we were steered towards the bank that would give them the best commission, that might not be the case, but as I said before I'm a cynic.
I'll look into some other brokers, ironically I recall brokers came about so we didnt have to shop around different banks, now it seems we have to shop around brokers!
Mortgage Choice pay their brokers a flat commission accross all lenders, so i doubt your broker made a choice based on commission. There are very few brokers who do this anyway, the difference is rarely that large. I strongly suggest you not muck around speaking to 100 brokers, just call Richard he has already helped you and he knows what he's talking about.
propertyboy wrote:Ok so essentially the offset account acts as a reduction to the principle amount. So in effect if that happens there is no difference between a P&I and I loan should you do same monthly principle reductions every month.
I don’t get the purpose of the offset account then. Why can’t they just reduce the principle loan amount?
Does the amount the offset account reduces from the principle charge a different interest rate? If not, why do they even need an offset account, why can’t the bank just reduce the principle balance of the loan?The offset account absolutlely does not reduce the principle amount, if it did there would be no difference between in and redraw. It just reduces your interest expense. The greatest benefit is that it doesn't reduce the principle amount, which means that money drawn from the ofset account is not considered new borrowings, which redrawn money is. This means you are free to use money in an offset account for anything you wish without affecting the tax treatment of the debt it is offsetting.
