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Went to their seminar last year, attended a small group session at their office and was turned off when I found out how they work.
Basically 'Custodian Wealthbuilders' is just a marketing thing to get business. They're pretty much a developer. They buy a massive chunk of land, divide it up and sell house and land packages to their clients. They build at wholesale and sell to you at retail. The only benefit is they take on the risk from you (eg. if builder goes bankrupt/whatever they pay for it) and you pay a big fat premium for that.
I would also be interested to find out about this.
Hi Bator.h,
I'm currently selling in regional vic, fees are 3% + gst and advertising/admin is $600 + gst, but is only payable if/when sold.
Seems like you are on the right track.
Hi Ben,
I am no expert and can't fully answer your question, however you should be able to retain the 'distributed' income within the trust. When you distribute income its so you can pay tax on the income earned so whats left can stay within the trust to buy property as opposed to transferring to your personal accounts.
As I said im no pro, you're probably best off seeing an accountant who will be able to explain in detail how they work. There are also plenty of books out there if you want to do some research yourself, just go to the investing section of any bookstore.
Cheers
Haha gold!!!! Keep it up mate, you had me in hysterics
Benjamin Csikos wrote:I nodded and smiled as I visualised wrapping a rope around my neck and going for a bungee jump.hahaah very funny!!! This line made me burst out laughing while at work…oops!
Hi Hughski,
My parents did exactly what you have said but to their PPOR. They bought a 3bed brick house with double garage(separate roller doors) and built a wall blocking off half of the double garage with panels. The panels they used are installed with railing at the top and bottom and you just slide the sheets in!
The room has two doors, one in the middle on the side which goes directly to the loungeroom, and another on the rear side of the room out to the patio. It also has a kitchen sink in the corner near the outside door and has central heating (I beleive the previous owner worked a fair bit in the garage)
The roller door at the front is walled off as well, so from the inside it just looks like another room, and from the outside it looks like a double garage still! There is a gap between the wall and roller door which is a very handy storage space for boxes etc.
I shared this room with my brother for a few years as it was obviously quite a large room. If left, the room would be the coldest in winter and the hottest in summer. In saying that, the house had evaporative air con so we could direct airflow through the room quite easily and in winter the central heating worked well also.
Now that all the kids have moved out my parents use it as a spare bedroom/study. It easily fits a queen size bed, piano, large computer desk and large robes as well as having a sink with cupboards and backdoor to outside and window.
I have rambled on a bit but hopefully this has answered some of your questions!
ryan mclean wrote:If i could subdivide then I would subdivide and sell off the land and use that money to reinvest in something else that is positive cashflow and would offset your losses on the current property. Or subdivide and sell both and then reinvestThanks for the idea ryan. I know of and have considered this strategy, however my research suggests that this may not be such a good idea.
My thoughts…
Purchase price(house on 800m2): 150k
Subdivide: 30k and upto 12months time
Total cost: 180kApprox value (House on 400m2): 140k – Based on similar houses/units in the area
Approx land value(400m2): 60k – I watched a similar sized block sit on the market for this much for months and months. Considering you can buy a block of land in a new estate near the golf course 693m2 for $73500 (next cheapest block in town) I may be able to sell for 50kSo assuming all goes to plan…
I sell back block for 50k and pay 5k costs so I bank 45k. After the cost of subdivision I make a puny 15k that I pay into loan (meanwhile I have lost 10k off the value). If I sold both I would make 5k and would lose that in the cost of selling the house.Does my scenario sound realistic?
From what I can see my best option seems to be to sell and hopefully make a little profit and then start again and reinvest. When I purchased I bought 10k under the asking price and this was before the government increased the FHOG, so perhaps I can sell for a little more.
I have a real estate agent checking the house out this week to see what she thinks she can sell for, I will let you guys know how I go.
maree_bradross wrote:I am noooooooo expert, but if you reduced your loan to interest only, claimed your depreciation it would be worth while to hold imhoI know this can and does work in some situations….however the building is far from new so I don't think I would be able to recover all the holdings costs, and since any growth is minimal I'm finding it hard to see this is a viable investment.
Hi maree,
I have not claimed any depreciation. This was previously my PPOR and has only been an IP since the start of this year. I don't know that it would be worthwile getting a depreciation schedule done considering I am now planning on selling?
Hi hleung and Terryw,
Thanks for the comments.
I’m sure there will be capital growth in the future, however my understanding is that it will take a long time. I lived there for nearly two years and as it is a small town its very easy to keep up with the real estate. I’ve looked at houses sit on the market for months and seen freshly renovated houses pass in at auction. There is an empty block next door and for the last 12 months there has been a sign up ‘selling a land and house package’. There is simply not a lot of demand, and as Terry says I have to look at opportunity cost.
I was pretty sure of selling and you guys have just confirmed for me. I have read a lot of content on this forum and hold a lot of respect for you guys…so thanks for your help!
Cheers,
Pavv
sonyasal wrote:What would the figures be like if you changed the loan to IO?Hi Sonyasal,
If I refinanced the loan to an I/O on the existing balance and at the same interest rate the repayments would be approx $8880. The rent ($8580) just falls short of covering the repayments without taking into account other costs. I think its time to add some value and reassess or sell and put my money elsewhere?
mattnz wrote:If there is no growth potential, there is no point having it negatively geared, (also known as making a loss). Sounds like you have already decided it is time to sell.Hi mattnz thanks for your comment.
I completely agree. As it is currently losing money and not in an area where I'm going to see any good growth in the near future, I'm feeling that it's time to sell and invest elsewhere. I just need to work out whether to just sell as is, or put some work into and hopefully get a better return.
patriotsoldier wrote:Without knowing the complete picture, could you hold onto it and value add by renovating?
OR
as it is a bigger block, could you get approval for a second dwelling, like a modular house or a kit home, something basic that could be rented easily, this may turn it positive and give you a little capital growth along the way.
Or
Depending on town planning, get development approval for either subdivision or units and either develop or onsell the property with that planning approval, again for a little extra capital.Good luck
Hi Patriotsoldier,
Thanks for the reply.I don't think it would be worth renovating, the back has already had a nice outdoor living area added on and there is no room to extend to either side as there is a fence on one side and the driveway on the other. The kitchen has also been recently renovated so other than tidying up, there is not a lot of opportunity for structural renovations.
I have looked at subdividing and putting a kit house on the back as you suggest. My concern is that once I have subdivided and added another house, that there won't be that much more equity than what I already have considering the original dwelling will lose a big chunk of value. My thoughts are that I'm taking too much risk for not enough potential profit. (I will admit I have not looked into this in a lot of detail so perhaps I should be getting some quotes before writing this idea off.)
Your last idea sounds more attractive to me by getting that little bit extra value without too much risk. Do you know the costs involved with getting plans approved etc?
Hi Richard,
Thanks for your comments, and sorry for the late reply! I will be looking to move the loan across to an IO with 100% offset in the near future, and setting up some sort of trust for further purchases.
Thanks again for spending the time to answer my question.
Cheers
Pav
Hi Nos1,
My understanding of offset accounts….
"an off set account on a an IP loan actually pays off any of the loan"
No it does not pay off the loan balance. Its more like a savings account that (as the name suggests) offsets the balance of your loan when paying interest."does it just reduce the monthly repayment?"
It reduces the amount of borrowed money that you pay interest on. Your minimum monthly payment does not change.
eg. $200k loan, $40k in offset account, you pay interest on $160k (the loan balance remains $200k.)I am no professional so someone could perhaps confirm/expand?
Pete
Hi Trev,.
For me the first place I go to look for most things is the internet. What I find there is my first impression of the company/service etc. After this I would probably discuss with family/friends etc. and if they make recommendations I check them out on the internet for myself! I havn't opened a yellow pages book in years!
Another idea might be to do some local advertising (radio/newspaper/flyers etc.), it really depends on who and where you are targeting and what your budget is. Another great tool is having a clean clear cut website that is easy to use, loads fast and provides the information they are looking for, not what you think looks pretty. Along with a great website, an online marketing campaign to back it up would deliver quality leads to your employer. ( You would need to pay someone to do this)
The main features for me would be price, professionalism and quality of work. I know peoples first reaction is almost always price, but the key thing here is to steer them around the price by not only outlining the features for going with your firm, but how it benefits them. Eg. "We break down the legal jargon and clearly explain your conveyancing (feature), this helps you make an informed decsion that best suits your needs (benefit)" I know for sure that I would be happy to pay a little bit more for a better service.
I hope this helps a little!
Pete
