Hi Jacob

Firstly congratulations on making the decision to get into property investing something that once you start you cant give up.

I am suprised that the property is a – geared with a loan of only 60K outstanding.

Structuring the loan is probably one of the hardest tasks and getting it right is not easy to avoid making the usual mistakes.

Whilst there are lenders who accept merely rental income as serviceability it will not be long before the term "Rent relaint" get bandied around again which is something most institutions like to give a wide berth to.

My suggestion would be to establish the loan structure prior to giving up work or cutting back you hours as your lending opportunities will dimish without regular income.

A good mortgage broker should be able to consider the options for you and advise you accordingly.

Well simple answer is Yes you would get slugged with CGT using the concessionary rate.

It sounds to me that serviceability is the issue but again without exact figures difficult one to answer.

If this is the case lodoc probably not an option as most lenders wont consider lodoc refinance.

As has been pointed out utilising a LOC to 90% and funding it this way is an option.

Land on its own probably without a rental return (unless there is some decent potential capital growth) is probably not the greatest option so building on it might give you a return.

And does there work come with a Guarantee that their structure is ATO compliant.

Personally I would never take the word of a marketing organisation trying to sell me a property package for something as important as this.

Hi Nathan

Sounds like a good deposit.

Hate to say if you are thinking of wrapping it to her for the same as the purchase price you are lossing serious money and exposed to risk.

You will incur stamp duty on the acqusition and other purchase costs and would be wanting to add on a decent profit margin.

If the actual price is $365,000 you would probably be wrapping this for circa $430K.

As you said she wont get finance for some unknown reason so if she want the property she pays the higher price.

Now I understand I can sell my RE to a company, which can then hold the RE for the SMSF

Not if the security is residential you cannot.

Couple of quick points

Rather than selling the blocks to the SMSF I am thinking of holding the land and have the SMSF buy the transportable homes.

Unofrtunately you are unable to sell the blocks to the SMSF anyway so that is out of the equasion.

Question1?: As the landowner I could give a lease – say a 25-year lease – to the Super fund ?
If yes – the Superfund owns the transportable buildings (which can be sold and moved, so are a portable asset). The Super fund pays me, the landowner, a small amount to lease the land. I am then in the position where the land is not vacant – it is income producing, so I can claim rates, land tax, etc etc.
After paying the annual lease, the super fund then gets the rental from the transportable home.
A transportable home is about $70-85k to install. Rental return would be $150 to $180pw. (This town has a waiting list for rental accommodation, especially for a new 3-bed house). So this offers an excellent return to the super fund..

Big question: Is this scenario allowable? No regretfully no as they are related parties benefits under the SISA.

I am interested in this strategy because I would not have to sell the land to the Superfund, Regretfully cant anyway AND the $120k in the new SMSF would almost buy 2 transportables – I’d top up the short-term shortfall with either a loan and/or current employer contributions plus some salary sacrifice.

Great in theory cant be done in practice.

NOS1

Probably allow $2000 for an Accountant to set up a Company and DFT structure.

Remember to take your partners income into consideration for financing they will need to be a Director / Trustee and this may not be ideal for complete Asset protection.

Obviously whilst interest is a deductible expense when used for developing using your own cash will produce better net results. Balancing item is of course whether you can use the cash elsewhere to obtain a better return i.e offset any non deductible debt.

Finally remember most lenders will consider your activity as a business and will probably want to pass you over to the Development / Commercial side of the Bank.

Your Broker should be able to come up with a solution although appreciate that his / her commission will be clawed back if you sell the property within the first 18 months.

I have several clients that do exactly what you are doing and we charge a fee per deal for them with both parties knowing that there is no net commission paid so dont expect us to work for nothing.

DFT = Discretionary Family Trust

As SNM has mentioned sounds like you are buying a bit more than the average block.

Talk to the Council and see what opportunities arise.

Nothing to stop you (subject to of course DA) retaining the current dwelling and constructing on the balance of the GFA.

If the neighbouring block is zoned for multi dwellings then you or your tenant might be inconvenienced during the development and construction of the townhouses.