Forum Replies Created
JacM makes a valid point but it actually gets worse than that.
Imagine you borrow 100% of the purchase price and cross collateralise your new Docklands inv with your PPOR or other IP
You decide to sell the PPOR and the Bank downvalue the Ip. They say to you either could you put some cash into the deal now as the value has dropped and of course we all have cash lying around we want to use as security or they suggest you refinance as the lvr has dropped.You find it impossible to get more than 80% as the mortgage insurer has gone off the post code or has to many insured properties in the area and the are looking to lighten their exposure.
The best case is you put in cash and lose some deductible interest. Worst case is you have no pile of cash and the Bank wont release the Mortgage to allow the sale to go through. You end up defaulting and the purchaser sues you for being in default.
Personally i would never put myself in that position when with the right carefully chosen property you could sleep at night and had good cash flow.
Look everyone to their own but not for me. I also dont like base jumping either and the risks are much the same.
We work with investors all day long helping them Turbo charge their portfolios and that wouldnt come into our statement of Property Advice.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Very true Jac
I see it all the time with clients and this becomes more of a problem the older the investor gets as often they are looking to reduce their working hours and live off some of the property income.
This is only possible if they sell the asset and the market is right.
With a good yielding property you can live of the rent and come back when the market recovers.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jason
Claire mentioned that she moved out of the house didn't say she sold it.
Stamp duty in Qld on the transfer cannot be claimed as a Tax deduction.
It is actually added the Cost base of the property so when you eventually sell the CGT is reduced.
Ok if you are looking at an IP post July 1 then might have different criteria to meet your needs than it would be for a PPOR.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Jac M has made a valid point and i must enjoyed i did chuckle when i read it.
When i first talk to a client about their investing goals most investors think if they do their research capital growth is guaranteed.
I usually say to them buying a property with this attitude is like gardening.
You can prepare the ground, check the acidity of the soil, buy the right plants and fertilize and water them.
Before you got this far you read the best gardening annual and attended a dozen gardening conferences.
Then some outside elements come along and your plant doesn't grow as tall as you expected.
Your neighbour is not a gardening guru so he engages the services of a local landscaper who specialised in multiple plant growth.
You pay him to come along and he says to you don't go for the highest tree in the street let us see if we can't plant a dozen smaller ones that give us richer fruit we might get one or two that prove to be real winners.
As the trees bear fruit one of them takes off and grows out of control and now you have the best of both worlds.
The man with the tall tree finds that a change in circumstances means he misses out because he has to sell the house and move on but the man who went for a smaller portfolio of trees and spread his risk to attract a bigger yielding tree wins out.
Sometimes you have to accept that engaging the help of a professional can help.
I mean i can change my own tap fitting but i don't. I prefer to engage the services of a plumber.
Exactly the same as the non gardener.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tim you can start a SMSF with a couple of thousand dollars but whether you would ever do so is a different matter.
Certainly i would never advise a client to start a SMSF with such a small amount.
In regards to new investment products there are a couple with close to 100% funding subject only to the security property.
We in fact as a private lender are re-launching our 100% investment property finance loans shortly.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Would avoid off the plan like the plague.
Sure interest only might reduce your repayments but probably wont increase your serviceability.
If you intend to remain in the current property for the foreseeable future and are trying to build an income stream long term you can always look to pay down debt or certainly look at going interest only with a 100% offset account.
Personally i have nearly paid down all of the investment debt on my 41 properties over the last 15 years and am down to the last $1.15M which should be knocked off in the next 18 months but i admit everyone;s situation is different.
Sounds like you are a very busy individual so why not engage someone to careful source the properties for you.
Possible capital growth is great but what happens if it doesn't come at the speed you expected.
You can't retire off capital growth alone. At least with a good yielding property you can accelerate your acquisition phase.
With the limited details you have provided i think the future looks rosy with the right property selection.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sebastian from an aged forum member to a newcomer welcome.
I don't think you can go far by joining in the forum banter and discussion and you will learn a lot from members with all areas of expertise.
Read, educate and take nothing for granted and you won't go far wrong.
I like your attitude about realising investor mentoring is a 2 way street.
Good luck and make sure you hang around to ask questions.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
What lvr have your Bank told you they would advance ?
Also ask them what percentage of the rental income do they use for servicing.
My personal opinion is i would avoid it like the plague but i built my portfolio with quality yield assets.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Depending on the rest of the deal 95% lvr + maybe possible but going to depend on a couple of points.
If you are referring to a lowset duplex i think 400K is rich.
That's 200K per side and assuming they are 100 Square M each that's $2K / Sq M …… wow.
There are a few firms that build duplexes as part of their standard construction range.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tell you what if we get any more rain in Brisbane i am thinking of moving down South.
That assumes you guys in Vic wil have me.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Deepak
Will depend on the State you are going to build,
In NSW it is the Office of Fair Trading that regulated Owner Builders so you will need to check the Warranty Insurance details.
The property must have Warranty Insurance for 6 years after the date of completion if you intend to sell.
Financing a deal of course can be a different story as we discussed.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Joe
Any change in the Banks security you would need to disclose it so hate to say Yes.
If you were paying cash or not using the property as security for the loan and it would only enhance the lenders security.
Normally the way we do these for clients is get a valuation based on the front block only post sub division and then if it means a cash injection to reduce the lvr use a standalone loan on the rear block which covers the cash injection as well as the construction cost.
Some lenders will want you to lodge a plan of subdivision showing that the property will have separate Title before they consider the construction funding.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sorry i can't believe i am reading the content of this post.
Firstly we have an unlicensed tradesman carrying out building work (and i don't care if he is a electrician or not he is not qualified to carry out construction) then secondly you have paid him cash.
Certainly receiving or paying in cash is not illegal as long as he declares the income as Taxable income (hobby or not).
Has he given you a Tax invoice and is GST being charged on it.
A quick look at his Antenna quote will tell you whether he is registered for GST.
Thirdly (or is it fourthly) have you had plans draw up for the job had it lodged with the Building Commission and has he paid the appropriate Building services fees.
Assuming you are not intending to pay cash for the entire job have your Bank sighted written quotes, undertaken a post works valuation.
Sorry i could go on and on but i wont.
Please keep us all update and then shame the crook concerned publically so we can make sure he doesn't take anyone else for a ride.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Claire (Zorro) whilst we wait for the valuation to come back i will shoot you a RP Data report on the property.
Certainly when i negotiate any property deal i get the Terms set first and then worry about the price.
Access to the property to undertake certain items of repair etc can always be negotiated as long as you are correctly insured.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
As Terry mentioned as long as you are an Australian Citizen you shouldn't have too many issues.
I have a forum client who contacted me a week or so ago who is based in Dubai and asked us to source an investment property for him as well as finance the deal.
No real issues in doing either however some lenders love Non resident applications and others don't.
In most cases they convert your overseas income to AUD and then apply Australian rates of Tax even if you are in a Country like Dubai where it is Tax free (appreciate being paid in GPB this wont be the case).
Tax would be paid in the UK and you will receive a Tax credit here for any Tax Paid (Don't worry being a pom i have UK assets so know all about UK Tax rates).
If you find the right Australian property you will probably find that it may well be neutral or positively geared especially if the yield is right.
Careful property selection will be imperative to enable you to carry on your wealth creation.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Anz also do a 1 year fixed rate with 100% offset so that might suit.
The down side as Jamie mentioned is that the it requires a full application.
We do them fairly regularly with Anz and they are not as painful as most as long you don't want to increase your borrowing at the same time.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
2 Townhouses should be a walk in the park although assuming they are 2 storey it is unlikely you are going to find anyone of the national building groups be prepared to quote on it as it doesn't fit their simple box criteria.
If you let us know where the property is located we might be able to give you some options.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Claire hate to say the Stamp Duty on the Transfer will not Tax deductible but added to the cost base once the property is sold.
Also the First Home Owner Grant Stamp Duties concession form clearly states that the property needs to be occupied for a continuous period of 12 months.
Anyway away from that if you are considering renting the property then go for interest only with 100% offset account.
I would also be looking to cop some initial LMI as when the property becomes available for rent the LMI will become Tax deductible albeit over 4 years (or the term of the loan if shorter).
Make sure your Broker shops around as LMI rates have recently jumped and there is a significant difference amongst lenders.
Only concern is of course if the property has fallen in value and you end up putting in cash and borrowing against the valuation rather than the purchase price.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Andrew
Sorry to hear about your family passing never an easy time.
Have to say on the numbers you have given us the property certainly wont be paying for itself and whilst i can understand your desire to retain the property you would have to ask whether it makes financial sense.
By retaining the property it will certainly have a drain on your monthly income and that assumes it could be financed.
Holding the property with another family member whilst it might sound appropriate might be fraught with issues in more ways that one.
Personally i think i would sell the property and then carefully utilise your funds to restructure your home loan and set up an equity loan to fund a deposit on a new IP.
There are many properties we come across that certainly are not a drain on your hip pocket and are neutral or positively geared.
You might just have to look outside the NT.
Whatever you do not an easy time as i said.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I pay down all of my investment loans and as at April 1 i think we were down to $1.14 M but then i am fortunate to be in a slightly different position to most investors.
As Terry mentioned IO give you flexibility and the interest being charged with IO + offset will be the same as going P & I.
Of course you need to ensure you are not paying a higher rate of interest merely to have an offset account on the investment loan.
There are lenders out there that offer 1 year fixed (plus others that offer a variety of other fixed rate terms) rates with their 100% offset account.
As Terry mentioned we often find that dollars could be saved by re-structuring a portfolio.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
