Forum Replies Created
My accountant had my ‘family’ trust set up, but he did use a solicitor. I wanted his opinion for the best structure first and was happy to pay him to liase with the solicitor rather than trying to communicate what should be included and making a hash of it.
It will certainly be wise to talk to a professional about this, but my understanding is:
– If you have the property for 12+ month, you only pay CGT on 50% of the profit if you are an individual, partnership or trust. Companies do not get this concession.
– If you have a trust you have a lot of creative ways of splitting your income limiting you to max 30% tax.
– Trusts allow for ultimate asset protetion
– One major disadvantages of trusts are the setup and running costs .
-The other major disadvantage is that you cannot transfer losses to benificaries, you can only claim them against future earning. This could be crucial.
Overall I believe it is the best structure, but I am not sure how the ATO regards this if they deem you to be traders rather than investors.
Good Luck[xmas]Ok, provided the $160,000.00 is for both units, I can see your point.
If I was looking in Mt Isa, my first move would be to ring the agent to confirm. Search brings it up under houses, not units or blocks of units.
I would be very careful with this property. It looks too good to be true, and call me a cynic, it often is.
But I guess your point was what kind of property one should look for.I think it is a matter of creativity.
If you manage to flip a property, you can do it with $0.00 cash in. Or if you can agree on vendor finance, again you can do it with little cash (you may need the closing costs).
On the other end if you want to go the conventional way, you need whatever % (normally 20% without MI [morgage insurance]) of the purchase price the bank requires plus all the closing/improvement costs.
It all depends on your skill and experience levels. Nothing is impossible, but it is important that you always have a fallback position if things do not work out as you hoped.I just set up a trust after talking to my accountant. He gave me a big list of plus and minuses for trusts. Make sure you understand them all before ploughing ahead. Stamp Duty and CGT are certainly involved with existing properties and therefore not practical. The law sees the trust as a separate entity, similar to companies.
I would never do it without some really good advise from a professional that understands your individual circumstances and needs.Interesting thought. Steve is calling it bird dogging. But I do not know how to go about it. If anybody can tell us beginners, that would be great.
f this link works this is the type of deal i would be cosidering.
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103692250&f=0&p=10&t=res&ty=&fmt=&header=&c=40527609&s=qld&snf=rbs&tm=1166960348This is one example and their are plenty more if you are willing to wait..
I am not sure I get your point on this property, so please tell me your thoughts why you posted it Dom.
Cheers
Thanks guys,
good food for thought.
Please explain DEF and X collarised.
Cheers & Merry Xmas[xmas]
I think you may be better off doing the subdivision with a surveyor rather than a builder. Get everything in place and then approach several builders for a quote to build a house. Give them specific to work to (eg 3BR 1BR, 110m2, etc) and ask for a fixed quote. Make sure they do not leave any loopholes for extra digging/foundation costs. This is sometimes hard if they can strike rock, which does not seem the case with you.
It is often easier to go for standard designs shown in display homes. Alternatively you can get a custom made plan that you shop around with, but it will probably be more expensive.
And don’t be afraid to haggle and play one against the other. The more competent you appear, the less b..ls..t you will have to put up with. And being a woman, makes it a lot harder, because most tradesmen do not take them serious. This can be very frustrating. So if you have a male friend who knows a bit about building, it may help your case to go together. But you may get overlooked completely.
Good luck [xmas]I think you can easily do it without council approval. In my experience when you ask if you need approval they always say yes (more money to them), and then you have long arguments why you do not need approval.
It will also add considerably to your costs as you now need all kind of plans and documentation as well as to your time frame (allow at least a couple of month for their paperwork).
All you are doing is install internal walls, that is not structural! But even if you were to cut new window/door ways I would not bother, as long as you/your builder knows what you/he are/is doing. I think if done smartly you may be able to this for less money (remember Steve’s tip: add more in perceived than actual value)
Good luckThere is a lot of hysteria about asbestos these days.
Asbestos is only dangerous if it is airborne. This means only when it is cut, broken or otherwise disturbed. EG it is not dangerous in your rainwater as it affects your lungs, not your stomach.
You should know that there are several types of asbestos. The most common and least dangerous asbestos is bonded asbestos which mainly occurs in roofing and walling materials (deep six corrugated, shingles, and wall cladding) and is fairly easy to recognise. The wall sheets normally have wooden cover strips and are very brittle, while the newer fibrecement sheets have PVC joiners and the breaks reveals layers. These products only have about 10% asbestos contents. While not great, I believe they are more a perceived danger, rather than a huge threat and may allow for some bargaining power.
The really dangerous asbestos is the friable asbestos found in insulations around pipes, etc. If you find that, you want to be really careful. Get in the experts and get rid of it as fast as possible or run away from the deal.
Covering asbestos up with gyprock (inside) or plastering/texture coating (outside) could be cheaper alternatives to deal with the problems.
Because people are so sensitive to asbestos, you want to do make sure you have done your homework and have a clear action plan implemented.[strum][strum][strum]
I am looking into a simelar deal.
However you have to be careful. While the transportables seem cheap, there are a lot of hidden costs, mainly:
– transport; this can be quite substantial, because of road restrictions. In one case the distance from the building site to the property was about 70km, but the transport distance was 510km!!!!!!!!!!!!!!!!!!!!
[grrr][grrr][grrr]
– plumbing; because they have to be transported, no underfloor plumbing has been done and you have to allow this in your costs.
– the perceived value; while I have not totally discounted transportable yet, I am looking more towards on site build as I can sell a brick veneer for a lot better price than a transportable[strum]
Thanks Richard,
let me refine my question a bit more.
We have a PPoR and are starting our investment portfolio. In doing this I am trying to avoid costly traps.
I already talked to my broker about interest loans, LMI’s, lodocs, exit fees, honeymoon rates, fixed rate loans, line of credit.
I guess I am looking for a ckecklist what I things I need to consider discussing with the broker before I sign on the dotted line. How do I avoid eg hidden fees.
I am currently looking for investment properties which need TLC and can be subdivided. As I am using equity from my property, I will be selling part of the portfolio to bring down the LVR and make them cashflow positive. This means that I want to minimise exit fees.
I will create my own list, but there is always the chance that I forget an important question. So I would like to do both.
[thumbsup2]I think it is unfair to hack into somebody that is just trying to understand the basic principle’s involved in property investing.
It would certainly help to understand more about your situation, and I would suggest that you get some expert advise. It would probably be good to set up a family trust that owns all properties.
Check out how much does your mom want to be involved in all this? After all it looks like her money/equity is on the line.[wink2]I suggest that you sell the property and buy 1 outright to live in for your mom. You look for a rental and invest the leftover money into an IP.
This gives you more money to work with, because you can only draw against 80% of your property. And as you do not have a huge emotional attachment to it, you are a lot better off. Read Steve’s book 2 ($1,000,00 in property in one year) where he describes a couple that did a similar thing.
However before you sell make sure to learn what improvements would make you an additional profit.[blink][strum]
Thanks Guys – Much Appreciated
What are the differences between lodoc and nodoc loans? How do they exactly work?
That’s where a good broker comes in. He/she will advise you beforehand of the pros and cons of certain options. And the more you explain him/her of your future plans, the better he/she can tailor the product.
It also helps to have a checklist of questions to ask before choosing/signing a document.[biggrin]I agree with most of the above.
One thing about handing low balling offers to the vendors. You as the agent have a reponsibility to submit all offers. That does not mean that you should not tell your clients what you think about the offer and advise them strongly against signing. Alternatively you can send signals to the buyer indicating that the buyer definetly will not look at any offer below asking price, or that the property has generated quite a bit of interest, so low balling will not be successful. But the experienced buyers will know it that is one of your standard lines or if you are genuine.
One mistake I think a lot of agents do is that they think because I am working for the vendor I cannot build up a good relationship with the buyers/investors. Take them serious as well.
Listen, listen, listen. Ask questions to find out more what they are after. I generally appreciate if the agent makes a pre selection on his/her list and lets me know why he thinks this property may suit my needs.Find out if investors are looking to subdivide, renovate, just sit and hold. If you think what possibilities of value adding a property has, you can also suggest this to potential buyers and get them interested because you give them ideas. If you have the time, a few phone calls to the relevant authorities may give you leverage.
All these ideas above are basically value adding. Compare yourself to a sales person in a hardware shop. If he/she is a tradesperson, has used the products before and is able to give the buyers help in completing their project, he will be successful without having to buy his/her business with super specials. But be careful, you don’t want to tell a tradie how to do his job.
Another area that will improve your leverage is to be in good contact with your property manager and know for each of your property what it would get in rent, what the current vacancy rates are, median rents (current and past). You may want to introduce potential buyers to your property manager. If he/she is good, the investor may come back and let you manage the property, even so you did not have a suitable property to buy. This way your company gets some business out of the investor and a good chance of a later sale.
I would also read diffent books about property investing to understand different philosophies. Steve’s followers are mainly looking to create cashflow positive deals. Other investors concentrate on other strategies. If you know how the buyer thinks, you are better able to help him/her.
If you have the time/inclination, you may even want to do some investing yourself. I would do this outside your normal area. Apart from making some money along the way, it would open your eyes to what investors are looking for.
Good luck
Food for thought:
On each project you both keep a record of time invested (you in looking for the deal, he in renovating), and allocate a nominal hourly rate. You also record what interest you each would have received on the money provided. You deduct all these costs of your net profit and either split it 50/50 or in relation to the money value (labour and interest) that each of you put into the deal.[biggrin]I dont know if you have IKEA anywhere close (eg Brisbane), else try the net. They sell reasonable priced kitchens which are really easy to install if you dont have to stuff around with connecting water/gas/electricity[strum][strum]
