Yep, trusts are probably the way to go, although you won’t be able to get the 12 month CGT concession if you do so.

If you just buy property using a company, it’s also going to be difficult getting your capital out – there’s a bit of red tape you’ve got to go through.

At the end of the day, you need to work out what actually works best for your particular situation.

Cheers
Elysium-M

Interesting how they mentioned Warren Borsje. I went to his $30 conference a few years ago. The first flashy property investing seminar I’d ever been to. I was so impressed I signed up for the expensive weekend conference, paying by instalments. I couldn’t go to the conference because of work, and called them up to cancel. They said sure, we’ll even refund your deposit and your first instalment which you’ve already paid (around $800).

To cut a long story short, a few months, several letters, many telephone calls and unreturned messages later, still no refund. Got a big law firm to send them a strong letter, and I got my money back in a week!

Others might have had a different experience with him, but after all that pain, I’m glad I didn’t go to the conference.

Cheers
Elysium-M

Yeah – it happens to me from time to time too, and I’ve got broadband. I think there’s some technical reason for it, although I’m no technophile and can’t for the life of me figure out why.

Hi gen,

I might be a bit slow, but I’m a bit confused. You say that you have “recently purchased” the property. Then you say you haven’t signed the contract.

Which is it? I think this makes a big difference in what you can actually do.

I agree with kay henry – does the price already reflect the restumping problem? How does the price compare to the asking price for similar houses in that suburb?

If the seller has already taken the problem into account when setting the price, they’re unlikely to budge much. Then again, there’s no harm in trying to bring down the price more, since the property will be harder to sell.

I personally would not buy the property if the price has only been reduced by the cost of the restumping. Why take the risk when you can buy a property without the problem for exactly the same amount it’s going to cost you at the end of the day? There should be a further reduction to take into account the risk and extra hassles that you’re taking on.

Cheers
Elysium-M

Hi guys,

The only catch is that the property, since it’s an asset of the super fund, cannot be mortgaged. That would be illegal.

You’ll need to set up a unit trust to buy the property. The super fund buys units to the value of the deposit. You borrow the rest from the bank and use that to buy units as well, so that the trust has sufficient money to buy the property.

Because you can’t put up the property as collateral to secure the loan from the bank, the bank will want some other security – ie another property.

This is what I know. Let me know if you have a better way of doing it.

Cheers
Elysium-M

I thought that the point of Steve’s story was that he did buy the property for fair market price, and it was Steve’s pre-settlement renovations that increased the value. As such, I didn’t get the impression that the agent was incompetent, just shamelessly unreasonable. An extra bedroom and renovations do make a big difference in the price, you know. Other forumites have told stories of much bigger profits than $25,000 from buying, renovating and selling. And without having added an extra bedroom at that!

What would I have done? Just said: “Thanks for your proposal, but no thanks, and goodbye.” Then hang up.

Then again, if he was clued-on, he could have got a better deal for his client by asking Steve to pay rent for the early possession period. Of course, given that the rent idea, whilst clever, isn’t going to get him an extra commission, maybe he did think of it and didn’t bother.

Cheers
Elysium-M

Hi richmond,

If I understand what you’re saying, your wife initially declared to the ATO that the property was essentially an investment property (ie by claiming the interest payments as a tax deduction). But now you’re saying it’s actually her PPOR, and you’re offering to pay back the tax refunds relating to those deductions.

I’m no tax expert, but better check with your accountant whether you’re likely to cop any penalties (eg interest) on the interest payments which your wife claimed as a tax deduction. My impression of the ATO is that they take a hard line on these things, even if you’re just trying to do the right thing.

Then again, there may be a ruling or law that allows you to get the best of both worlds (although that’s inconsistent with what I know of our tax system!)

Cheers
Elysium-M

Is it near a university? Rent each room out to a student. $100 per week per room (assuming you’ve got 4 bedrooms, as most new houses seem to nowadays), you’re now pulling in $400 per week, which should put you in positive cash flow territory.

More tenants means more hassles, and common areas become an issue you need to keep an eye on, but think about it and see if it works! If no uni nearby, see if you can adapt the idea.

Cheers
Elysium-M

Hi Matt,

When I was much younger, I wish I had my head screwed on right, and someone told me about investing in property. Not just “you should buy property”, but how I should be investing. Unfortunately, there were no books like Steve’s back then, and I watched Wall Street once too often.

I just want to suggest the following:

• Don’t be in a rush to buy. If you see an absolute beaut of a property, but can’t get it for the price you’re comfortable with, walk away. There’ll be another pearler in a week or two.
• Contrary to Michael Douglas’s opinion, greed is NOT good. Greed leads to rash decisions, which lead to fear and loathing, which leads to you losing a lot of money, and owing a lot more. Be honest with yourself. If you’re getting some runs on the board, and self-confidence is turning into greed and overconfidence, pull yourself up and take a reality check.
• Don’t believe everything that people tell you (including me), even people who claim to be experts, people you’re paying for advice and people that everyone tells you that you should listen to. Do your own research, critically check and challenge what you’re told, and make sure you’re comfortable with it before you go ahead and commit yourself. Is it legal? Will it actually work out for someone in your circumstances? What’s the catch?

Above all, good luck and happy investing!

Cheers
Elysium-M

Hey Risky,

I don’t know what State you’re buying in, so can only give you one piece of advice: Check the fine print in your contract.

Of course, if you bought sight unseen, and the property was already in that condition when you made your offer, you might not be in a good position.

Cheers
Elysium-M