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For some great free info on commercial property have a look at http://www.gal.com.au
Regards
Alistair PerryHi Lionheart,
There are several software packages that do this, taking into account your tax rate as well. PIA by Somersoft and POSH are two that I know of.
Regards
Alistair PerryThis is a significant change in there advertised policy. However, in actuality they have been able to do this for a number of years. I purchased my current PPOR on 85% LVR three years ago and paid no LMI.
Westpac will also likely be making some other major policy changes in coming weeks.
Regards
Alistair PerryHi Gerrit,
The First Home Owners Grant (and reduction in stamp duty in some states) is a compelling reason to purchase yourself a house first, even if you only live in it just long enough to qualify and then turn it into an IP.
Apart from this, it probably makes more financial sense to purchase IP’s and rent. Although purchasing a PPOR has less inherent risk and also has lifestyle benefits.
Regards
Alistair PerryHi Karen,
Most lenders will not finance properties if they know it is for a wrap. Your first moves should be to get yourself a wrap savy solicitor and a lender who can assist you.
Regards
Alistair PerryIf a house with a DHA lease is being sold by another investor, it would make sense that you should be able to pick it up for under its intrinsic value, because owner occupiers are out of the market. I haven’t tried this, but if you were to purchase one with say 3 years left on the lease it should be possible to purchase it under value and then sell at market value once the lease expires. I’d be interested to hear if anyone has tried this tactic.
Regards
Alistair PerryHi Brizza,
They will value the titles seperately and will do residential contruction loans on each, no problem.
Regards
Alistair PerryHi Ozi,
If you are planning on developing in the future, I would suggest that you go through the planning stage as soon as possible as it is going to take anywhere from 6-12 months to get a permit. Once you have the permit it lasts for 2 years and can be extended for another year.
It is good that you will be in a position where you can choose to sit on the land for a while. Most of the people who lose money from developing do so because they can’t handle the holding costs.
One thing you should be aware of too is that it is quite difficult, in the current climate, to find small developments that are offering a good return if you plan to sell as the end of the project, I would suggest not developing unless you are able to hold the end product. This doesn’t mean definately don’t sell, just don’t put yourself in the position where you have to.
Regards
Alistair PerryHi Brizza,
This is the process in Victoria, I expect it is fairly similer elsewhere. First need a town planning permit (DA). Once you have the DA you can start building, usually you get the subdivision done once you start buoilding, a surveyor does this. The cost of a DA and surveyor would probably come in at around $10,000 for 2 units.
As part of the town planning process all of the authorities you mentioned will be contacted if required.
Regards
Alistair PerryHi Jason,
A couple of things to take into account when investing in commercial property is that the leverage available isn’t as high and the interest rates on loans are higher. Vacancy risk is also higher.
My personal view on what you have said about the opportunity you are looking at, given the info availoable, is that you will be using up a lot of equity for a pretty small cash flow return.
Regards
Alistair PerryIf you think you might swap the PPOR into an IP, the sooner you swap the loan to IO the better. The reason being, if you have a mortgage on your new PPOR, the interest after tax is going to cost you a lot more that the interest on the IP, the difference depending on your tax rate. If the money is in an offset you can use it for whatever you like, eg to reduce the loan required for the new PPOR.
I have no problem with fixed rates, but don’t fix the rate until you have decided for sure what you want to do in terms of your loan structure.
Regards
Alistair PerryTerry,
The product specifications say they will only go to $500K, but there is always flexibility in this, particularly for a strong borrower. I do agree that a 95% would be better.
Regards
Alistair PerrySorry for the delay Marco, but hear goes.
10 year growth in Median prices:
Brunswick
Houses 11.0%, Unit/Apartments 12.2%Coburg
Houses 11.5%, Unit/Apartments 12.5%I agree with Michael re his preference for Brunswick, depite the slightly lower historical growth rate.
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Alistair PerryHi Gilltraps,
Surveyers process subdivisions, you should find yourself a good surveyor as your first point of call. If you’re in Vic I can give you some names.
Regards
Alistair PerryHi Pelzer,
You don’t need a 20% deposit, you can get quite good rates for a 100% loan, which would be far preferable to a wrap. If you really want to purchase through a wrap contract though give me an email address or other contact and i will pass it on to someone who can assist you.
Regards
Alistair PerryHi,
All the strategies you mentioned are sound. A smaller IP will likely give you better cashflow now, but buying the larger house now and moving in later may save you more money over the 6-8 years, assuming prices appreciate over this time.
One thing you should most certainly do though is to make sure the loan on your current property is interest only if there is any chance you will use it as an investment property in the future. You can use a 100% offset account to reduce the interest payments just as effectively as paying down the loan, but this will allow you to position your equity most tax effectively in the future.
Regards
Alistair PerryHi Rexilla,
The rental income seems high if it is for 6 months. For the second scenario have you taken into account possible tax deductions?
Regards
Alistair PerryHi Marco,
I’ll post the average growth in median price over 10 years for you tomorrow. I have the info just no with me. I suspect that they have outperformed the average and expect they will continue to do so.
Regards
Alistair PerryHi Jack,
You have more flexibility with a 100% offset account than a LOC, you can organise for it to be interest only and then put all your money in it, not just rent. The debt stays the same, but the interest charges will be reduced. If you are paying interest only then there is no need to redraw anything, you just use the money building up in your offset account. With the LOC, you can not redraw money for personal use without creating problems.
Regards
Alistair Perry
