Forum Replies Created
Im not questioning your use…i believe u WILL use it for investment…But
when u lodge a tax return, ur accountant is going to ask to prove it’s for investment..as ATO requires paper trail proof; i was able to claim my 4×4 drie under investment but my situation is slightly diff in that i bought it under a company name and the company was a property investing company so that was my paper trail….Might want to give ur accountant a call to see what he thinks and how you can create the proof.
Regards
MichaelMick C | Shape Home Loans
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chrisaus wrote:Guys,I have just purchased an investment property which is currently tennanted. I am in the market for a trailer/ute as I do all my own maintenance on the property and it's a real pain carting tools around with my 4d family sedan.
Is the purchase price of a trailer/ute tax deductable if you have an investment property?
The question is can you prove it’s for the investment property?
ANY money you spend towards the investment property is tax deductible ; including petrol and flights
Regards Michael
Mick C | Shape Home Loans
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https://www.loans.com.au/Pages/Home.aspx
Ummm did loans.com.au just increase it’s rate from 6.59- too 6.69 ??? without RBA movement, or was it a special rate etc???
and it looks like they changed the “5 years RBA linkage” down to 3 years..wonder what else has changed?
Mick C | Shape Home Loans
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HI,
You wil need to live in it WITHIN 12 month…so if the lease ends in 12 month time from the day you buy it…you may not qualify;
http://www.osr.qld.gov.au/eligibility-testers/fhog-decision-tree.shtmlRegards
MichaelMick C | Shape Home Loans
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narboz wrote:Hi Terry,
No, we will slowly build this with our own money.
But, Paul asked whether there was a chance of setting the farm up on a business/commercial loan.
cheers
LInda
Hi,
For the farm type and size your after..it be def commercial loan. From the sounds of thing you dont have any solid exp in farming?? t without knowing your personal details i know the bank will ask you 4 questions that will also help you decide if this is the right path for you.
1.Any experience in farming?
2. will this be your JOB? ie going from PAYG to self employed?
3. What financial returns are you looking at and is it signed off by accountant with a full balance sheet
4. Business plan with exit strategiesWith the size your after and for a production farm, the max LVR you will be able to get is 55%-65% ( unless you have another security to back it up) ; rate would be 9.5% on a 20 years loan ( With good farming experience + ABN) …also even if we dont include the 60k debt into the finance ( which we can;t anyway) the bank will use the debt as part of their calculation in serviceability.
Not sure how your going to get around this …esp given you have no deposit..
Sorry for the bad/complex news- but it’s best to hear it here then from the bank ….
Regards
MichaelMick C | Shape Home Loans
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narboz wrote:HI, I am hoping someone can help me.We have found 60 acres that we would like to purchase. We have made an offer of $630k. We would like to borrow $460 against the property to pay the owners $400 and clear $60k debt, we would then pay the onwers the rest in 24 months. To combine our debt with the amount of $400k would free up cash to pay the owners and extra $400 per month cash in the hand. As the house is a dual occ we could rent the other 3 bedroom side of the house out and get approx $300 – $400 p/w which we would also pay directly to the owners as cash in hand.
The owners have agreed to us taking a first mortgage out on the property and then they would take one out for the remaining amount that is owed. We do not have a deposit.
Can someone please explain what they are meaning. If it were vendor finance wouldn't the owner borrow the whole amount? And then we pay the owner. We are also having trouble finding a bank that will vendor finance the deal. Any ideas?
Can anyone see this working any other way. Or how we could make the deal sweeter for the owners. My hubby and I both work full time and have decent wages. We have a couple of things in the pipeworks that will give us cashflow in 24 months.
Help please!!!
To be honest- i dont think this is a do-able deal under residential lending….and it will be hard as well under commercial. Reason?
1. Partial vendor finance
2. 60 Arces
3. You have a 60 k debt that’s not related to the home
4. No depositCould you do it as a full vendor finance? rather then borrowing some from the bank – shoot Paul a email he might be able to help with the full vendor finance.
Regards
MichaelMick C | Shape Home Loans
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Tracey B wrote:Wow, that was quick – thanks Michael. I will email you later with further info.So can I just check – you're saying that even if 4 were with say NAB and 4 with another lender, only one would give 90% LVR and the other 80% LVR?
Yep…that’s cos the LMI providers will NOT insure more then 25% Risk per building. and since there are only 2 LMI providers in AUS- it doesn’t help..
Regards
MichaelMick C | Shape Home Loans
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Great work Alistair- alwasy good to have a “visual” video.
The only negative is the voice over/talkers are very “flat”…
Regards
MichaelMick C | Shape Home Loans
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Tracey B wrote:To the finance guys:
We are about to sell an 8 unit property and would like to understand whether purchasers may be able to borrow 90%. These ones are on individual strata titles, have laundries internally, fully tenanted, in a city of 100,000. Expected listing price will be $1.1M, offering the purchaser a 6.7 gross yield.
Would any lenders do 90% on something like this?
Does the level of return for the size of the investment come into consideration for lenders when determining the LVR?
If lenders won't do 90% on something of this size, maybe we are better off to sell them individually (although we were planning to leave something in it for the next person)?
Cheers,
TraceyHi
Residential rate- 6.9%-7.1%
If it’s individual Strata then the bank will allow 90% LVR..but only on 4/8 of them- so it be 4 x 80% and 4×90% and the loan will be split bwt 3-4 lenders as well…a lot of work…and bit of hassle but that’s the way around it.
Commercial rate 8.5-9%
less hassle and less chance of a rejection- 1 lender only as well… LVR at 80% Max
Tracey- if you dont mind…could you email me the address of the property? + any another details you have; as i have a bunch of client who actively invest in block of units so i could forward your email to them.
P.s In your situation, i would suggest you sell them individually but it will take you 6-12 month to sell them all….as you have to releae them in stages so there is no “over supply”.
Regards
MichaelMick C | Shape Home Loans
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Hi,
1. Is your parents just going to borrow the money as it is ? ie a personal loan OR
2. Borrow against any property they owned as equity? ie a home loanFor them to be able to claim the tax deduction they need to meet the purpose test; and if the purposes is for “investment” then yes that’s fine…but in your case i would say it would be “hardier” to prove it’s for investment as the money is given to a related family member and no “official ” paper trail can be issued etc…
Regards
MichaelMick C | Shape Home Loans
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Without knowing the addy- i can you;
1.It;’s zoned residential…but it be residential 2b or 2c
2. Being close to the uni-it’s 90% chance it;s a student accommodation/boarding house..
3. 7 bathroom= boarding house automatically
4. The agent most likely gets 4-9 separate rent…ie not one tenantWith any of the above 4 points…your going to have “some” trouble with the bank; and that’s why it hasn’t sold yet…given the high rental yield. Don’t get me wrong…finance is possible…but slightly tricky and out of the box.
Regards
MichaelMick C | Shape Home Loans
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melb15 wrote:Hi Michael,
I think you were thinking I was the landlord but we are in fact the tenant in this case. So what you are saying is that we should be paying for most of this stuff right?Liam
Hi Liam,
Sorry yes i was referring from a landlord’s point of view.
If you want to negotiate with the landord i would highly suggest you cut down on the list and focus on the item that cost the most…showing a landlord a list of 5+ request would just put them off!When you exit; you most likely can’t ask for any cost back due to you “adding” value to the property.. because in the landlords eye it may not be useful items for their purpose ie the next tenant that moves in may want more space and want storage only and may not want a shower? etc..You most likely would have to pay some cost when you leave to “remove” some stuff.
Regards
MichaelMick C | Shape Home Loans
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melb15 wrote:We’re about to sign a lease on a brand new warehouse/office. Downstairs is warehouse upstairs is the office. The place is brand new so it is like a blank canvas. We let the landlord know what modifications we required and they proposed the below allocation of who will pay for what. I just have two questions:1. Does this allocation sound fair and standard for a commercial lease (it’s our first commercial lease so I have no idea)?
2. If we have to pay for improvements to the property such as shower/kitchen etc we obviously can’t easily remove them when we leave. Is there any provision we can make to recover some cost upon leaving considering we would have added to the value of the property?The items proposed are:
1. Phone and Ethernet sockets/cabling will be up to the tenant to arrange at their own cost.
2. Upstairs Heating/Cooling will be installed by the landlord and will be factored into the rental over the first 3 years of the lease agreement.
3. Downstairs kitchen with stove, exhaust fan, pantry will be up to the tenant to arrange at their own cost.
4. Downstairs shower will be up to the tenant to arrange at their own cost.
5. Bars on downstairs windows will be installed by the landlord and will be factored into the rental over the first 3 years of the lease agreement.
6. Alarm system will be up to the tenant to arrange at their own cost. (note; unit 2 installs are alarm installers)
7. Standard roll down blinds will be installed by the landlord and will be factored into the rental over the first 3 years of the lease agreement, any other type of blind (wooden slat etc) will be up to the tenant to arrange at their own cost.
8. Doorbell system will be up to the tenant to arrange at their own cost.
9. Upstairs to be painted (white) will be installed by the landlord.
10. Stair well to be painted (white) will be installed by the landlord.
11. Floor coverings upstairs will be installed by the landlord and will be factored into the rental over the first 3 years of the lease agreement.
Thanks in advance
Everything you mentioned, if not 90% of it are payable by the Tenant! – it MAY kill the deal…but forking all this cost is def a no no…be aware if you agree to instal and do the work then any damage to the item you will have to maintain and repair (unless the tenant directly damaged it).
As a matter of fact the tenant should be paying for the water sewage fee as well.
You should only be paying for the outgoing- council rate, strata( if any), insurance
Regards
MichaelMick C | Shape Home Loans
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ferdinandch wrote:Hi MichaelSorry to inform you, that I likely to accept an offer from a solicitor who will charge me $750 fixed fee all inclusive if I use mortgage broker he refers. I apologise if you have done some works. I hope I still can ask some questions if I am unsure about smth.
Regards,
Ferdinand
Hi Ferdinand,
That’s fine. My team will still work on the file for your benefit; so you can compare etc…and if you want us to confirm the recommendation/question by this broker; i be happy to assist!
You may not be our client now…but mortgages/investing is a life time commitment and we are sure we be able to assist you in your next adventure
Regards
MichaelMick C | Shape Home Loans
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Terry- it’s a shame you dont do conveyancing work anymore, you are so knowledgeable in this field.
ferdinandch – Standard fees in Sydney are: conveyancer – $850-1000 + you pay for any report/search you require ie Sparta report/building report
Lawyer – they normally charge as a “package” $1,500- includes all required searches etc…
So $990 ALL inclusive is cheap…as one standard strata report is already $250.
Regards
MichaelMick C | Shape Home Loans
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slowachiever wrote:Great topics ,I have just been tracing information myself for possible restructuring .
I have found the same a few property groups I went to see , have been full on into tax benefits not interested at all about any positive gearing as it will attract tax .Although we do need to be tax effective in our property portfolios.
But as I think Steve and others have mentioned before , If we make money we pay tax and the reverse is also true if we are paying tax we are making money , which is good .Could someone comment on Lines of Credit ,a bit concerned on these, never used before and a broker has suggested I convert my current loan to this and my accounts I have at other banks .Take out a line of credit on a property I own outright to release equity, to get ready for buying more property.I am used to having my pays go into one account and also take all expenses out of there , then rent money from 3 properties goes into a high interest internet account for saving for my next property deposit .I know one other way would have been to just get a MISA account going for property I owe on and put everything into that .
Any comments Thanks .LOC is easier to get approval and less hassle…but it’s def not the best structure in the long term + less flexabililty and costly.
I would suggest a standard equity release with a standard split loan…Regards
MichaelMick C | Shape Home Loans
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Great Post Anthony!
Regards
MichaelMick C | Shape Home Loans
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Terry pretty much covered it.
LMI refund is possible and it happens; especially if the loan is discharged in the 1st year. It will be written in your loan docs and most of the major 4 banks allow prem refund; however it is case by case…if in doubt aks your broker/banker.
Straight from Genworth”
No refund is payable where:
separate arrangements are in place with the lender for a reduced premium rate in lieu of taking premium refunds.
the loan is repaid within one year of the maturity date of the mortgage; or
the notification of cancellation of the policy is received by Genworth more than 3 months after repayment of the insured loan; or
the refund amount is less than $150.00; or
a loss has eventuated; or
the loan has been reported to Genworth to have had arrears.PERIOD FROM DATE OF PREMIUM PAYMENT TO DATE WHEN LOAN HAS BEEN REPAID IN FULL REFUND PAYABLE*
1 year or less 40%
Over 1 year to 2 years 20%http://www.genworth.com.au/lender-resource-centre/policy-and-product-information/cancellations/
QBE refund form- http://www.qbelmi.com/Uploads/Documents/925eb114-882d-48b9-a95e-3bc98b9c57b7.pdf
—-
When i submitted refund form for client i find Genworth is much more easier to deal with and ask less questions + less requirement. However QBE do give a much higher refund amount back- 30-60% back.
Note: AMP has the worst refund policy out of the banks that i have seen….
Regards
MichaelMick C | Shape Home Loans
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tjunction wrote:Thanks Richard and Michael for your valuable responses.Michael: the other lender I found that was willing to do 80% residential loan, pulled out because the units didnt have individual laundries. I havent heard of that one before….
That’s very common.
No individual landries 50% of the time means it’s part of a boarding house zoning -Residential Zone 2b.
This is the solo reason why soo many of these cash flow properties are on the market for > 6 month.Depending on your financials and overall deal…you may be able to get this pass a lender that will do resi- but rate is around 7.9%
Regards
MichaelMick C | Shape Home Loans
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OK- yep you be able to claim the 1 bedroom from Nov- June. could be worthwhile, spend ~$700, should be able to get $2,000 back i would think.
Just note the things thats Deprecating the most is the “internal” (70% of the cost) .
$650 is on the expensive side for a Depreciation report…you could arrange a cheaper price ( more then 50% off) if your willing to provide the pics + measurement etc,,,that why it saves them the cost and time going out to the property; this will be easy for you since you live next door
Regards
MichaelMick C | Shape Home Loans
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