Hi Sparky's, why don't you keep the house but turn it into an IP, intead of selling it. There are a couple of advantages, firstly you can keep the CGT exemption for up to 6 years and you won't have to pay all the various costs associated with selling it and then buying the new IP. You are also obviously happy to live in it, so if things don't go well at least you know you can use it is a PPOR. I think if you analyse your situation properly, this will be by far the best course of action for you.

Regards
Alistair

This is no different to financial advisers, who have to hide behind research reports and dealers product lists when recommending investments. This is not a defence of Carly Crutchfield, as I don't know much about her, but I do know quite a few "Gurus" and speak at some of their seminars on finance. I would say they act with far more freedom than most financial planners and are often more ethical.

There is a great need for education on wealth accumulation, the formal education system has chosen not to fill this void, the financial planning industry does not do it well enough and has too may restrictions placed on it anyway. In this environment there was always going to be people step into the void. It will never be possible to regulate them out, and it wouldn't be a good thing to try. Regulation really just provides a framework within which people can be safely ripped off eg nobody from Storm Financial is in jail.

Whether Carly or others offer good value is open to debte, but there are very few Guru's who teach information that is not of some use.

Banks get their money from basically four sources:

1. Long term Wholesale Funding
2. Short term wholesale funding
3. Deposits
4. Securitisation

Securitisation is gone for all intents and purposes. Deposits are self explanitory. Wholeale funding comes from other financial institutions both domestically and internationally. Prior to the financial crisis the average cost of wholesale funds on LIBOR (in the UK) was something like 0.05%, this jumpred to about 1.5% directly after Lehman Brothers collapsed, and is currently something like 0.6%. The average time period is something like 3 years, so there is money rolling off very low margins into much higher margins every month, the banks are also being asked to fund a higher percentage of their balance sheet with longer term funding so that they are not as subject to short term occurances in future, they have to pay higher margins as the term gets longer. I hope this is reasonably clear.

The website is http://www.resultsmentoring.com/ . Brendan and Simon who run the program are great guys, very knowledgable and the course they run has been exceptionally well designed.

As I have commented on the topic of investment in the US in the past on this forum, I want to make it clear that I am not the "Alistair" that works for myUSA Property. I have no involvement with them, nor do i have any opinions on them. I am however, very sceptical of most of these companies, having seen a lot of people lose a lot of money in Buffalo a few years ago, particulalry as every second person investing in the US seems to be investing in Detroit, which does not seem to be all that disimiler to Buffalo in terms of the fundementals driving property values there.

You should defiantely have a town planner as part of your team, but probably more important when choosing a block is a achitect/draftsperson, as you need someone who can conceptualise what they can get onto a given space. The role of the planner is to work with the designer to get their design through Council/VCAT. In short you need both, but at the acquisition stage probably a designer is more important, as you only need a rudimentry knowledge of town planning to make a decision as to what is possible, turning possibility into reality is sometimes a lot more complex and at that stage you should certainly have a consultant planner working for you.

I'm happy to give you a referral to a town planner if you like, but i caveat the recommendation by disclosing that he is my father and I part own the business. Frank Perry http://www.town-planning.com.au.

Hi, I do some work with Cashflow Capital and know the people there well. They act as both buyers agents and also have some exclusive stock from developers. They are unlikely to tell you where the cash flow properties are unless you are a paying client, and even then I think you will find they will be able to locate superior deals in those areas than you are able to because the local agents do very well from the custom they receive from the company.

I hope this helps, I suggest you call Spiro the owner if you want to know more, he doesn't mind a chat.

Any referal payments have to be declared to the client in writing under the new credit licensing regime. 

Hi KindofNew,

The comments by Banker are true in terms of dealing with Banks. However, depending on the geographic location you may be able to do this outside of the banking sector. There are a number of mortgage funds around the country that specialise in smaller developments such as yours and will provide you with significantly more money and will almost definately have a lower presale requirement than any bank. As an example, if this is in Victoria you would almost definately get 70% of end value (there would be a % of costs limit also, but you would more likely be restricted by the end value figure) with 2 or 3 presales.

With regard to your query about the valuation. For a contruction loan the lender will ask their valuer for a "Project Related Site Valuation", this is worked out by starting with the end value, deducting the expected costs, interest and a development margin. If it is a good project, this will give you a figure that is substantially higher than your purchase price and you should be able to use this uplift as additional equity. On the numbers you have posted there wouldn't be a great increase, but as you have discounted your expected price by 10% there may be something there, do the numbers yourself using approx $100K as interest cap and a 17.5% margin, if your build costs don't include a contingency amount ad 7% to it.

I can tell you categorically that if this development is in Victoria you will be able to get a a very high level of finance . If it is elseewhere it will be harder, particulalry if it is not in a Capital city.

I think I explained myself pretty clearly in my previous post. The fact that you are prepared to make a call on what will happen to prices over a 10 year period show that you have absolutley no idea what you are talking about, professional economists generally can't get 12 month predictions correct, what chance do you have? The fact is that prices are just as likely to rise 20% ove the next two years as they are to fall by that amount.