Forum Replies Created
I must say I’m not really impressed with this new “Property Trust”. And to me it seems like there is more marketing than actual structuring. For example there is zero info about it (apart from some people telling us how good it is), but there seems to of been a big focus on tradmarking the name “Property Investment Trust” (which costs a grand total of $450 if your not using a lawyer, etc).
Im not saying that this new “Property Investment Trust” is good or bad, but of the little bits that get out (for example not having a company as head of a trust) and zero info. provided (even a vague general idea would be better than nothing) I would NOT throw caution to the wind and ‘try out’ this ‘new’ type of trust, even with glowing words- “Property Investors Trust” is the prefect Trust and the only Trust to be used for properties”.
My guess is similar to that of CATA/carl_vic but I liked to think there is something more funky – perhaps having two types of units… (though I think carl_vic hit the nail on the head).
FFComm
wow thx for yor advice….
Lucky your here to save me from the seminar[evil4]…
(which for a 4 day event and the people speaking (a flipper with over 180 property flips; a wrapper with 130+ prop.; a developer who has built 1,500 homes, and of course a individual who own 30+ propertys in US, and a whole bunch in NZ/Aust (+CF buy and holds)), and a individual who does commercial developments)) somehow I think I will be okay [wink2]).To those 4 who read here [wink2] [tongue] see u there.
As a side note I don’t invest in good ares. Mainly as +CF buy and hold person with a focus on commercial now (LVRs are still a pain in the but) I like the bad areas… well in areas I wouldn’t like to live…[toff]. Bad areas have less people wanting to invest there, so competition is much reduced, less competiton = great buys (how about a 4plex for $92K – $80p/w for each plex – pure gold[
]).FFComm
(Editied for the toff hat).
Theres a big event happening on the GC – http://www.ascendbeyond.com/2005mindshare-aus.htm
I’ll be going up for it.
Rgds.
FFCommThanks Qlds007,
sorry I don’t really do wraps (so just went of old forum posts – list has been updated), just someone wanted to see if moneymatters were the only insurance provider. I think I will look more into CGU but from memory people were having certain problems with them (CGU and their view of what an ‘incident’ was, which means if someone kicks multiple holes in your wall, you might have to pay excess for every hole).
I’ll keep reasearching….
I’ve herd that stars are over rated, but in this hot star market everyone seems to want one…
At least I’ve got a few… Might be time to sell?…
Regards,
FFCommI often hear how ‘bad’ wrappers are, but to tell you the truth in my opinion there not that bad at all. I’ll tell you why:
1. If people went to a non standard loan program they would be charged a much higher int. rate.
(I know of one case where a guy was paying 11% from GE and refinanced with a wrapper who’s charging him 8.95%!).
2. That is assuming they could qualify for a conventional loan. But most people couldn’t. And not because they shouldn’t get one, but because the banking system here is so conservative.
(For example if you receive a pension from the Gov. alot of banks demand a higher deposit. Now in my humble opinion getting money from the Gov. is more secure than a biz, and unless the banks know something we don’t (i.e. the Gov. is insolvent and bankrupt) you would assume they would consider normal income, but they don’t! Hence pay a higher deposit).
3. Wraps allow people who can’t get the required deposit to buy a property. Banks still require 2yrs. worth of tax returns if you want to get more than an 80% lend. For young people it can be a big struggle to save the required deposit. Wraps alleviate that problem.
(For example I know someone who whos biz was going gang busters and in 13 months accumulated 10% deposit, but could he get finance? No. He has 30 clients in Syd, and he wants to live near his office but can he? No. But with a wrapper he could).
4. Over the last few years most people who have wrapped have been much better off than if they had not of bought. Now I’m not going to say that is simply because of wrappers, but with property increasing in value these people have a real chance to create some equity and be further ahead than they ever dreamed of.
(I have been told by a couple who bought through a wrap, did the property up (a huge amount of sweat equity) and refinanced it in less than 5 months with one of the big 4 banks – the lady told me that her wrappes were the fastest cash outs in Aust!).
5. Most have a default rate of less than 10% (that includes everything – i.e. some people simply diappear (the same lady wrapper told me that she had some tennants who bolted and left her with a house with $50k worth of equity! And they had paid her in advanced. She spent 4 months searching for them but to no avail…).
I have the real default rate (of people who couldn’t afford to pay) is around 2% to 5% of the total properties. To me (and to many international banks) that is a very low default rate (I read Japan has a non-performing loan rate of between 15%-30%).
6. And finally it gives people a chance to own their own home rather than being in the rental cycle for the whole lives. High home ownership rates leads to less crime, higher school retention rates and gives family somewhere permanent to live, which usually leads to better social outcomes.
So wraps in my book are pretty good things. In my opinion legislation could be bought to bear and shut down the real rouges of the industry, while making it better and easier for the huge majority of wrappers that are actually making a positive differance to peoples lives.
Regards,
FFCommRobyn Grinter is a NZ property investor, who has completed over 180 property transactions.
She has done almost every type of property investment play there is – flips (her speciality), wraps, L/Os, buy and holds, commercial, really everything…
As a side note, she is coming out to Australia this yr. to be a session leader at the 2005 Global Mindshare:
http://www.ascendbeyond.com/2005mindshare-aus.htmI would suggest to anyone that to meet up with some of the sessions leaders there would accelerate your property investing to the next level! I will be definitely going to this event!
Interesting how she has hooked up to PropertyTalk – good on her for the articles!
FFComm
Usually there is a CGT rate of 30% for companies, with trusts you get a discount of 50%, therefor 15% (I am assuming that you could move the CGT through a company if you wished).
As you have shown it can vary depending on the flow through entity. For example an indivdual with no taxable income: $100K /50% = $50K; $50K after tax = $11K; Which is under 15%.
It really depends on income. But I must say that alot less workers are on the highest marginal tax bracket. Even on $100k per yr. which isn’t chicken feed your really only paying $35k / 35% tax (inc. medicare – that is according to ATO calculator, which assumes no salary packaging, no HECS, allowances/pensions, etc). Say you add $50K to your $100K income, on the $150K you pay basically $60k, which is 40% tax rate.And no. [offtopic] [baaa]
FFComm
The standard structure is a trust with a company controlling the trust (know as the trustee or corporate trustee).
The reason why we have that structure is that it reduces our CGT to 15% (rather than 30% for companies, 15% for trusts & indivduals) and we have a corporation as trustee because we have higher protection from lawsuits.
It would prob. be best to see an accountant.
FFComm
You can always get a personal loan.
FFComm
Perhaps we should put this list some where else on the forums???
FFComm
blogs are basically online diarys. Some are thoughts, some are dicussions and others are really diarys (like what I did today). Anyway here are a few good blogs:
Steve McKnight Blog:
https://www.propertyinvesting.com/newsMatthew Chan Blog:
http://www.matthewchan.comPiB (Property Investing Blog):
http://www.propertyinvesting.blogspot.com/Property Manager (US):
http://greensteward.blogspot.com/Wraps/endor Finance:
http://www.loanalert.com.au/blog/Rgds.
FFCommDANGER WILL ROBINSON! DANGER!
If you were to sign up I would get the contract checked over by the very best with the possible aim of legal action (either as a defendant or to get what the contract says). (Of course I would do that for most contract [blink]).
FFComm
95% LowDoc??!!!! Wow.
I guess it will be postcode restricted?
Also which mortgage insurer will be holding the bag?
Usually sub-letting if banned by the landlord/agent is illegal. However there a few ways around this, for example draft your own lease agreemnt up (you may need to profit share for the landlord to okay the idea).
In the end however it probably would simply be better to purchase a property and the sublet, that way you don’t have to deal with landlords (who dislike subletting for a reason).
Figure out the average cost of a prop. work out how much you can borrow (usually up to 95%). Right now is a good time to negotiate deals because the makret is falling (so vendors are getting a bit desperate).
FFComm
This frum relates mainly to Australia. When doing quick cash techniques usually you have to pay double stamp duty and pay 30% Capital Gains Tax on the difference between the two sale prices.
Of course you can offer Vendor Finance, but this has other issues (such as the quality of tennants, etc).
Also many banks will refuse to allow 2nd mortgages or cavets over property. And there is virtually no note market in Austrlaia.
FFComm
I am with Terry on this one, what are you hoping to achieve?
As aside apartments are harder to sell for a number of reasons:
1. They are exacty the same as other apartments.
2. Prices are dictated by other sales in the building.
3. Oversupply of apartments.
4. The market has fallen dramatically.The boom is over and so if you are desperate to sell you may have to lower your price or change the apartment (i.e. make over time), of course that costs money…
FFComm
To my knowledge their is no database kept of bank foreclosures that is available to the public. I think that the banks would be loathed to be seen helping people comming ou of the wood work and taking advantage of desperate people.
I am sure ACA/TT would do excllent TV programing and Gov. would be forced to act.
Usually though people are really put under presure to sell before the banks has to repossess.
FFComm
I would not invest in PNG. There is too much downside (e.g. economy on the brink, political instability, etc).
If I were to invest I would invest in units for foreign workers. So high rise. Also I would make sure that it was difficult to climb up these apartments (as I’ve herd that they don’t mind climbing up 8 stories to rob a apartment).
Also I would get one higher up (better views and increase in security – hopefully).
FFComm
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