Forum Replies Created
Hi Del
In short – yes, always better to divert all free cash flow to reduce non-deductible debt first. If you have a home loan then I would definately only repay interest only on IP loans.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auMaximus
Generally, the minimum P&I repayments (to apply after IO period) are already set out in the loan documents when you first take out the loan. So repaying principal will have no affect (but check with your loan docs).
Most lenders will let you roll over into another 5 or 10 year interest only period after the first one has expired. So you could essentially have an IO facility ongoing if you wanted.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auRichmond – you already have an existing income stream so I would think it’s deductible. You may have to apportion between personal and investment (i.e. meals expenses, etc may not be deductible). This is a tricky area which I have not touched on for a couple of years (not until now when it’s become relevant again).
There is a defence that if a deduction is denied (maybe through an audit) and so long as you have a ‘reasonable arguable position’ (weird wording I know) then perhaps at worst all you will only have to pay is the tax and interest accrued on that amount (no penalties). So at worst you just pay the tax later. On this basis I am reasonably aggressive but not to the point where I move away from “reasonableness”.
I am not suggesting that anyone break the law. By all means comply with the tax law. I just want people to be aware that perhaps there might be an argument for why a deduction is legitimate. But this has to be an educated and well informed argument. Ignorance will not help you.
Just work with your accountant and give them as much information as possible. Bounce ideas off them. I would not suggest doing it alone.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auThis is a complex area. There is no easy answer (depends on a lot of factors). I suggest you seek professional accounting advice. Plus you can also see http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR989/nat/ato/00001
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auThanks Terry… do you think I’m beautiful? [
]Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auTry http://www.ato.gov.au/content/individuals/downloads/NAT4151-03work.pdf
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Trecia
I’ll explain how equity works by example. Say you are building your new property that costs $100,000 (including land and construction costs) financed by:
Loan – $80,000
Your deposit – $20,000Then in a year your property is worth $200,000 (that would be nice).
What you can do is approach your bank and tell them that you want to increase your loan (this is called a loan ‘renegotiation’ or ‘variation’). They then send a valuer out to your property. If the value is $200,000 then they can increase your loan to $160,000 (being 80% of the value). You can increase to 90% but that would incur mortgage insurance (this is a one off cost – it’s expensive).
Naturally, the bank would only increase your loan to $160,000 if you have enough income to prove that you are able to repay a loan of this size (this is called serviceability).
You can then redraw the additional $60,000 (i.e. $160,000 less existing $100,000) and use it for what you like (e.g. property investing).
You can also do this by shifting to a different bank (i.e. refinancing). All you have to do is apply for a loan of $160,000. When it’s approved the new bank will pay out your existing loan of $100,000 and you will have $60,000 left over.
Let me know if this doesn’t make sense.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auI would guess that stamp duty would be levied on fair market value in a non-arms length transaction. Perhaps you might find the answer here: http://www.osr.nsw.gov.au/portal/page?_pageid=33,63559&_dad=portal&_schema=OSRPTLT or you can email the SRO at [email protected].
Hope that helps.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Kristoffer
There are a couple of commercial lenders that will consider franchise. If you email me the purchase price and the name of the franchise I can give you an indication of indicative interest rates, application fees and loan value ratios if you like (alternatively you can always call me during business hours at 03 9909 7100).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Kristoffer
Definitely speak with other franchisees. Pick the ones you want to speak too (don’t ask head office who you can speak to). You will be amazed what people will tell you. In my opinion, that would be the strongest evidence to consider.
Naturally, normal financial and legal due diligence is also required to be completed by your team.
The benefit of a franchise is that the hard work has already been done. They know what works and does work. The downside is that you don’t own the brand name and to some extent you are building the brand name owners goodwill.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Mini
See https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=1105
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi aussierogue
I only have two comments.
1. Some Council’s can restrict people from renting out their property on a short term basis (i.e. holiday house). So you may want to check with the Council first.
2. Accountant – I would recommend John Filippo in the city (see http://www.filippo.com.au). He understands what its all about.I’ve heard that Venus Bay is pretty good.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Gavalynn
As a general rule, I don’t spend anymore than $200 on any one seminar. If I was going to spend $2,500 I might just as well go out and buy a property – that will probably teach me more than most seminars. Only when I become a bit more of a “sophisticated investor” (say 10 properties or more) will I consider spending this kind of money.
I know some people will disagree with me. They might say that I should educate myself before I purchase… not after. Well investing in property is like anything. You have to try it first. Make sure it works for you. Make sure you like it and want to continue. Only then is it reasonable (in my opinion) to spend that kind of money.
So here’s my advice. Go to 5 to 10 seminars that cost around $100 (this will teach you a lot – get many different views and strategies from different people). Then go out and do a lot of research and buy your first investment property. You’ll be surprised how quickly you’ll learn.
Good luck.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auSee https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=1825 & do a search on the forum. There’s heaps of info on this.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auJust my 2 cents… display homes can be difficult to finance becuase it normally has a condition in the contract that resticts the vendors (and mortgagees) ability to sell the property during the “display” period. Just thought you should be aware.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auSome other things to think about:
– Commercial leases are normally long term (and may have specified rental increases).
– Smaller market (affects liquidity of investment)
– Sectors of commercial property market are predicted to experience high capital growth in the short-term.
– High yields.
– Because a lot of commercial property finance deals are assess on a stand alone basis it does not impact on your personal borrowing capacity (so long as you doesn’t have to provide a guarantee.
– Might be worth avoiding ‘specialised’ properties (e.g. restaurants, etc.)Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Jars
Re: ASIC search on David McRae – not sure why it came up blank – you’ll have to ask him. Be sure to let him know (Stuart Wemyss – ProSolution) I referred you. He’s a nice guy and knows his stuff. He should be able to add value.
With respect to the above… I’m not sure I understand. Is your basic objective to purchase capital growth properties, complete minor improvements to increase rental income and pay down debt to ensure they are cash flow positive?
If that’s the case then is sound good however consider:
– effective structure (do you have a partner to share taxable income with, estate planning issue, etc.)
– Likely capital growth over next 10 years.
– Ability to be able to “buy well” and improve to create instant equity.I know these all sound a bit vague but its a hard question to answer.
How about diversifying your strategy. Perhaps you could do a couple of different things:
– Buy and hold in inner-city for capital growth (as above).
– Buy-reno-sell to create instant equity.
– Buy cash flow positive property in an area that you speculate will increase in value significantly (therefore aiming for high capital growth and yield).
– Commercial property.That way if the market falls in one area then your strategy does not suffer too much.
Anyway I’m just thinking out loud (or typing out loud…whatever).
Finance broker – where do I need to apply? Feel free to check out my website at http://www.prosolution.com.au.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auTheENJOLady – $500,000 in total borrowings.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auTheENJOLady
Just a tip – If your lending is over $500,000 NAB will give you more than 0.5% off – push them harder…
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auI had a meeting with NAB today. They have a very good package and will do some very competitive deals if your lending is over $500,000 – probably best in the market (I was very surprised).
However, not sure how they are on the service side. AD can attest to the fact that they can be difficult on the revaluation side of things as well.
I would disagree with Terry. Professional packages would generally be cheaper than any basic variable on the market (considering break fees and application fees) – especially if you have multiple loans/properties.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.au
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