Forum Replies Created
Adam
Work it out this way.
Your net income from the property = $153 / week.
which equals approx $662 / monthExpenses = $895 / month mortgage repayments (Assume P & I over say 25 years)
Rates = $100 / month
Utility Rates – $$83 / monthAlready you have negative cash flow of $416 / month. Be reducing your loan repayments to interest only will only help a little.
Ignore Mortgage Insurance $339 (unless of course you mean Buildings Insurance) as this is a borrowing cost and can be claimed over 5 years or the life of the loan.
Equity is the difference between the value of the property and the loan amount. However bear in mind usuable equity is not 100% as the banks will only go to 90/95% on a refinance so is less than the valuation.
Cheers Richard
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Heh Jacob
20 or not good for you on having a go.
You mention the vendor is looking for a delayed settlement. Why not consider asking if they will consider a Call Option.
You can then conduct all of your due diligence and meet with architects, town planners and Local Council and then if it can be done off load the property to a developer.
An alternative is to look at a family pledge style loan using parents property as security. As soon as the property was built and sold off you could request the lender release the security and guarantee from you parents (subject to your own circumstances and ability to support the loan)
Cheers Richard
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Kendo
Carrying on from what Terry has written i think you will struggle in getting the Vendor to wrap the property for you.
You state that “The vendor is debt free and wants to use the lump sum to retire and invest completely passively”.
Certainly by wrapping the property to you he will not enjoy a lump sum but a series of installment payments over a given period of time.
Why not suggest to him that he agree to leave say 20% of the purchase price in the property by way of a registered 2nd mortgage and then you finance 80% of the purchase price up front.
That way you will be able to obtain a low doc loan at a sensible rate of interest (80% and above the interest rate gets a little higher) and he will receive a lump sum and then a higher rate of interest on the balance.
Email us if you need any more information on the 2nd mortgage route.
Cheers Richard
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Beast
Obtaining your credits through a variation to your tax coding will help on a weekly basis and improve cash flow.
However one are we find many clients fail to overlook os to assess your investment loan and the structure in which you are buying the property in.
Talk to an independant mortgage broker as look at the range of options. Remember your lender will never tell you that someone elses product is more competitive.
Cheers Richard
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Talking about living on the edge.
If you can’t afford the repayment then your home is at risk. How many times have we heard this said.
This sounds like a couple who have been rather negligent in their borrowing or maybe their mortgage broker or financier has been negligent.
The are purely reliant on rent and capital gain. What happens when neither of these occur or when tax changes to NG reduce the amount they can claim.
The additional funds they draw on when they refinance are not tax deductible and therefore are merely a borrowing to support their current portfolio. Common sense would say pay down some debt cop some CGT and live within your means.
Remember the suposed equity is only realised once they sell the property.
Cheers Richard
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Hi Jacob
This form of borrowing is now quiet standard lending and was introduced by lenders to attract a new sector of the market who were previously unable to borrow.
For many young people these days with prices at the level they are this is the only form of borrowing that will neable them to get their foot on the property ladder.
Remember the guarantee is not for the life of the loan as you can request the lender release the guarantee once you are in a position to support the loan in your own right.
Cheers Richard
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Yasmina
Try Ownit Conveyancing at Beenleigh they cover the whole of SE Qld and are as good as it gets.
Their number is 3807 1522 speak with Leonnie and tell her Richard sent you and they will do you a great deal on costs.
Cheers Richard
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PP one consideration is if you never sell it you will never pay CGT Tax on it.
On the basis that you would be able to sell the property and make a profit look at the profit as Tax free equity. You can always borrow against this for future deals.
New property has several advatages over second hand which include:
1)The GST which you will be able to claim along the way by Tax credits and will only be payable on the end price if you sell.
2) The Depreciation and Building Write off which will aid your Tax position especially in the early years.
3) It will be easier to rent being new and likely to attract a greater yield.
4) Structured correctly you will find that you maybe able to save interest on your own non tax deductible principal home and this pay off the loan quicker freeing up more equity.
5) Sensible gearing can multiply your gains but can also multiply your loses so use this as a firm foundation to create long term wealth.We started with one single home in 1996 which we offered on Vendor Finance terms and now as a Company own 187 houses throughout Qld which produce an income which helped me retire in my late 30’s. It is only boredom that got me back to work.
Start slowly and you too could build up equity and achieve a life long income stream.
Cheers Richard
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Why is getting the title so important?
Cheers Richard
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http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Hal
A Call Option is the “right but not the obligation to purchase a given property at a given price on a given date”.
Lets us assume that you see a property for $100,000 which you like but are not in a position to proceed to contract quiet yet.
You approach the Seller and ask him whether he would enter into a Call Option option with you. This option gives you the right but not the obligation to enter a Purchase Contract for $100,000 with say a 30 days settlement.
The option period is for 5 months and you offer to pay him $5000 on signing the option.
After a period of 5 months you have several choices:
1) You can agree to exercise your option and proceed to sign a 30 days cash contract on the property for $100K.
2) You can elect to forgoe your right to enter the contract and loose only your Option Fee of $5000.
3) You can nominate someone else (Subject of course to make these provisions within your Call Option) to enter into the Purchaser Contract. The other party will sign the Contract for $100K.It is likely that you will have sold this right for a minimum of $5000 as this merely equates to the Option Fee you have paid and does not cover an any element of profit.
Assume that you sell the Option for $25,000 and taking away the Option Fee you will come out with a profit of $20,000.
The nominated party who enters the Purchase Contract will be liable for the Stamp Duty payable on the purchase.
As mentioned in an earlier post Duty maybe payable on the Option Contract subject to which State you are in.
Cheers Richard
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Kittie
HRM is correct consult with an independant mortgage broker and try and establish you level of borrowing first.
Remember this doesnt need to be the level of borrowing you go upto just what you an confortably achieve.
Think back to what pluses you came up with when you first decided to purchase your first IP and write these down. On the other side of the ledger think back about the negatives you had and write these on the other side of the balance sheet.
Work through each point and cross off those which you feel no longer apply or add ones that you feel may now apply.
For each negative ask yourself “What is the worst that could happen and write these down” Then ask yourself “Can this be overcome” i.e if it is an interest rate rise – can i take a fixed rate = YES.
At the end of your summary you will have narrowed down your list and can concentrate on those if any points are left.
Feel free to air those in the forum and seek what advise others may have.
Remember you stepped outside your confort zone once and can do it again and again and again.
Cheers Richard
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our specialityRichard Taylor | Australia's leading private lender
Hi Miho
Hope you got my latest email.
Would you like to PM or email me the name of the lawyer as I know most of the solicitors in the area you are talking about.
Also a telephone to the Qld Law Society would probably not go astray. Happy to give you the telephone number.
Cheers Richard
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Pinnie
In answer – Yes you can obtain a loan in joint names yet have the property in the name of the either party dependant on what is driving you behind this investment.
Feel free to contact us if you require any further information.
Cheers Richard
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Hi Wayne
Do you want to give us a little more information and i am sure we an come up with some suggestions.
Cheers Richard
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When we started wrapping in 1996 people said you will run out of deposits and the bank will say a BIG NO.
187 properties later we are still going.
Cheers Richard
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Firstly there are many reasons why people enter into wrap contracts and acceptability by the conforming or non conforming lenders is only one of them.
The current market and range of lenders has seen no slowly in the demand for wrap and license to occupy based products.
Secondly never buy a property with a view to wrapping it let the wrappee choose the property and then you take over the negotiations and buy it on there behalf.
This way you never get left with a property that you cannot onsell and secondly the wrappee gets a house they wish to live in and have chosen rather than one you have for sale and they only enter in the contract because of the wrap conditions.
Cheers Richard
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If you do buy through the Investors Club just ensure that you never buy a property where the Vendor is Probuild Industries Australia or any name similar.
And yes i am ready for litigation if they have the courage to take me on.
Cheers Richard
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Japanese property prices have been slowly falling for around 15 years.
If you wish to get involved in this market why not consider investing in Babcock & Browns property Trust as they are the only listed stock on the ASX which invests soleyl in Japanese property.
Havent done too badly since their market debut either.
Cheers Richard
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Why not get in touch with someone like Roy at Guardian Property Specialists as they specialise in the Perth area and can advise you accordingly.
I am happy to email you his details although he is a contributor to the forum.
Cheers Richard
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Terry is correct CGT is based on the contract date and not the settlement date.
I assume that your buyer is not aware of something in Town Planning that you are not. The area is to be rezoned or has sub division potential etc etc.
Cheers Richard
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