Forum Replies Created
Two 007s in Queensland,
"I must be dreaming'
Thanks Mandy G,
Will send you a message shortly.
Regards
Pete
Thanks Terry,
does this mean i'd have to refinance or would the banks be willing to make the change? especially if the new director was in a better financial positon.
regards
pete
I'm just wondering what happens when a director has given a personal guarantee and who then ceases to be a director.
is the former director able to be removed and the guarantee placed on the new director? i'm sure it can be done but do banks allow this?
I only ask as i'm currently an alternate director so would hope to pass gaurantees onto the director once they return
regards
pete
Thanks Spiro,
I have not gone to one of their evenings yet but hope too.
I'm currently trying to reach their HR so far with little success. will let you chaps know what they say.
cheers
pete
As someone starting out, i also agree the regs aren't tight enough. I'm aware that now is a hard time to start but you have tostart somewhere, i already put it off several months to see what the changes would be, turns out it wasn't worth waiting for.
Will take a look at aussie thanks guys. I'm just wondering what percent range a new starter could expect to earn in commission. From what i've seen it's around 60% with the remaining 40% split betwen the mentor and aggregator.
Is this standard?regards
pete
Thanks Terry and Eddie,
your both a great help.
i am looking into setting up a trust and finding an aussie to be the director of the trustee company until i get my pemanent residents.
as im trying to be creative in order to own 2nd dwellings i was wondering if either of you had any experience in using bare trusts?
i ask this as its my understanding that the legal ownership can be held by someone until the true owner requests it, in my case the legal owner could be a citizen and i could request ownership of it at a later date
cheers
pete
ive just come across them online and would also like to know if anyone has had any dealings with them
regards
pete
thanks terry big help.
i dont suppose you have any experience with dealing with foreign investors?
my partner is an aussie citizen but i am still classed as a temp resident and so am bound by firb criteria.
as you probably already know this means i cannot buy 2nd hand property for investment purposes, it also means i cannot be a sole director of a company so that cuts off using a company as trustee with myself as a director. as i understand it though i can still be the appointer.
there must be foreigners that get around this somehow and suspect it can be done in someway through a trust but im having trouble finding it.
anyone have any ideas?
regards
pete
Firstly great thread, one of the best ive read so far, alot of info here
i recently went to perth to see an accountant for the 1st time in relation to property investing as i wanted to discuss trusts.
my situation (or rather my partners situation)
2 IPs both pos geared and with recent price drops very little CG both of which also held for more than 12months.
PPOR reasonable amount of CGi told the accountant that i wanted to set up a DT and move the properties into it and gave him my reasons to see what he thought.
1) we are buying a new PPOR and will rent out our current, having acquired some CG we should be able to sell it the the trust at 95% lvr and release some of the equity from it for ourselves and still be able to rent it out as almost pos geared with the only real costs being loan fees/legal and stampduty. we then will have some released funds to be able to reinvest.
2) the 2 current IPs have little CG so minimum CGT payable, they also have the benefit of being pos geared if at an lvr of 90-95% so this would make the trust pos geared overall. costs would be stampduty loan/legal fees and a small amount of CGT
the accountant agreed with what i said but said little else unless i asked the right questions, overall i was pleased but i did expect to be given other ideas or go more in depth and will be interested in anyones thoughts here.
as it was a topic earlier i will say the appointment lasted a hour and cost $275
now some questions that still bug me!!!!
a) it will be a company as trustee with partner as director, it is my understanding that directors are often gaurentors for the loan so only having one is beneficial. is this true?
b) the trust needs money for deposit and stampduty, ths can be gifted or loaned. terry i think you mentioned earlier that the deposit can be funded from the proceeds of the sale. if so how does this work?
c) depreciation – i know this was discussed earlier but im still a little confudled.
say the properties are pos geared before depreciation. the profit will be distributed to the beneficiaries and the on paper depriciation wll be held in the trust until it can be offset by a`loss. is my understanding correct?d) as the trustee owns the assets in this case the company, is it only the director that can sign docs and sign agreements or can an employee or a nominee do this? i ask this as my partner who will be the director will be away for a while so it would be easier for myself to have authority for a short period to do things.
thanks for all the help
regards
pete
hi guys , can someone please correct me if im wrong!!
my understanding is that a foreign person cannot be a sole director of a company even if they are resident in australia, so to have a company as trustee you need a perm resident or aussie citizen to be a director.
from what i have read from the firb website,
A foreign person relating to company's is
"
- a corporation in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate controlling interest (that is, a total holding of 40 percent or more);
- the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation holds a substantial interest; or
- the trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest. "
with a substantial interest being defined as
"
A substantial foreign interest (ie, a controlling interest) occurs when a single foreigner (and any associates) has 15 per cent or more of the ownership or several foreigners (and any associates) have 40 per cent or more in aggregate of the ownership of any corporation, business or trust."
Does this mean that shares in the trustee company cannot be greater than 15% for a singal foreign person or 40% in total from foreigners otherwise it would be classed as substantial foriegn interest?
Are directors classed as having a controlling interest? if so the same % would apply would it not?
i also note that the firb aplication form for trusts/company's ask for the shareholders and benificeries, does this mean that the benificieries have to be a mix of both foriegn and non foreign?
thanks for the help
regards
pete
thanks again terry,
I thought that may be the case, i am just trying to figure out why lenders wont accept it any more.
Are there ways that you can get a mortgage for say 80% from a traditional lender and pay the 20% deposit then have the lender take out a 2nd mortgage?
I assume this is possible however would like some thoughts on ways to do it
Thanks again
Pete
thanks terry,
can i ask how the differs from the example below?
my understanding is a discretionary trust can be loaned funds from say me (a beneficiery) and these funds can then be used as a deposit to purchase property, i can even sell my own property to the trust which i (the vendor) would have in effect lent the buyer (trust) money to purchase property from me – in my eyes this is the same outcome by a different process.
am i missing someting?
regards
pete
i now understand that banks will usually take the contract price – rebate as the cost of the purchase for lvr.
are the any lenders who will consider lending on the contract price?
im also aware that point 2 on my previous post has no benefit to the costs involved compared with negotiating a lower price to the samevalue as the rebate.
does anyone know of any alternatives to get around this?
cheers
pete
hi guys, i came across this thread and thought id add to it instead of starting a new one as its of a related topic.
Q) as a buyer, is offering the vendor asking price provided they give a rebate instead of negotiating the price down considered fraud?
the situation!
the area im in, prperty prices have flatterned or in some cases slightly dropped. as sales are slow those that need to move are getting desperate for a quick sale so in some instances sell below market value (yes i know market value is what someone is prepared to pay for it, but you know what i mean)some of theses are very close to cash flow pos but raising the 5-10% deposit is the problem to continue buying. so as an example:
property for sale for 300000 seems a fair price but market has slowed and the seller is motivated and the property is cash flow pos at this price.
i offer the 300000 provided i get 5% cashback
i can put down a 10% deposit of purchase price from my own funds
i have no intention of hiding the cash back from the bank and would be eligable for both a 90 and 95% lvr loan
1)if the bank sees the property as 300000 then i could 95% loan and the 5% rebate which was my depsit
2)if the bank sees it at the rebate value than i would put down 10% of the purchase price which would leave me with 95% lvr in te banks eyes on which it is happy to lend?
any thoughts would be most appreciated
regards
pete
thanks for that guys.
Richard can i ask what you are refering to when you mentioned taking cash out the property when refinancing could be an issue to a related party?
plan so far is to transfer the ppor into the trust 1st as this has cgt exception and also has the highest CG.
costs could be a killer but to start with trust/company set up fees, loan break costs, lmi, stampduty (approx 11000) app fees, legal fees.
the other 2 properties have little CG and we would have held them long enough to qualify for the 50%CGT discount, we may even move into 1 with the highest CG to reduce the cg as we are not expecting any cg in the coming months.
my partner is also looking at doing some travelling next fn year so would be an ideal time to the transfer them into the trust as she would have little income.
your assumption was right also richard in that we will be taking cash out the property when we refinance into the trust at 95%, what issues can this cause?
we will loan money to the trust forstamp duty, costs and deposit. i take it we loan the trust more in order for it to make repayments to the beneficeries as the mortgage should be covered by rent.
im aware that money we loan is our asset and can be taken back if sued but we are not at present in a highrisk situation of being sued although we may be in a few years.
thanks again guys
pete
Thanks again Terryw
when declaring yourself as a gaurentor either because you are a director or beneficiery, does this in a lenders eyes class you as having a loan for that amount yourself when you apply for a loan?
on a related topic, if you rented a property from your trust fully furnished (paying market value) i understand this makes the furniture etc deductable/depreciable with in the trust. do the items have to be there at the start of you renting it or can they be added along the way?
thanks
again
pete
Thanks for that Terryw, that helps me out alot in my understanding. i still have a couple more Qs however
1)you stated that a new trust can easily borrow money in its own right but i am wondering what sort of a lvr we are talking? i have done a good old google search but found that only credit unions loan at a high lvr or major lenders dont state the fact on there websites, do you know of any that are 90% plus?
2)what obligations does a gaurentor ie a beneficiery have when applying for loans in their own names in regards to being a gaurentor for a trusts loan?
thanks for the help
pete
Could someone please verify my understanding of discretionary trusts with a compay as trustee?
1) set up a company that will hold no assets of its own
2)set up a trust with the company as trustee and a couple of people as beneficiaries (the company can also be a trustee and therefore have a max 30% tax rate)3)funding hmmm, a)beneficiary gifts money to the trust
b)beneficiary loans money to the trust at the same rate or higher as they borrowed it (am not sure how a beneficiary gets a loan for this or if its only done for a unit trust)
c)company takes out the loan and has the director as gaurentor with their income verified.
d)trust loans the money in its own right having provided previous tax returnsis there anyway a trust can loan the money in its own right without financial history? i.e low lvr or pos geared
What effect does be being gaurentor have on the director lending money themself?
what effect is there on a director for financing property in there own names?
thankyou for your help
regards
lordoftheundeadpete
sorry Richard i didn't put it in a very clear way. but you hit the nail on the head!
i wasn't sure if lenders would see it as as an accetable/safe form of income for my partner for further lending purposes.
thanks again for your help!!!
Pete
