Technically buying a new house is not “adding” to the number of homes available.

If I knock down a house and build 2 units then I am adding up the numbers. Or if I buy a block of empty land and start building new housings, then I am adding up the numbers.

If all I do is buying 1, then I am not adding any more houses (new or old), because I…[Read more]

I still don’t quite see how “new” is defined… if I buy something that is “new” (not that I will do anyway), does it stay “new until I sell it”? Or does it stay “new for X years” and then becomes “not new” whether I sell or not?

This is precisely the reason I believe treating property investment “not as a business” is a very bad idea.

Speak of which, they are trying to introduce something similar in NZ too. They call it “ring fencing” over there.

I would say this sounds like it would have a more negative impact against individual speculators rather than investors.

Unless they propose negative gearing cannot be used to offset the investor’s own investment portfolio, in which case that will probably kill off the invest altogether and cause some very serious consequences to the economy…

And why is that?

I am not doing any buying, renovating and selling. None of those items are performed under my name. Instead the corp trustee acting on behalf of the Trust is doing all of that.

The properties are purchased under the trustee, renovated by the trustee and eventually sold by the trustee.

Yes, I am the settlor of the trust and…[Read more]

Hi Ben

Yes, that’s what I always thought in the past… until I read the post stating “any transfer is considered to be illegal if not having a credit license”…

The corp trustee is the borrower.

Reason for considering to transfer to me first and than having me to transfer to the corp trustee is more from an ease of management point of view.

My parents are old folks and it is a hassle for them to transfer money to overseas. For example, ANZ now days no longer does overseas transfer across the counter…[Read more]

You are right. I didn’t quite understand it.

When you said “If he is lending to you as agent or trustee of the trust you are an individual.” I read it as “If he is lending to you and he is working as an agent or trustee of the trust you are an individual.”

Now that I think of it, it appears you actually tried to say “If he is lending to you…[Read more]

Nah, not like that. He is not part of my trust or member of my trustee.

Trust is like this:
Me as the settlor
Me as director and shareholder of the trustee
Me and my son are beneficiary

My parents are not covered in any scope as far as my trust is concerned.

My question is more in this regard:

1. If he sends money from his account directly…[Read more]

My dad is in Australia… I am in Australia, but my corp trustee is overseas.

My Trust / Corporate Trustees is overseas.

In this case, does he need to send money directly to my Trustee (in which case the National Credit Code will not apply)? In other words: Dad’s account –> send international money to my trustee

Or can he send to my Trustee via my account? Dad’s account –> my account –> send international money to my…[Read more]

Hi Ben

I think this is where things are getting very unfamiliar to me.

Can you let me know what license / gotcha’s that need to be careful with the below scenario:

———————–
What if say, the scenario is you are a property investor, and you specialize in “buy – renovate – sell” scenario.

Let’s say you repeat this strategy 3…[Read more]

Well… that kind of sucks, and I have difficulty understanding the logic behind such laws. It is almost like saying “individual people are not allowed to help each other when it involves money”, and the law appears to setup in such a way that makes it purposely difficult for people to lend each other a hand.

A typical scenario could be, I need…[Read more]

Are you able to elaborate a bit more? A bit confused here. It sounded almost like it is illegal for someone to lend money to a friend and expect the money to be returned in the future?

What if you just want to Angel invest someone?

Eg: you have 50K sitting in bank doing nothing. You have a friend who wants to do a flip and need some renovation money. You and you friend agree (both get lawyers to write up loan documents) to lend you 50K for 3 – 4 months and you friend will return 50K + 10% interest and the end of 3 – 4 months.

I have just read that this is about to change again. Seems APRA thinks the control has at a high level achieved its purpose so IO lending is going to loosen up a bit again rather than tighten.

We will see how accurate this information is.

I don’t like negative gearing.

To me flipping should be done as a way to raise capital rather than “hold it and sell when I retire”. I would consider flip in the following scenarios:

1. I want to do buy and hold but I don’t have enough deposit to buy another one for buy and hold after this purchase, so I will flip for this purchase and as many…[Read more]

I think this is where it can potentially get a bit confusing.

While the serviceability “will improves”, but if the repayment (P&I) is high enough and to the point where your monthly repayment + other expenses are high and your combined income doesn’t cover, then banks will still not lend to you.

It is not like banks will say “OK, out of $3000…[Read more]