Forum Replies Created
Ok – unlimted finance it is! I’ll get to work.
Big Cat – see my answer to Stamp Duty question above.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auTry http://www.commercialrealestate.com.au/
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auGrace, a little off the topic of mortgages… however…
To meet the definition of a self-managed super fund each member of the fund must be an indiviual trustee or the director of a corporate trustee (Superannuation Industry Supervision Act sec 17A).
Therefore, you do not have to set up a company to be trustee. You can be the Trustee in person. The member and trustee must be the same person.
Hope this helps.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auActually, just thinking…
You can borrow at 65% LVR and not have to provide any financial information – no income, assets, or liabilities (this is called an asset lend). Interest rate is 7.25%… but at least it allows you access to your equity.
Therefore…
$1.4 m * 65% – $514,000 = $396,000.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auYes you are correct – $606,000.
This is how I work it out…
$1.4 m * 80% – existing mortgages = what you can borrow.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHwd007
Yes – if you under or over estimate your taxable income the tax office may penalise you.
Your idea sounds like a bit of cash flow juggling… I guess it sounds ok but what happens if you don’t really have anything to spend the $2,600 on? You don’t want to put yourself in a position where you have to find things to do just to ensure your taxable income is on the mark. Furthermore, be careful and ensure that what you spend your money on is fully deductible and not a capital item that needs to be depreciated.
On the whole, I don’t think I like this strategy that much – no real gain. Why not put all this creative energy into thinking about buying better property – that will make you way more money.
BUT that’s only my opinion.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHay, hay, hay we’re getting off the topic aren’t we???? [
]Stamp duty is added to the Cost Base when working out a capital gain (Section 110-35)… that is…you work out a capital gain by…
Sale price – index cost base = taxable gain
Topic ideas
Thanks everyone… keep them coming.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Xenia
I totally agree with you. I would use the equity as you are suggesting (otherwise its an underutilised asset). I think Steve would agree with us… or perhaps I need to listen to FastTrack again.
Steve???
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auYou aready know the answer to that one AD… ProSolution
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auIf your gross rental yield is high enough then the property might qualify by itself.
Two points:
1. Most lenders only take between 75% to 90% (one at 100%) of the gross rental income.
2. All lenders will calculate serviceability based on P&I repayments at a benchmark rate (a benchmark rate is the current interest rate plus a margin).Here is an example of a property that costs $100,000 @ a rental yield of 9.5% (financed at 80%)…
Banks assessment
Rental income @ 80% = $7,600
P&I repayments @ 8% = $7,044
Surplus income = $556 (therefore this scenario does not drain your borrowing capacity)This assessment assumes that the borrower earns other income that covers its personal expenses and any other financial commitments.
Don’t get me wrong… the bank will look for other income (because they don’t want borrowers to be 100% reliant on rental income).
Conclusion
Therefore, theoretically a borrower could purchase an unlimited number of properties (based on the assumptions above) so long as they had unlimited deposits.
For example, I have a client that owns 19 properties and earn minimal income. But since her average rental yield is approx. 11% her investment properties have actually increased her borrowing capacity.
I hope this makes it clearer.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Helen
No I haven’t used them – I prefer to do the work myself.
I have referred clients to them before and I know them reasonably well. When I started ProSolution I went around and spoke to about 10 buyers advocates – these were the best in my opinion (in terms of experience, qualifications, professionalism). My suggestion is look for someone that has valuation experience and they should be a registered Real Estate Agent (e.g. David McRae used to be a valuer).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi TJ
Yep, the banks will count pension income towards serviceability (provided it’s ongoing). However, the pension isn’t that must is it? Their maximum borrowing capacity would not be that great.
However, the main thing this person will need to prove is genuine savings. That is, they will need to demonstrate that they have been able to save 5% of the property’s value over at least 6 months. Some lenders may only require 3%.
There is an argument that someone paying rent (instead of saving) has demonstrated that they have the spare cash to meet loan repayments. However, lenders will probably only take this into account in some situations (i.e. if someone’s been paying a very high rental or if they only have 4% genuine savings – they are margial).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Helen
You might want to check out:
Janet Spencer at http://www.buyersolutions.com.au/; and/or
David McRae at http://www.david.mcrae.net/.
They are buyers agents that I would trust.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Choc
I would also suggest reading:
1. Streets Ahead by Monique & Richard Wakelin.
2. Real Estate Riches by Dr Dolf De Roos.
3. Get a copy of Steve’s FastTrack tape.These are good resources that will give you a good overview of property and strategies.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi PB
Why don’t you post some of your numbers on the forum for people to comment…
quote:
I have played around with variations on LOC, P&I and Fixed loans and I get various degrees of success.The decision to go P&I, interest only, fixed is a very personal one and really depends on your investment objectives, risk profile and personal preferences.
To all those of you who have emailed me for my article – thanks – I’ll email it to you on Monday.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Everyone,
I guess it’s my return now…
Ok, up until just a year ago I was working for a Big 4 international accounting firm (Deloitte) in Corporate Finance preparing company valuations for mergers and acquisitions. After doing a bit of reading (e.g. Robert Kioysaki) I decided that being an employee was not the way for me to become financially free. So it started me thinking… property investment, starting my own business, etc.
In end of May 2002 I resigned. My goal was to start a business to generate cash flow and invest that cash flow into property (similar to RK). I went into business with a friend… I know… I hear you all thinking… bad move… and it was! We didn’t have the same work ethic, client service commitment, etc. In Nov 2002 I left and started ProSolution and haven’t looked back!
I set a deadline of 30 June 2003 to buy my first cash flow positive property. I’ve only got 9 days left. I’ve just been too busy but I think I’ll definitely get one by the end of July.
My plan is to build a property portfolio of all types of property (some positive and negative high growth property). I’ll be the one buying in Docklands (Melb) in 1 – 2 years when everyone’s selling. My grand aim is to get into commercial (still positive cash flow).
On a personal note, I am 28, married (3 years), no kids. My wife (Josie) works with me at ProSolution. She fully supports our investment aims (i.e. business and property) – which is important as Steve and Dave agree (in FastTrack).
Anyway, that’s probably enough about me.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auOk, I think I might have found the answer…
If you go to Baycorp Advantage’s website to it FAQ – “What is on my credit file?” (see http://www.mycreditfile.com.au/help/faq_personal.asp?CountryID=1&UserTypeID=11)
It says:
quote:
What is on my credit file?
Information about you and your credit history including:– Personal details such as: name: residential address: date of birth: drivers licence number:
– Credit applications and enquiries you have made during the past 5 years
– Records of some current credit accounts
– Overdue Accounts (Defaults) which may have been listed against your name
– Bankruptcy information,Judgements
– Public record information such as Directorships and Proprietorships
It defines a credit application as:
quote:
A credit application is an application for credit made to a credit provider. These are held on file for 5 years from the date of the application.– The information recorded includes:
– Who the application was made to
– The date of the application.
– The amount applied for.
– A general indication of the nature of credit being sought.
– A reference number for the application.
– Whether the application is a joint application, or relating to an application to act as guarantorTherefore, it seems that if you act as gaurantor then it will be recorded on your credit file.
This is sensible as the strength of a guarantor is a very important consideration for the lender – especially where the applicant/s is not strong enough in their own right.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auTwo things:
1. Land tax – go to the State Revenue Office website for more information e.g. http://www.sro.vic.gov.au.
2. Mortgage insurance – can range between 1% to 2.5% of the loan value depending on LVR (e.g. above 1% if LVR is 85%, about 2.0%/2.5% if LVR is 95%).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi Jumbuck
If you have purchased well then ‘demand’ should have a greater impact on your property’s value rather than inflation or deflation.
Remember that housing is a commodity – everyone needs one. Even in a deflating market the quality areas and assets may still benefit from some capital growth.
But who knows where the economy is going to go – even the economists don’t.
As a general rule – if you buy a quality asset then you should enjoy a good return in the long term (this should apply to all asset classes).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.au
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