Forum Replies Created
Hi Lil,
As long as you move in in the first 12 months you should be able to get the FHOG and stamp dute exemption. With regard to CGT, check with an accountant, but I believe that as long as you don’t claim interest on tax you will be able to get a full exemption. At worst you would only be liable to CGT on a portion of the capital gain when you sold. If you have a good acountant you will have no problems.
Regards
Alistair perryHi Benderfile,
Another option would be to sell the IP’s into a trust, if you operate your businesses through a trust already, this might be a tax effective structure for you.
Regards
Alistair PerryHave you had a look in the Bayside suburbs. You won’t get a house for $300K, but you could get a townhouse or large unit, somewhere between Cheltenham and Mordialloc, if you are prepared to buy something that needs improvement. Its actually quite quick to get to the city from there too, because there are express trains from Cheltenham.
Regards
Alistair PerryHi hb,
I never said that people can’t start businesses and be successful, such as the people you listed. Hell, I am a small business operator myself. This does not change the fact that the majority of people are employees.
I think you will find that the excessive use of credit is mostly to do with consumer credit. How many small business owners go under by the way? A very large percentage fail in there first year, is this a good reason not to start your own business?
I’ve got no idea of Mitchy’s income, so how could I tell how much she would have left over. If she thinks she can afford credit and a lender is willing to provide it then why should she not invest.
Regards
Alistair PerryHi hb,
Your post is very interesting and certainly shows there is more than one way to build wealth. However, most people do not operate their own businesses, and if they do few are as successful as you obviously have been. For the majority using their cashflows to invest is a sensible way of building wealth. Paying cash as you did for IP’s is simply not a viable option.
I can’t see the problem with high levereage if the person/people have the cashflow to service the debt. Of course there is risk, but I think the risk of doing nothing is greater.
Thankyou again for your post, I think it was a very informative and certainly provides a different view point to the norm on the forum.
Regards
Alistair PerryHi Doncossack,
Good luck with Russia. I have a friend whose parents were kidnapped and ransomed by the Russian mafia (they got out unharmed) and another who used to export food there and owned a few supermarkets. He no longer deals there, has lost all of his investment and has been promised a grewsome death if he ever steps foot back in the country.
I also have a cousin who was the major shareholder in a gold mining coimpany over there. It went broke because the governemnt wouldn’t let him take the gold outside the country.
These may not be the general experience of people dealing in Russia, but they are the only three people I know who have done business over there and none of them have done well.
Regards
Alistair PerryHi Marisakim,
As Richard stated, being self employed does not mean you cannot get a loan. Even though you have been in business for less than a year it may be possible to get a high leverage full doc loan.
Regards
Alistair PerryHi Tony,
If all you are after is sample advertisements, have a look in the trading post there are always lots of wrappers adveretising in there.
Regards
Alistair PerryHi stuck-at-two,
From what you have said it seems that the two properties were cross-collaterised and the bank has now told you that you can uncross them. This is good as it means you have additional equity, and if you sell the IP you won’t have to pay down the loan on the PPOR, although if there is one this would be the best use for it. If you sell you could be liable for Capital Gains Tax, so be sure to factor that into any decision.
Regards
Alistair PerryHi,
Your strategy sounds very sound, except that if youn are planning on turning the property into an investment property you should no pay down the loan. Using an interest only loan with a 100% offset account will do the same thing in terms of your interest charges, but will give you added flexibility and will also save you money when you come to purchase another PPOR in the future.
Regards
Alistair PerryHi JG,
There are a number of problems with these sorts of properties. Principly, they are very difficult to finance, lenders do not like them. So you will find you either have to put in a large amount as a deposit or pay very high rate. In most cases, when this is taken into account, they are not attractive. You can get better terms on a commercial property if you are after cashflow.
Regards
Alistair PerryHi Judw,
What is the value of the security properties and are they unencumbered?
Regards
AlistairHiu Simmo,
I have to agree with Michael. I am prety certain you will do well in that area over the medium and long term, maybe even short term as well. My company is involved in a number of very large projects that way at the moment, and i’m sure there are others spending money down there.
Using Metropole would also be a very good idea, especially if you are going to be interstate. I have seen many want to be developers do very badly because of inexperience, using a service such as Michaels would substantially reduce your risks.
Regards
Alistair PerryHi Sweet,
There are a number of groups from this forum that get together, in different states. The Sydney one seems pretty organised and group of us have had a few meetings in Melbourne where we have had a range of speakers, at no cost.
Regards
Alistair PerryHi MGS,
Servicability is not worked out as a percentage of wages. Lenders take your income then add a percentage of rental income, maybe overtime and some other income (percentages and what income is counted differs between lenders). They then minus debt repayments, usually worked out at a higher interest rate than you are paying (but not always). This includes investment and other debt, some take negative gearing into account.
They also minus living expenses which is generally worked out using the Henderson Poverty Line, plus a margin, which takes into account the number of people in your household. The number of dependents counted in this also may differ between lender. Some lenders place another buffer on this, some don’t.
The rule of thumb therefore is that different lenders will often lend you vastly different amounts, which is one very good reason to use a mortgage broker.
Regards
Alistair PerryIf WA is anything like Vic you need to budget for 12 months. You may get it through in 6 months, but it is best to use a worst case scenario for due diligence.
Regards
Alistair PerryHi Darren,
I think you would find this easier to get your mind around the situation if you only seperate your debts into Home Loan debt and Investment debt, whether you investment debt is one or more loans doesn’t really matter in terms of the cost.
The home loan debts will cost you considerably more than the investment debt, because it is not tax deductable. When you purchase the IP, your total debt will be the same whether you borrow all of the costs or put some cash into it, as cash you put into the IP is cash that you can’t put into the non-deductable home loan. If you undertand this you will understand why it makes no sense to put any cash into the IP.
Regards
AlistairHi Martin,
The rastes are higher but you can still get around 7%, which isn’t too bad. I haven’t brokered one for a while, so i would have to go and look up the exact rate. If you can save a 5% deposit you can access the vast majority of loans (you can also capitalise mortgage insurance with the majority so effectivelu lend 97%). If possible this is the best way to go, but 100% is ok. I’m quite happy to email you some info on these products if you like.
As Richard stated you can lend up to 106%, although the rates for these loans are quite a bit higher.
Regards
AlistairHi Martin,
I think the area you are looking at is great. My company is doing work for a number of large developers who are investing very large amounts of money in the area. My brother also bought an IP in Somerville last week.
With regard to finance, if you can afford the stamp duty and other expenses then there are 100% loans available that offer very good rates.
Regards
Alistair PerryHi Herks,
I also have quite a lot of experience in this type of deal. Basically, if the local council has designated the area as suitable for rezoning in its strategic plan, then you can start the process and there would be a lot of people interested in joint venturing with you or buying you out. If it is not, then you need to get are looking at a pretty long term project.
Regards
Alistair Perry
