Forum Replies Created
- lamp1111 wrote:
I just got my current bank HSBC approved to lend me 25% of the proposed value of the potential IP today. I am thinking that the 5% (in case) may be used for renovation and other settlement costs. Westpac is happy to lend me the 80% as well J
5% for purchasing costs is ok, but you will not have much money left over if you want to do a renovation as well.
Cheers,
LukeAutralia is on its best terms of trade of all time at the moment- our economy is booming and is fueled by the hunger for our resources from China. I think Iron Ore is a boom industry- there are billions of dollars worth of projects going ahead in the north west of WA which will only add to wage and inflation pressure Autralia wide- good news for the property market IMO.
Luke
Rental guarantees should be avoided. If it is a good investment, you wont need a rental guarantee to achieve a good rent. If you are getting a rental guarantee, then the developer is taking on risk and so he will increase the price of the apartment to cover the cost of the risk of the rental guarantee. Nothing comes for free.
Luke
Jamie or another broker would be able to offer some good advice on this one.
I think you are better off paying the money into your loan in this case and then redrawing via a LOC or a split on your loan. This will maximise the tax deductability of the new borrowings. Of course you dont invest for tax reasons, but if you are going to invest then you may as well maximise the taxation benefits.
But definitely talk to a mortgage broker or an accountant before doing anything. Perhaps give Jamie a ring for a chat!!
Cheers,
LukeHmmmm, I have heard stories like this before. It is very important to do your due diligance before purchasing properties off the plan- developers such as these people have given the industry a bad reputation. I suppose you can just count this as a leson learned (an expensive one at that)!
I think the most important thing in property investing is making sure you are not paying too much. If you pay over market value, you are always going to lose no matter what or where you buy.
Cheers,
LukeRe Trusts- A discretionary trust in your situation could be a good way forward. You have a high salary and your future wife is studying and likely to not be earning as much as you so being able to distribute future income to the lower earner is a massive advantage.
Another way forward is using a unit trust. You will still be able to negatively gear through a unit trust (as opposed to a discretionary trust which you will not be able to do), and unit and discretionary trusts have the advantage of being able to refinance to pay down non deductible debt. You can not do this if you buy in your own name.
I will not buy another property in my own name (apart from a PPOR possibly) now I understand the power of trusts a little more.
Cheers,
LukeI think that making money via renovations is pretty tough. If you are looking to buy, renovate and sell, then you would probably be doing this within a 6 month period. You would be up for purchasing costs, closing costs, capital gains tax (no 50% discount) plus all of your renovation and holding costs so you would need to increase the value by about 35-40% to make it worthwhile. This is really hard to acheive, and you will need to put in LOTS of work to find the right properties to do this. Probably a better way to go (IMO) is building and developing- whether it be subdividing and building a new dwelling, knocking down a house and building units, or even doing a major reno which might involve adding a second story onto a house or adding a major extension. I think that the more work you do and the harder it is to achieve, then the more likely you are to make a good profit as there wont be heaps of competition from people doing a similar thing. If you go beyond the simple buying and doing a cosmetic reno before selling strategy, then you won't be faced with competition from mum and dad investors who are working on tiny margins.
I hear heaps of people talking about how they would love to do a couple of reno's a year and make an easy $200k with no stress but in reality is not like that. To make big money, then you need to have drive, passion, a vision, a great team, be really good at what you do and also need to work really hard. Nothing comes easy in this world, but if you work hard then you can acheive anything!!!
They are just my thoughts. My goal is to get into developments (maybe 4-6 unit developments) in the next 5 years or so, but first I need to build some equity and get some cash behind me. I am also going to do a few smaller projects to start off with.
I hope you acheive what you want to acheive, I am sure you will if you stick to it and have support from people around you!!
Cheers,
LukeSounds like a good return. Did you buy this through a buyers agent? And is there a tenant signed up or is it being advertised?
I would be interested to hear how you go.
Cheers,
LukeThere are a million threads on this topic on this forum. The consenus- change to interest only ASAP!!!!
Search "Interest Only" on the forums for other threads.
Luke
I have recentrly set up a unit trust. It cost $1100 for the set up, $220 for an initial meeting wit hthe accountant and $510 stamp duty to get the trust deed stamped (NSW- I dont think other states even charge for this).
Luke
You can definitely claim the travel to and from a property you own for maintenance, not sure about travel to inspect a propective purchase.
But you have a contract, on what grounds are they terminating it??
Terry- Is is ok to use a LOC to pay for costs on an IP (such as rates, water, insurance etc)? And do you need a private ruling to be able to claim the interest that accrues on these costs or do you only run into problems if you are using a LOC to capitalise interest on an IP?
Cheers,
LukeI think Derek is on the money. You can still claim the FHOG if you have owned reisdential property, but if you have owned a PPOR in the past you can not. This is because property is just another asset class- the same as shares and bonds etc so it is just designed so someone who has invested in property in the past is not at a disadvantage compared to someone who has invested n shares.
Luke.
DWolfe wrote:Hi all,Well it shows to me that if the traditional buyer group of families or singles are not buying, there are other buyers. The majority at this open were older people. The grey army has arrived, and they have lot's and lot's of super to throw at property. They were not buying for themselves as many of the were having trouble even using the stairs. (not to be rude, just true)
You tell me why prices in some parts of Melbourne haven't even remotely began to stagnate. I'm watching several suburbs in several areas and price brackets and I am not seeing even a hint of a drop. There isn't really even a slow sell as many properties are still selling in a 6 week period.
I'm intrigued. I want to know where the money is, and where it is coming from.
D
Interesting post D- I personally think that the boom of SMSF and the ability to be able to borrow money in a SMSF to buy residential property will keep pushing prices higher.
Luke,
This is tricky- you need to talk to a property savvy accountant about this. Capitalising interest can be done but you would probably want a private ruling to be sure. If you do not get a private ruling and show the ATO that the reason you are capitalising interest on your IP and while paying off your PPOR is not to avoid tax, you may not be able to claim the interest that accrues on your LOC.
Luke
Take a LOC out for 20% of the purchase price of the new IP plus costs secured against your PPOR. Then borrow the rest secured against your new IP. You will purchase the new property using none of your own money and minimise debt on non tax deductable loans.
But speak to a mortgage broker or accountant of course- I am no expert.
Luke.
lbluedento wrote:engelo 10 I ended up missing out on the house. That's what happens when you convince your sister that she should get involved in property investing! She ended up making on offer on the same property as me (neither of us was aware of the other's interest!) and her offer was the successful one, LOL!That is really funny (for me, probably frustrating for you!!!)
I have never heard of that before. Hope you find the right property, and don't tell your sister this time!!!
Luke.
How do they know that the property will grow by 10% per year? Are they God?
Luke.
I think discretionary trusts are better, as many banks do not lend to Hybrid Trusts. Also as Dan has suggested, the ATO is cracking down on Hybrid Trusts. If your properties ar positively geared, then why do you care that losses are trapped in a descretionary trust as you will be making a profit?? Discretionary trusts would be much better in your case as they are much more flexible when it comes to distributing profits.
Also, I think it is better to use a company as a trustee and a seperate company as a 'bucket' company for asset protection purposes, but this would probably be clarified by someone who understands trusts better (such as your acocuntant).
Luke.
