Hi Jessicca

Welcome to the forum.  I'm sure you'll enjoy your time here, as we're all such nice people

Cheers,  Paul

Hi Bayer

From a purely asset protection point of view, then yes, a trust is probably the way to go.

However a couple of downsides of a trust structure are:
1.  Any losses generated from the property are quarantined in the trust, i.e. you can't use these losses to offset your PAYG income and
2.  In NSW, discretionary (family) trusts get no Land Tax threshold, i.e. you pay land tax from the first property.

To overcome the Land Tax issue, we use a unit trust (these get a Land Tax threshold) and the units are owned by our family (discretionary) trust.

And to overcome the limitation of losses being quarantined inside the trust, we have a mixture of positive and negative cash flow properties inside the trust, with the aim of getting as close to cash flow neutral, inside the trust, as possible.

As usual, the above is just our experience.  Please check all this with your relevant professional.

Cheers,  Paul

Hi Alex

One way around your visa and associated low LVR challenge would be to "buy" a property on a Rent To Own (RTO) basis.  While you'll normally pay a premium to buy with a RTO it does get you into a property now, at a fixed cost and usually for quite a low deposit.

The legal paperwork for a RTO is a residential lease and a call option.  People on temporary residents visas are allowed to enter residential tenancy agreements, so no problem there.  With the call option, you'd just have to make sure that the term of the option lasts longer than the time you get your permanent residency, as you won't be able to exercise the option until you have permanent residency.

Some places to find available RTO properties are:
1.  in the classifieds of your local community newspaper and
2. at   http://www.renttoownhome.com.au  (we don't own this site but we do advertise there)

Cheers,  Paul

Hi Lloyd

All the above approaches work but we like to fix both our capital gain and positive cash flow.

For example, I would buy a "standard" family home, in a solid working class area, i.e. well away from housing commission areas and with a low percentage of rental properties.  Preferably brick & tile and 3+ bedrooms.  I'd then on-sell this property with vendor finance so it generates income at three points, i.e. around $15K as a deposit when the new vendor finance buyers move in, around $500 per month positive cash flow (after all expenses on the property) and the "back end profit", e.g. you buy the property for $300K and on sell it for $335K.  All income from this property is declared as "investment property income".

The above property then has the potential to support your next, probably negatively geared, long term buy and hold.

We have found that starting off with a positive cash flow property first, followed by a negatively geared buy & hold, has been a great way to build our portfolio, without having to wait for market driven capital gain, i.e. we fix our own capital gain and cash flow.

Cheers,  Paul

Hi Nit

As you did not stipulate a date for the commencement of the Agreement, I believe the Agreement hasn't commenced.  Also Form 20a says: "If the appointment is a continuing appointment, you may revoke the appointment by giving 90 days notice in writing to the agent, unless you and the agent agree to a shorter notice period (but it must not be less than 30 days)."

Just contact your property manager and let them know that you're selling the property and will not be commencing the Agreement.

Cheers,  Paul

Hi David

Some of the techniques used for Vendor Finance are:
1.  An Instalment Contract
2.  A Second Mortgage Carry-back
3.  A Lease/Option

As you mentioned 20% vendor finance as a deposit, I believe you're considering a Second Mortgage Carry-back (SMCB).  Our last two SMCB's were structured as follows:
a.  20% of the purchase price was carried back by the seller, over 5 years.  We pay $420 per month to the seller and this $420 comes off the amount owed.  We then have a balloon payment for the remainder at the end of the 5 year term.  However, as you will have seen, it's an interest free loan.
b.  20% of the purchase price was carried back by the seller over three years with no payments and no interest over that 3 years.  If we haven't paid it off in three years, we commence payments, over another three years at 5% interest, with the amount owing to be paid off at the end of this second three year period.

As you can see, it boils down to whatever you can negotiate.

Cheers,  Paul

Hi Wynyard

There are a lot of Australians in your position, i.e. unable to get the deposit together that traditional lenders require.

There are some properties on the market that are being sold with Seller Financing.  These properties usually require quite low deposits, with the trade off being you pay a premium price.

I guess only you and your family can decide if it's worth paying a premium price, to get into the market and into your own home now, as against waitng longer to save the necessary deposit that traditional lenders require.

I think the site that advertises the most properties for sale with Seller Financing (Vendor Financing) is:
http://www.renttoownhome.com.au
I advertise there but otherwise have no connection with the site.

Cheers,  Paul

Hi Amy

I'm with Richard and Ryan, i.e. if it were me I'd put this second IP into a Discretionary Family Trust.

While you can't transfer losses out of this Trust, in the future, you could place a positive cash flow property into  the Trust.  In this situation the gain from the positive cash flow property could offset the negative cash flow property, already in the Trust.  With the aim being to get at least a cash flow neutral position.

This cash flow neutral position would help your Trust's serviceability position, with the aim of doing it again, i.e. get a +ve cash flow property, followed by a -ve cash flow buy and hold.

Cheers,  Paul