Forum Replies Created
Hi kay
You are right in that IO loans are basically so that we can buy more properties with the same amount of cash.
A P&I loan of $200K & 7% over 30 years = $1330.60 per month, made up of $163.95 Principal, and $1166.67 Interest.
If you took an Interest Only loan, you wouldn’t have to pay the $163.95 extra each month, which could be the difference (servicability wise) between 1 IP and 2 IPs.
This doesn’t actually stop you from paying extra into the loan if that’s what you want to do – it just has taken away the requirement.
At the end of the IO term (usually 5 years) the loan contract states that the loan will rever to P&I, however, you can ask for a further 5 years – or refinance to another lender who will offer you IO.
Cheers
MelTridean, maybe it is that your agent doesn’t get a lot of investors looking?
Perhaps the marketing is not targetting investors? And/or the sale price is as James suggested, too high?
Also I think some people are very wary about the owners wanting to rent back. Why are they selling? etc. etc.
Cheers
MelHi Sam
If you are in ACT, you can claim stamp duty off your taxable income, but nowhere else in Aust. It is claimed as a ‘capital cost’ as James said.
James, I’m not sure how you came up with your 6/60? I get the 60 months being the time lived in, but if it was rented for 6 months prior, then it would be 6/66? Total ownership period.
Cheers
MelHi jcassidy, welcome to the forum
Agree with Derek re the trust – especially if the plan is to buy more than a couple of properties.
Also, with your accountant, you do not have to be in the same area. A lot can be done by phone/fax.
Check out http://www.strategicwealthmanagement.com.au
and http://www.gatherumgoss.comCheers
MelDerek
Check out Trust Magic and Tax Battles by Dale Gatherum Goss. Also visit http://www.somersoft.com.au Forums.
Cheers
MelGet somebody else to go in and negotiate for you – but don’t tell the owners that’s what the go is.
See if they can assign the contract to you (can be done, but generally must be sorted before contract exchange).
Tell the owners you are not willing to pay the price they are asking as it’s not viable for you. Tell them the price you are willing to pay.
Perhaps get your ‘friend’ to offer them a lower price. If you are cashed up and can offer a quick settlement, use that. if not, look for other sweeteners that the ‘friend’ could use for a sale.
Cheers
MelRent to Purchase (price) as a %?
Cheers
MelBrendon, can you please explain how the ATO are going to access your bank application forms to see what you declared your income as?
And how that’s going to make any difference to them at all? Sure, say I tell the bank I earn $100K per year so they will give me the Lo Doc loan, when in fact I only earn $50K but know I can afford to pay it off.
Why’s the ATO going to care? And more to the point, what can they do about it? I thought the whole point was that your income wasn’t easy to prove (self employed etc. etc) which is why you have gone Lo Doc in the first place.
Cheers
Melspi, have you not got any family that would be willing to go into a deal with you? Starting close to home was the best way for me to go.
Cheers
MelHi beerboy, I would probably look at buying that deal.
the insurance and maintenace appear very high at first glance – as do the rates for that value, although I guess they could be realistic.
Basically I would look at perhaps a ‘clean up’ on first purchase, which should also cut the yearly maintenance figure, plus may well increase the rent – a win on two counts.
Maybe you could also strata them and sell one/both of them?
Cheers
MelNo .au on this one. Much recommend this manual, and also Dale’s other manual – Tax Battles.
Cheers
MelBec, if you are planning on following Chan$ and Celivia’s advice (good advice btw) make sure that you set up the loan so that it has an offset account.
Remember that as you use equity from the (now) IP to purchase your new home (PPOR) you cannot actually claim that on your tax.
So if you also plan to ‘pay as much off as you can’, then put the extra payments into an offset account, and use this money towards the (new) PPOR.
Cheers
MelSorry to disillusion you all, but I’m almost certain that the discounted stamp duty for OTP purchases is only available in Victoria – they seem to make up for it with killer rates for completed properties.
Cheers
MelHi Desk Top, you’ve done well so far!!
Talk to a mortgage broker. there are loans out there that you can get based on the value of your asset alone, which you could then use to fund more properties. So you definitely don’t have to sell it, and I wouldn’t wrap it as you have no loan, and wouldn’t be able to secure one against it after you wrapped it.
Cheers
MelI agree with the concept of first person to mention the number losing. I’ve seen it a few times recently.
Well done on your negotiations – plus you got yourself a 2 year tenant!!
Cheers
MelStephen, if the partners you have mentioned are not family, I would look at using a unit trust rather than a discretionary trust.
This way, it’s a little similar to a company in that distributions are made on the basis of the unit holdings. With a discretionary trust, if the ‘beneficiaries’ fall out with the trustee, they stand to get nothing at all from the investment, which is not a good way to go if investing with non family.
Cheers
MelLes, do a search for Jamie McIntyre, this was discussed recently. Possibly in the Guru or Heads Up sections.
Jamie himself posted in the thread.
Cheers
MelHi breakingout
Yep, I think you are changing bad debt for good debt, which is fine, and not what Steve was talking about (from memory).
Paying the interest on the IP loan is probably a reasonably ‘safe’ way of going too.
Cheers
MelCould you not finance it through a lender in England, and then bring the money in to Australia?
Friends of ours recently did that – but they did have pension income in England which possibly helped with the loan. Not sure of all the details there.
Cheers
Mel
