NAB for 20 basis points, effective next Wednesday (13th May)

http://www.skynews.com.au/business/business/market/2015/05/06/nab-fails-to-pass-on-full-rba-rate-cut.html

The summary of the deal is : hand over $300k or a property with $300k equity in it to you, for just 5-8% return on the $300k. I can’t understand why you think that is a fair rate of return that will attract a “smart investor”.

Incorrect. I made no mention of bank involvement. Investors will sometimes do the loan by themselves. As I said, on loan where the investor is lending against a security asset (ie property) you would expect to pay a bare minimum of 1% per month, payable to the investor. This has nothing to do with a bank.

You may think it sounds steep but it is important to compare apples with apples. There is no point comparing against bank rates if banks have declined to be involved.

Matt wrote:

Regarding your view on the large complex, if the flat is renovated with a newer kitchen etc, would this be more advantageous in your opinion if you were searching for a tenant?

Not necessarily. In a complex of 60, you won’t be the only one with a newer kitchen. Also sometimes tenants prefer a lower priced rent even if it means a brown kitchen. In this regard some times it is harder to rent out shiny new things.

Matt wrote:

When it comes to looking for a suburb to look in, so there an industry technique or standard that good investors tend to use to find it, then once they’ve found it, what’s best? A Unit or a house?

It depends on your local tenant market and what it wants.

Matt wrote:

If I move into the property for 12 months as a first home buyer, will this remove the fee’s you mentioned before? (I’m trying to understand the tax implications that might have at this stage also.

You can never get out of paying solicitors and building and pest guys. As to whether stamp duty would be payable or would be discounted to you would depend on the legislation (at time of purchase) in the state in which the property is located.

As a general rule, I find that properties with the least management hassle are the properties with the least facilities provided. eg If there is no dishwasher, then the dishwasher can’t break. So no complaints requiring you to pay for repair of the dishwasher, or do dishwasher servicing. Same applies to internet. The likes of Telstra is painful enough without you having to sit on hold forever to them every time your tenant wants to complain about something.

Terry is right… you DO NOT want to be the accountholder if someone infringes on copyright laws (eg downloads a film that falls under copyright).

Victorian land tax rates are here;
http://www.sro.vic.gov.au/sro/sronav.nsf/childdocs/-34FAD0EFBAFF8BE0CA2575A100442101-C580F3A333F4AD44CA2575D10080AD1C?open

As has been mentioned, a SMSF gets its on land tax-free threshold so this might be an avenue worth looking at if you intend to acquire additional properties.

Hi Jason

It depends on plenty of things.

If the interest you will pay on your “bad debt” is equal to the stamp duty and buying costs you spent on buying your IP (plus the capital gains tax to pay on offloading it), then there is probably very little point in selling it. Have you taken a look at figures like that?

Wishing you the best of luck :)

Hi IronLady,

If the SMSF were the lender then there would surely be no need for a bank in the transaction, so I would imagine that the selling agent wrote “lender” rather than “borrower” in his update to you.

That is unless they are indeed planning to loan “some or all of the purchase price” from the SMSF to an SMSF member or member’s family trust. If they were loaning “some” of the money and approaching the bank for the rest then I suppose the selling agent’s comments make some degree of sense, however the SMSF is not allowed to loan its money to related parties and the ATO would be very very unhappy about this. In theory the ATO wouldn’t find out about it till audit time at end of financial year so depending on contract timing it would be their problem not yours, but either way it’s not a good situation. Their accountant should know better than to encourage this behaviour so it would be surprising if this was the path they were intending to tread down.

It could be that they are still establishing the fund (which can be a slow process or a swift process depending on how busy things are at the ATO and ASIC). Have they provided a purchasing entity name to the selling agent or your solicitor as yet ?