My very rough calculations are:

Your current loan $250K @ 7.5% P/I
Sale price $400K @ 7.5% P/I
Deposit $7K (assume FHOG)
Term 30 years

Current rent $285 pw.
Loan repayment on $393K = $633 pw approx plus rates and insurance pro-rated to per week amounts.

Need to then check affordability against his income and any current debt.

This is about $644 positive cashflow per month (get your accountant to advise on the after tax amount) and $7736 pa.

Just watch that if you only do 1 wrap you should get your accountant to check if you can use the emerging profits rule or if you will be slugged capital gains upfront.

Note – if you charged him 6.5% interest the weekly repyament would be around $575 pw plus rates and insurance and the monthly positive cash flow would be around $381 per month and $4575 pa. A great deal for both of you.

The missing item is your COCR. Not knowing what you paid for the property and therefore what equity you have in it now, we can’t work that out.

I also like to take COCR out to a SCAT (spendable cash after tax) ratio as well.

Hope this helps.

skippygirl

Well..they need a venue, some IT, food and drink, a certain ambience or “vibe” to the space.

Just an idea to evaluate.

skippygirl )

Poor risk management in the business planning and strategy phase.

I would have thought a glaring risk to the market entry was customer confusion, and backlash from regulators and established players whose business you may threaten.

They should have mitigated those risks before they went public. They need to take a look at someone like Richard Branson. Then the product would have either succeeded or yes, failed. Now nobody knows.

skippygirl

Westan we are on FIRE!!!!!!!!!!

A wonderful win against Collingwood – after playing like schoolboys for 3 quarters Terry turned the mental switch to “play like legends” and off they went. Brownie booted 5 goals – one of those all time great games.

It was hard because my daughter and her friend follow the Magpies whilst my other daughter and I follow Tigers so I had to contain some of my cheers – but belted out the Club song with gusto.

And then we beat Brisbane at home!!! First time we’ve beat them at the Gabba for about 5 years I think.

We are THIRD – can you belive it?? Oh why oh why did I book a trip to Europe in September????

Well, as history shows……

Cheers

skippygirl [biggrin]

Great info, Scott. It’s good to hear an objective report as I don’t live in Sydney.

We have a unit there (2yrs old) and in the complex (6 blocks, each max 5 storeys) there is currently zero vacancy rate, and the rent on our unit has gone up $30 per week over the last 12 months so the yields are rising. According to the property manager the last 2 units that came up for rent were occupied the day after the last tenants left.

I wonder then, if, what you encountered was a lack of investors, whilts there seems to be no lack of tenants?

Interesting, thanks.

skippygirl

Sorry, just want to return to the topic.

What’s the best LOC rate, 80% LVR, around $200K, freestanding houses, for family trust with company trustee (directors incomes to service etc).??

Thanks
skippygirl

Have a great trip Westan.

Wouldn’t get your hopes up just yet. We are away all of September in Europe – didn’t see much danger in being away at that time for either of us (hubby is a Hawk).

Nevertheless Terry seems to be doing something right and the management bounced back nicely from the TAC fiasco so the signs of hope are there.

Have never been in love with Richo I’m afraid – I wanted him sold years ago but hey 6 goals is OK by me.

Oh if only we could play like we did in the 1995 finals…what a game against Essendon! Time of my life, and 5 months pregnant at the time, singing my lungs out, “YELLOW AND BLACK, we come from Ti……Ger……land…..”.

Cheers

skippygirl )

So far I’m wrong on the first point and correct on the 2nd.

Go Tigers!!

skippyygirl

Gatsby LOL.

Bwendan, been there, had all A’s all my life(they were A’s in the 80’s) and brought home one report with a single B in Year 11 and all Mum said was “what the hell happened?”.

You are doing great, you are way ahead of other people your age, and smart enough to learn that parents are not perfect, in fact they all carry some sort of baggage that affects the way they treat their children but overall they are better than their own parents and you will be better than them to your children too.

However, we all need to be recognised and praised – I certainly do. I know myself when I’ve achieved alot (and I reward msyelf) but it still means something special when the love of my life says how great I am.

Maybe just say to your parents that you are proud of yourself for the great report, you feel terrific, and say you hope they feel proud of you too. It will no doubt make them realise they forgot to tell you that and they will agree with you.

Kid, you’ll move mountains. (Dr. Suess)

skippygirl )

Hi MJW,

We too had a sort-of AIP going before I read John Burley’s book and then we refined it and have followed his methodology for the last 2 years. I just use a Vanguard diversified index fund (which has gone up very nicely thank you in the last year) and do automatic BPay payments on the 1st of each month for 10% of our gross income.

Then another 10% of our gross income is added to our minimum PPOR mortgage payment. The other 10% of gross is for charity but we are tracking at 3-4% until our mortgage is gone.

John points out that if you educate yourself about an asset class or investment opp, know about it and have a strategy to earn 15% + returns for it then invest in it, but if you have the “buy, hold and pray” or pure speculation method then he does not regard that as investing and recommends for your AIP you are better off just using an index fund for the lower management fee and because you will simply earn the index return and you can’t do any worse than any active fund manager 2 out of 3 years at a time.

So, if you do have a strategic approach to direct shares and can earn 15%+ consistently go for it.

With any AIP he then recommends you take that as it builds up and invest it in the niche you have chosen which must earn a min of 25%. So our Vanguard fund builds up and is converted into property as we go as part of our “Level 4 and 5” strategy and that strategy has to deliver 25% COCR.

Hope this helps….

skippygirl