This property is certainly negative geared.

You must anticipate that it will appreciate at a faster rate than your $500+ shortfall each month.

Cheers,

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

This is a US tactic where mortgagee’s offload properties cheaply and authors write about it a lot.

In Australia the law requires that lenders sell properties for full market price. Generally they go to Auction. If advertised as a mortgagee sale you will find people such as yourself attending expecting to get a bargain. Sometimes you might but not as much as the American authors would have you expect.

Best way to find them ius to establish a network of REAs who know you are serious and who will call you when they get something.

Cheers,

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

There will be another boom.

Will you look back and wish you had retained the properties and slogged away at the repayments?

Will you be pleased that you had freed up the capital to invest elsewhere?

Noone can answer this but you.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Frank,

Strata is a type of title. A normal house on a block is Torrens title. If you build a four unit dwelling and sell the units to four people they would each own one. What they actually own is a strata titled unit and this means everything inside their unit. The building exterior and grounds belong to the Owners corporation and each owner has a 25% share (assuming all units are the same size).

If someone wants to paint the inside of the unit then they can. However they need the Owners Corporations permission to do anything to the common property.

So your example of a development being strata titled means that it is structured this way.

When your development is complete you apply to the local council to strata the block, so you can sell each unit. Your solicitor can do this for you. It is important to build them so they can be strata’d which usually means seperate metering and fireproof construction. Your council will specify what is needed.

I doesn’t affect finance – is a very common thing.

I don’t know why you would compare this to a land surveyor.

I didn’t mean to offend when I said you have a lot to learn. Developments are not simple and many beginners lose a lot of money. I suggest you that doing a development is not the best place to start your investing unless you have some assistance.

http://www.metropole.com.au may be able to help.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

That is certainly a strategy but you will not be able to use this rent to qualify for your loan.

REAs do quite a lot when managing a property – sometimes they are only really appreciated when things don’t go smoothly.

But in the case of you taking in lodgers to help pay the mortgage I would think you wont need one.

Cheers,

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Frank,

You have a lot to learn before you contemplate doing a development. Here is some info for NSW but the concept is the same whatever state you are in.

STRATA TITLE

Horizontal Subdivision

Strata title is also part of the Torrens title system. It permits the horizontal subdivision of land into separate titles for separate “strata” lots or units, which is something that the former torrens system was not set up to do. Each lot or unit represents a separate apartment.

The title or ownership rights in land continues, in theory, along imaginary lines from the centre of the earth up though the boundary on the surface and then upwards to the sky. However, the owner of a strata title home unit has title to that cube of air bounded by the inner skin of the boundary walls of the unit vertically and by the ceiling height above and the floor level below horizontally.

Strata title law is regulated mainly by the Strata Schemes (Freehold Development) Act, 1973 which was substantially amended in 1996, but which began its life known as the Strata Titles Act in 1973 and the Strata Schemes Management Act, 1996. This legislation allows, among other things, for ownership of common (or shared) property, the management and maintenance of that common property and for regulating the social interaction of all the building occupants.

Owners Corporation

The legal title to the land and building structure is owned by the “Owners Corporation” being a corporate body comprising and representing the owners of all the units in the building. There can be several separate stratas in the same building and in major developments there often are.

In your typical flat building, however, the Owner’s Corporation owns the land and building and is obligated by law to maintain all necessary records, maintain and repair the building, look after the gardens and keep current insurance policies protecting the owners corporation’s interest. The individual unit owner cannot insure the structure but must rely on the owner’s share of the common insurance. Of course, the owner can and should insure the contents of the apartment including the carpet on the floor and the paint on the walls.

Example of Common Problems

A common problem is a good example. If the unit on the first floor is water damaged from above it may be the unit owner above who is liable if for instance he leaves his bath taps running and the overflow goes through to the unit below. However, if the pipe in a common wall breaks and causes the damage it becomes the owners corporation’s responsibility.

Common Property

As the common parts of the property are owned by the owners corporation the individual unit owners may use and enjoy the common property (unless all the owners have agreed in the by laws, or “house rules” generally regulating things that can and cannot be done by the residents of the units, to restrict those rights by, for example, granting exclusive possession to, say, a particular garden area nearby a unit for that unit owner).

Title Record

A title deed or “Certificate of Title” will issue to and in the name of the owners corporation for all of the common property areas and a separate Certificate of Title will issue in the name of each particular unit owner in strata subdivision. For new developments, the Certificate of Title for each unit will initially issue in the name of the Developer. Once the unit is sold and the contract of sale is completed, the Certificate of Title will be changed to record the name of the purchaser of the unit, on registration of the transfer document at the Land Titles Office.

Books and Records

The owners corporation must also, by law, keep certain records and registers of its own. So the purchaser will also need to notify it in writing of the completion of the purchase transaction, to enable the purchaser to be registered as the new unit owner in the owners corporation’s register. This registration process, however, although still important, is not crucial from the perspective of achieving ownership of the unit. That will be done by registration at the Land Titles Office, in any case. It is that registration which secures indefeasibility of title.

Unit Entitlement

The owners corporation’s title (or “Common Property Certificate of Title”) will disclose what unit entitlement each unit owner will have in the owners corporation. The number of unit entitlements will depend on the various values of each unit. Assume a 4 lot unit building with 3 approximately similar ground floor units each worth $200,000.00 and a large penthouse on level 2 with a value of $400,000.00. In this case the penthouse owner would have the benefit of say 4 entitlements out of a total of 10 and each of the ground floor owners would have 2 each out of 10.

The Unit entitlement regulates the proportion of levies that an owner must pay and also the voting rights of each unit owner.

The costs of insuring, maintaining, repairing and managing the common property is shared by all the owners in the proportion of their respective unit entitlements. These are collected by the owners corporation making levies on each owner. There are normally three types of levies: one to cover the day to day expenses (administrative fund levies); one to be used in the future for long term repair and maintenance (sinking fund levies) and, special levies for either unexpected repairs or unprovided for repairs such as “concrete cancer”.

Car Spaces

Car spaces and storage areas are often important for unit dwellers. In modern strata schemes the allocated car or storage space is generally marked on the strata plan and therefore actually forms part of the unit title even though on a different level. In older buildings these rights were often granted by giving an owner exclusive rights to use a specifically marked space, but these car spaces were not owned and did not form part of the title.

Meetings

The Strata titles law provides that there must be at least one meeting of the unit owners every year (called “Annual General Meeting or “AGM”) and that certain officials should be elected at these meetings as the governing body of the particular Strata Scheme. There are a number of things which must be canvassed at the AGM, including a budget and striking the levies mentioned earlier. If an emergency arises, any owner can require an Extraordinary General Meeting to be held, provided set procedures are followed.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

1. Do it now or wait a bit. The market is not moving up so no urgency. But the sooner you get started the sooner you will be ready for number 2…

2. Call a few Agents in the area. They will give you an idea of rental in no time at all.

3. Can’t help with this one as I don’t know the areas.

Cheers,

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Yes.

You will also be exempt from CGT for a 6 year period as long as you do not buy another home.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Settlement is the period between you agreeing to buy a property and actually owning it. A number of checks and changes need to be made and most times a settlement period is 4-6 weeks but can be longer or shorter as required.

it has no bearing on the FHOG.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

What makes it good? I think that rate, fees and LMI are pretty critical and most other considerations come second place after those?

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.