Hi,

Thanks for the feedback. I’m thrilled and delighted I’ve been a guide on your financial journey.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

(post moved to PropertyPlus)

Welcome to the community and thanks for posting.

Despite what many people think, I’m not against the idea of negative gearing… I just think that it’s a strategy that only works when the market is rising.

Karen, in your case the lesson to learn here is that you went into the property without your investing eyes wide open, and seemingly without and structured plan.

As such, your investment is largely out of your control as you need to rely on the market to continue to rise, which can be very frustrating.

Using your figures, $240 * 18 months = $4320, yet your property is only worth +10,000 more than what you paid (nett) – and your sales price is before selling costs.

Only you can decide whether to sell or not, but your decision needs to be planned rather than a knee-jerk response.

What I’d do is set a benchmark return I want to get, and if, after a few months, this cannot be achieved and does not look likely, then it might be time to cut your losses and start again.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Rebecca,

You can debate the morals, but what you don’t seem to see is that the majority of the forum here don’t agree with your take on things, and when they do try to engage you in making their point known, you start hurling abuse which needs to be moderated.

So, as I see it, you have added little to the discussion of late other than name calling and criticism that is anthing but constructive.

Please, if you can’t find something to advance the discussion then refrain from posting.

The art to winning people over to your cause is not to hit them with a sledgehammer.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Hissho,

quote:

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just a further question: wouldn’t a vendor get upset if you went back to him and said “sorry mate, i just couldn’t get the finance.”?

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Nope – happens all the time.

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

quote:

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My problem is that I am looking for a lender that will provide a lvr of 80% and not the usual 70% for a commercial loan.

Any ideas as to where I might locate lenders or brokers that are specialists or flexible in this area regarding an 80%LVR for a commercial loan.

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Hmmm – hard, but not entirely impossible. FYI all my commercial loans have been at 70%LVR, but I know people who have secured 80%.

I suggest trying one/several mortgage brokers and seeing what they can find.

Just a ‘heads-up’ it’s likely that the term will be a max of 10 years, so you’ll probably need to go interest only to achieve a +ve cashflow outcome. This being the case, be sure to allocate some of your cashflow profit to debt reduction, just keep it accumulated in an offset or other account.

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi mate,

Glad your enjoying the book. []

The reason why I put getting finance after signing a contract is, in my experience, the practice of almost all lenders.

They require a physical property, or more accurately a signed contract to purchase, before they can issue (final) approval for finance.

Pre-approvals are always subject to conditions, which basically says that final approval will depend on the specifics of the property being purchased (e.g. independent valuation, validation of income etc.)

Furthermore, I’ve heard of people obtaining pre-approval but later having the application rejected, so IMHO it’s better to have a signed contract with a subject to finance clause in your hand when you go shopping for a loan.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Julian,

Nice to hear from you all the way from NZ!

Very perceptive insights… my relationships with Dave and Julie are cornerstones to my success. Rencently I wrote somewhere that your spouse needs to be your #1 fan, not your #1 critic.

Yeah, more business relationships fail than succeed, I believe having common goals and being accountable is very, very important.

Re: too much emphasis on the evils of neg gearing… perhaps, but to explain how a concept works you need to attack its weak points. Too many people don’t understand, which is why I went into in in a lot of detail. Besides, it is a major point of differentiation between me and other property educators.

Re: vacancies, at the time of prelim analysis I allow for 4 weeks unless there are mitigating factors, in which case that base figure goes up or down.

Re: my emphasis… I’ll buy anything that makes money from day one []

Great to hear from you and hope to read more of your posts in the near future.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Jimmy,

P&I loans are calculated based on the annuity formula where PAYMENT is a variable of PRESENT VALUE (principal or loan balance), INTEREST (per compunding period) and TIME.

Excel does this with the PMT function.

Hope this helps.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi SIS,

A couple of points to note (albeit perhaps at the complicated end of the discussion):

quote:

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See with a Family Trust, you can only have +ve cashflow assets, were as hybrid you are able to have -ve geared and +ve geared properties that run at a lost or profit.

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Well, you can do the same in a family trust too. Indeed, the issue of trust loss provisions is very complicated, but the same essence is true… you cannot distribute a loss from a trust, instead it is accumulated and carried forward.

In the case of a family trust, an income loss (as opposed to a cap loss) would offset the income and the nett profit distributed or the nett loss accumulated and c/f.

quote:

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Hybrid trust has both similaritites of unit trust and family trust, there are more tax advantages as well.

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Hmmmm – I don’t think this is correct… what are the additional tax advantages?

quote:

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With Hybrid trust you have more flexibility in sacking and appointing a new trustee.

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Perhaps, but I’ve never seen this advertised as a benefit before. In truth, the trustee appointment / removal provision of most trusts are the same as the wording is similar.

quote:

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Hybrid trust also gives you the flexibility to distribute different amounts to the beneficearies.

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This is possibly ture, but it depends on the circumstances of the structure. The same effect can be gained from a family turst where the Trustee distributes according to a formula (ie %) rather than $.

quote:

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Theres lots of things, but has more advantages than Family Trust.

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Hmmmm. I don’t necessarily agree. I haven’t ever used a hybrid trust and I don’t think I’m the poorer for it.

quote:

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A big disadvantage, is that many accountants dont understand Hybrid Trust

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This may be true, but most qualified accountants – and certainly all tax professionals would know the hybrid trust drill.

quote:

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Other thing too. Trustes dont pay tax

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Mate – this is wrong. Trusts DO pay tax on any undistributed profits, and the Trustee pays it (on behalf of the trust) at the top magringal rate (48.5%) from dollar one.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Piscies,

Sorry, re-reading my post it may have sounded dismissive re: deposits. Apologies.

Just working through what the issue re: small deposits to flesh out the discussion, are you suggesting:

A. The vendor carryies back a second mortgage for the deposit shortfall between sale price and what the bank finance?; or

B. The vendor offers terms (instalment sale) on a low deposit basis?

Just clarifying…

Thanks,

Steve McKnight

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Remember that success comes from doing things differently.
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