Hi,

I recommend you take a few days off work and turn up to BH for a visit so you can see for yourself.

I’d still be an accountant if I listened to my friends who told me that I would be crazy to invest in the country.

It wasn’t until I drove and saw for myself that I realised there was opportunity where others saw doubt.

Conversely, I wouldn’t invest in an area that I hadn’t previously visited first hand.

All the best,

Awesome answer Julie. Thanks for taking the time to make the post.

As I understand it, renos don’t carry warranty protection but anthing that requires a building permit probably does, particularly if it is structural.

In Vic, I’m told that renos greater than $5k require a building permit, and so I would imagine the builder would require insurance of some sort.

Clearly, any electical or plumbing work should be carried out by the appropriately qualified person and come with a certificate of compliance. In this case, they would have insurance to cover their work.

Hi,

There are some very good posts made here – particularly by LA Aussie.

Some further comments I would add:

1. Your accountant should be advising you on the financial consequences of various decisions rather than telling you how to invest. It is wise to get a second opinion, but be careful that you drive the outcome you desire.

2. Watch out for the GST considerations of selling your new dwelling. You may find that 10% of your profit gets swallowed up!

3. To really know what to do you need some kind of investing plan or vision. In truth, what you do here needs to be looked at from a global goal achievement perspective (macro) as well as a deal-by-deal (micro) perspective. The question to ask is: what course of action pushes me closer to my goals the quickest.

Cheers,

Hi Ben,

Thanks for your post and welcome to the forums. It’s great to see you here!

Building costs are quite subjective, with the final price varying substantially depending on:

1. The location and availability of trades
2. The type of construction
3. Size of dwelling
4. The ease of building
5. Weather conditions
6. Builder’s margin

As you would expect, large spec home builders have tradespeople employed and therefore are able to build faster and cheaper than abuilder who uses sub-contractors.

Generally, build costs are quoted either on a ‘sqaure’ or ‘square metre basis’. As a rule they do not include finishing costs (driveways, fencing, landscaping etc) or appliances.

Also, watch out for GST. A lot of builders quote on a + GST basis.

In the case of Dixon… I would want to do more research on what is and is not included. Often cheaper prices are quoted for base products but any variations or changes come at top dollar.

Cheers,

Hi,

Zoning changes are rarely straight forward. It requires a length petition to council who must then contact neighbours and other affected parties.

It’s not impossible, but it can certainly take six months, or more, for it to go ahead assuming everything is okay.

As a rule, it can be a tougher ask to have something zoned from res to commercial as opposed to rural to rsidential. However, many councils are keep to protect so-called ‘green wedges’ and are reluctant to allow urbanisation of areas.

I did a quick search for you and came back with the following information:

Source: Darebin City Council

As part of the rezoning, you may be required to pay quite heft fees and contributions to headworks (such as sewerage, roads, stormwater etc.)

My suggestion would be to visit a local town planner and pay for a prelim meeting to discuss what you are planning to do.

All the best,

Hi,

Trusts are generally seen as an attractive way to control wealth without owning it.

However, since a trust is usually set up just prior to buying, it often lacks the necessary financial history to properly comfort a lender (such as 2+ years of financial statements).

Even if a relatively low LVR is sought, the bank will want some surety that the loan can be repaid – or that someone will repay it should the trust default.

That is wht lenders typically require a guarantee from the Trustee(s). In this case, the ability of the Trust to borrow money will depend on the ability of the Trustees to be seen as worthy guarantors.

Hence, the credit history, personal asset statement etc. all come into play for the individuals behind the loan – either as individual Trustees or as Director’s of the Trustee company.

More commonly these days, lenders are starting to become a little more suspicious of elaborate schemes involving multiple entities and / or ‘bare guarantors’ – those with little income or assets but with a lot of contingent liabilities in the form of guarantees.

Like many things in the lending market, there is the lender’s formal policy and then there are the advantages that come from having a relationship with a senior lender who can cut to the chase and make things happen.

I am not suggesting anything illegal is done, only that these banker understand structures more than the standars loan officer at a branch level.

As you can see, there is a little more to this question than a simple answer. Terry is right to say that it shouldn’t make much difference, but often getting the bank to approve the loan is a matter of taking away all the reasons for them to say no as much as it is getting them to say yes.

All the best,

– Steve

Hi Supagirl75,

Thanks for your post. Welcome to the forum.

By ‘owner occupied’ I assume you mean live in…?

In that case what you are doing is making a lifestyle decision while trying to maximise the financial outcome.

I say this as it is important to make this observation as many people mistake their home for an out-and-out investment.

That is, the question that you need to ask yourself is: ‘First and foremost, is this property a home or investment’

Your answer will dictate what sort of property you acquire, and your timeframe for ownership.

Again assuming that you are looking for a home, select somewhere that has appealing features that will become more scarce (and therefore more valued) over time.

Examples include access to ammenities, land size, proximity to landmarks etc.

If you are looking for an investment that you can also live in then you have a choice of doing a ‘buy-reno-sell’ or ‘buy-reno-keep’ (with or without subdivision and development). This option sees you living a less glamourous lifestyle but potentially making tax-free profits while also having a place to live.

Food for thought.

Keep us posted on your progress.

– Steve McKnight

Hi,

It is likely that the ATO will view your activities as a business given your intention to ‘trade’ properties.

That is, your choice of investment structure (that is, the entity) will not be able to get around the tax treatment of the transaction.

For example, it doesn’t matter if you use a coy or a trust, the profit will be taxed and not subject to CGT.

However, from an asset protection point of view, a trust may be better as it allows you to split income while also securing assets.

It would be wise to have an accountant look over your situation and provide an opinion.

All the best,

– Steve

Hi,

Yep – Dave and I have shaken hands, thanked each other for the memories, and decided to part ways.

There is no gossip or hidden agenda. We had simply reached a point in our business relationship where we wanted different things.

Rather than compromise and end up with a lose-lose outcome, we respected each other enough to end on a high.

No doubt our friendship will continue and we’ll be able to bouce and support each other in our new businesses.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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