It also means you can utilise different banks for different loans. Then when you have a new property you need a loan for, you are an existing customer of more than one bank, and sometimes it’s easier to go to them first – you can ‘shop’ your loan, and tell them you are looking for the best deal.

For instance, we had all loans with St George, who wouldn’t come to the party last year for our next lot. We wanted finance at valuation for an off the plan purchase. NAB were going to do it, but then we found out that they would only offer that deal if we were existing clients.[]

We now have a couple of properties with three different banks to give us the flexibility.

Cheers
Mel

Hey Fudge

Depreciation helps your cash flow – but only if you pay tax!!

For example, let’s assume that your property is cost neutral, ie. rent = all interest, rates etc.

BUT, your house was built after 1985 (when CGT was brought in, they also brought in the depreciation on building allowance).

You had a quantity surveyor who said that your building could be depreciated at $2000 per year (2.5% of building cost = $80000 is what he/she said it cost to build). You also have carpets, blinds etc. that in year one can be depreciated at $2000. Total allowance is $4000.

This figure is then deducted from taxable income. Say your income is $50K, and you pay $11K in tax.

Your new taxable income is now $46K ($50K – depreciation), and therefore your new tax is $9800. You get a refund of approx $1200.

this also is how some negative geared properties can be positive cashflow.

Cheers
Mel

Hey Bushranger

Is the company the only beneficiary? I would have thought as a family trust it should have a few people as well – I know mine does!!

Having assets in a trust is a good way to protect your assets. You can also minimise your tax by paying any income to those on a lower bracket – or to your company where the rate will be 30% (I’m assuming Australian trust and company).

Cheers
Mel

Greg

In regards to a Sydney property, I think that you’ll find that you can rent a much much better place for heaps less than the mortgage payments. Even for a rent to own, lease/option deal etc. if it were me, I’d be trying to recoup at least my costs for offering that sort of deal. Do your sums, but you might be better off renting, and using any extra money you would have been paying to pay off other loans, or put towards your next deposit.

My two cents.

Cheers
Mel

Hey Kewl Dude

Thanks for that! Now I don’t feel quite so inadequate![]

Cheers
Mel

Simon, I’m with you on this one.

My understanding is that unless you are in business, any trip to purchase is not deductible, unless you already owned some in that area, and also had a look at them while you were there.

As to when you are ‘in business’ of property owning, would be up to an accountant to help here. I think the argument can be made at any point, but what is acceptable to the ATO probably would require a good argument. In short, I don’t know on this one.

Cheers
Mel

Hey doogs

I thought your idea sounded feasible, but only if you could handle having all that equity tied up, and the CP unencumbered. That’s why I did not comment. I have lots of issues with banks and others credit, as I too have joint ventures, so any new loan involves the bank examining every one of them’s loans etc. Pain in the @#$$

As for the LOC issue, I have never been asked by the bank what I am using the money for when I withdraw it, so I really don’t see what the issue is!!

Cheers
Mel

Hey Fudge

You basically pay it forever, or as long as you owe the money anyway.

Although what the banks tend to do is give you a five year IO term, after which it reverts to P&I, and is a 25 year loan or something like that. If you want to keep it at IO, you just renegotiate with them for another term, or refinance to another bank.

Hope his helps.

cheers
Mel

Hey Fudge

I think it depends on how many properties you own – and the resultant paperwork nightmare etc. But to get around that, I’m hiring an employee to do it for me.

Personally I would buy as many properties as i can as fast as I can. If they all make money weekly, then they look after themselves, and you can also participate in any capital gain across a larger number. If you have 4 properties that each go up by $10K, you have an extra $40K of equity. But if you have 20 that only go up by $5K, you still have $100K to either buy more, or sell a couple to pay down some loans.

My two cents.

Cheers
Mel

Hey muppet, look, I’m a Silver Member too. Yay for me. Who would have thought. I’d like to thank my Mum, my Dad, my oodles of puppies, um, well, everyone for this honour.[][]

Cheers
Mel