Me no speake de Latin Bruce.

Pisces133

>>Option 1 sounds good to me Let’s see if I got this right.
House contract at $ 250,000
I can get 80% from bank = $200,000<<

If the buyer hasn’t been able to save some money in the past which would enable him to put up some of the deposit at least, then it is a pretty safe bet that you would be looking for problems by selling to such a person.

So, using your example I would be looking for someone who can come up with anywhere between
$ 3,000 to $ 10,000 cash + who also would be eligle for a FHOG. (government grant of $ 7,000 )

This would make a total of between $ 10 K to
$ 17 K which would be available and in such a case I would not be unhappy to lend him the balance of the 20% deposit (provided this would come out of my profits so I wouldn’t be digging into my own cash money.

Secondly, the contract of Sale wouldn’t mention anything about a vendor’s mortgage as the lender may not be happy about this at all. The second mortgage document would be signed but not be registered on the title. Lodge however a caveat on the title.

I want to mention however that a lot of solicitors nowadays would, for security reasons, advise their clients against an unregistered second mortgage.

The way it has been explained to me is that a caveat in effect doesn’t give an equitable interest in the title.

This means that the first mortgagee could conceivably increase the loan amount and this would therefore eat up the equity in the property
which you are counting on for security.

Until recently I thought that a caveat would provide a proper protection for an unregistered mortgagee. That no longer appears to be the case.i

I don’t know the exact details, I guess that there must have been a recent courtcase relating to this.

In any event as my loan comes out of my profits anyway I personally would be prepared to take that risk.

Please note however that if your purchaser has the income to service a loan greater than 80% you may be able to obtain such greater loan for the buyer. (though this does mean that the buyer will be up for a, once only, mortgage insurance premium however).

pisces133

>>Richmond has my unqualified support – he does an ace job in difficult circumstances.<<

He has mine too []

Pisces133

My thinking is that if one is considered to be a trader by the taxman then the only way to clearly differentiate one’s personal investment is by placing the trading stock in a company Pty Ltd (or a Trust).

I understand that Steve has published a booklet about Trusts guys.

If you go to the home page it stares you into the face.

Steve, does this booklet go into the subject of hybrid trusts as well ? (Don’t know the difference in any event but PropertyGuru is emphatically suggesting that a hybrid trust is the better way to go).

Pisces133

One can always look at things from a different perspective so, yes, I would be curious to learn what the reasons are for some others to prefer P&I.

The only reason I can think of at the moment is that for P&I the LVR may possibly be a bit higher in certain cases.

Pisces133

Bruce, it is obvious to everyone, bar you so it seems, that the problem is your behaviour in disclosing addresses when Bear was trying to earn a smallish kind of fee.

That was puerile behaviour if anything and Bear had indeed reason to be quite upset about you spoiling his little adventure.

But, as you say, it is a new year, a fresh start,
so let us all put that kind of behaviour behind us and move on.

Only those who have never made a mistake in their life are allowed to continue being upset.

Welcome to the New Year Bruce.

Pisces133

Terry mentioned small units in Kings cross.

Kings Cross isn’t a bad area to have either small units or bedsitters. I believe there is a big demand from tenants.

The only drawback is that finance is harder to find. Yes, finance can be found though most of the major lenders shy away from anything which is less than 50 sq. metres in living area.

Living area as meaning internal living area and excluding balconies and car spaces/

I have some Sydney clients who are making it a habit of buying small 1 bedroom units on the Gold Coast.

Don’t know anything about that area so, again, one has to do one’s homework.
I do believe that they are very rentable. These people p[ut some furniture in and are very selective in picking their tenants. They don’t appear to have any problems getting tenants.

After say a 20% deposit those can show a + return.

Pisces133

Richmond, read my post literally and that is what I am talking about.

No ifs no buts, no hidden meanings, no stabs at you, I am merely saying that I am able to sell properties in say the Blacktown, Rooty Hill, Seven Hills etc area on only a few thousand dollars deposit to the right kind of person (i.e. someone who is able to service the loan.

It may not suit everyone and one does have to determine whether such a purchase is or is not suitable or profitable for one’s paticular circumstances.

Pisces133

However, (in my opinion) one cannot ‘do’ an option deal on a development site without having some upfront risk money to put in. I have the impression that many people think otherwise.

The upfront money is required to pay for the option fee, surveyor’s and architect’s fees and
council application fees etc.

I am not necessarily taking about Sean’s situation so much as my remarks being general kind of remarks.

I have spoken to and even actually met with several people over the last couple of months who have read stories about options and the money which can be made and who therefore would just love to get active in this area.

It isn’t as easy as the stories may give you a misleading impression. One also needs an understanding of what to look for and be able to work out what exactly one can build on a site and the values of the land as well as the value of the end product.

One pundit even thought he could get by by using an architect to search out suitable sites and to tell him what he could do with the land.

Unless one has a good understanding what to look for in the first place and how to apply the council’s rules one would go broke paying the consulting fees of an architect everytime he (or you) finds a property which more likely than not may turn out not to be suitable.

The ‘easy’ way to learn is by teaming up with a developer and making yourself useful to him/her and then perhaps hope to learn something on the run.

Summing it all up, I want to emphasize that in addition to essential knowledge one just cannot do a deal without putting in some upfront risk money. Anyone who leads one to believe otherwise is, more likely than not, leading people astray.

Pisces133

There are lenders around who will be prepared to lend based on the valuation rather than the purchase price the moment the title is in your name.

So settle say today, the title goes into your name a week later or whatever and thence you can immediately re-apply for a larger loan based on the valuation figure.

No need to wait for 12 months or whatever.

Pisces133