Forum Replies Created
Sorry if I missed the point here, but what is the point of paying your PPOR out early if you can't then leverage against it as it is stuck in your SMSF?
Sorry two options, not too. Fat fingers
I have done a little bit of research in Cairns, personally it sounds like you are thinking about this purchase a little too emotionally istead of running the numbers and going for the best deal. Cairns is a beautiful place, but if you are looking for an investment I think you will definitely find a better deal elsewhere.
If you are set on Cairns then I think at this stage there are too main options. On the south side Edmonton seems to be the suburb with the most growth in recent times, there is still some development going on there and it is only 10 minutes to the city centre.
On the North side most of the development id happening in the Northern beaches areas like Trinity Beach/Park, but I would probably recommend Smithfield, it is a family oriented suburb. Smithfield is about 15 minutes to the city, is at the bottom of the Kuranda range, has good shopping, James Cook Uni and good schools.hope this helps
Shane
I will have to agree with Terry here, it seems as though it is not only the banks who are not overly happy with the Hybrid Trust structure at present, after a discussion with my accountant last week she advised me that the ATO were becoming increasingly aware of their use.
Discretionary Trust is my recommendation also.
cheers
Shane
I haven't personally delat with C&N, but after a recent thread on this website about their Property Investor Trust and them falsely using another experts quote as a reference I would be stearing clear.
Integrity in business is paramount for me. Just a thought!
Shane
I just set up a discretionary trust for investment purposes through a conversation with my Accountant and Solicitor, cost me $385.
cheers
Shane
I live in Mackay and have previously lived and worked in Moranbah. As far as investing in mining towns goes the cash flow is fantastic as you would have figured out by now having done the figures. A problem I read about in the Australian Property Investor magazine was that an investor had purchased a property in a mining town and yes the cashflow was great, however when he went to leverage against that property for his next purchase the banks would only go to 60% of the value due to the inflation caused by the mining boom.
Just something to consider and maybe ask a lender whether or not this is still the case.
Just on a personal note, compare the property you are considering in Blackwater to some in Moranbah, the concentration of mines surrounding Moranbah is greater than that of Blackwater (from what I recall). Might be something to sway your thinking depending on how long you were planning to stay invested in the town.
Shane
I know what you mean by the shock value of the cover of Steve’s Book, he did manage to do it once upon a time, but yes you are right the cover does not apply to the current economic climate. Nevertheless, its a good read.
As with anything you are passionate about, try and surround yourself with technical experts. I just started ringing around all the local accountants and solicitors in my local area until I found a few that actually invested in property themselves. At least now when I go to them with a strategy or far out idea they at least know where I am coming from.
Shane
PPOR – Principal Place of Residence.
Got to love acronyms
Erika,
are you looking at investing in residential or commercial in Cairns?
Shane
A trust by itself with you as trustee will cost you about $500, I have just set one of these up to try and employ the same principle which Steve M advised in his book. If you wish to use the Company/Trust structure, you will be looking at around the $1250 mark.
You can still set up the trust now which you can use for future purchases, and you can transfer your current properties into the trust, unfortunately this does come at a cost as you will be up for stamp duty and CGT if you do the transfer. Then again it might be worth asking your accountant whether or not you will pay CGT if you transfer your PPOR into the trust? Its a costly decision, I am in the process of trying to make it at the moment. I figure that if I sold my investment property I would have to pay CGT, so I may as well transfer it to the trust, its going to cost me about 10k in stamp duty, but I am talking to my accountant at the moment about whether or not its worthwhile to absorb that cost next time I refinance, anyway enough of my problems.
The scenario Steve spells out in his book is ideal, they own their PPOR which is in his wife’s name, everything else is in the trust. A fresh start might be the way to go, and then you can have everything configured the right way from the get go.
Shane
I agree with Pascoe, I have only read one of Jan Somers’ books, but she seems to be the leader in info on Positive cash flow properties.
I’m also the same as you Josh when it comes to reading, I think I have read about 15 books in my life, fortunately 10 of those have been property investment related.
One thing I would definitely suggest you do is see your accountant about setting up a trust structure to suit your needs, trusts serve a very good purpose. In Steve M’s book there is a very good chapter on how a trust structure provides you with asset protection and also increases your borrowing capacity if you have it set up correctly.
I have recently set up a discretionary trust for investing purposes, they cost around $500 just to give you a round figure.
Shane
You also have the additional equity in your current home to contribute to the 65k to use as security for another purchase, is that right?
So in effect that gives you 65k + 180k (430k-250k) = 245k
I see you have 245k to use as security toward another purchase.
I’m only an amateur investor as well Scotty, but I pretty sure you have more than just your 65k in equity.
Shane
Josh,
I am guessing you have read Steve McKnight’s book if you are on this site. If not get it and read it, its like a bible. Another book I enjoyed reading was ” How to achieve wealth for life, through property investing “, Tony Melvin and Ed Chan – these guys also have a book on Trust structures, ” How to legally reduce your tax “, it goes through the basic trust structures but be wary of their TM Property Investor Trust, I have recently read a few threads on here that indicate the PIT is not all it claims.
cheers
Shane
Richard,
I am hopefully asking the following question on mine and Scotty’s behalf, I am hoping that I am confirming info I have received from a fellow investor.
The purpose of having the interest only loan with the 100% offset account is a matter of having control over your money? In principle having this configuration achieves the same result as paying P%I but prevents you from having to speak to the bank in order to gain access to the additional funds you have paid down off the loan.
So in effect rather than having to refinance or redraw on the loan where costs may be involved, you simply withdraw the cash from your offset account?That is my basic understanding of the scenario, please correct me if I am wrong, I have a thirst for knowledge and would like to figure this one out as much as scotty.
cheers
Shane
Hi Peter,
I am also in central qld, property advisers outside of the capital cities are rare, so rare I haven’t found one yet, and as you may have found advisers who trade in shares and managed funds are a dime a dozen. In light of that I have taken a slightly different approach, I have actively gone out and found people who are successful investors and spoken to them about their strategies, to try and find a light at the end of the tunnel.
Anyway, I live and work in Mackay, if I find anyone in the near future, I’ll let you know.
Shane
