I think it is better to ask, which is better high growth or high cashflow?

Positve cashflow is always better. There is no sense in losing $1 tax claim back 50c, unless there is growth.

In my opinion, I think it is better to go for high growth property. Cashflow positive property is good, but a $20 per week cashflow is no good if the property is still worth the same in 10 years time.

High growth properties are usually in the cities -with rather low rents, and cashflow properties are usually in the smaller country towns -with much smaller gains. But you can get high growth property that is cashflow positive.

Terryw
Discover Home Loans
North Sydney
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I think what Chris Batten is getting at is for you to structure your purchase of property that gives you the great flexibility in tax minimisation and asset protection. If you use a unit trust and discretionary trust strucuture it gives the added benefit of allowing you to transfer a property to your SMSF without paying stamp duty or CGT. You may not ever do it, but you never know, so best not to purchase in a way that poisions this idea.

Terryw
Discover Home Loans
North Sydney
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Firstly, never beleive an agent@!

And secondly, if you are goign for a 14 days settlement, I hope you are paying cash. It would be very hard for a ‘normal’ bank to have the finance ready in time.

Terryw
Discover Home Loans
North Sydney
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I’ve seen a recent example where $10,000 in land tax was simply reduced to $5000 by splitting a trust up into two trusts with one property each.

Since Land tax is incremental, the more you own in one name, the higher the percentage you pay.

Terryw
Discover Home Loans
North Sydney
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It may be possible to wrap, but the repayments would be much greater than the market rent on the place. But it can be done, and has been done in Sydney.

If it is on the market, you can offer the agents incentives to sell. eg, above $XX, they get an extra 2% commission etc.

Also, it is not clear from your post, what did you pay for it and what is it worth now – bank valuation. There is no use in selling at a great discount if you could simply borrow the extra equity and use that to invest in postive cashflow stuff.

Terryw
Discover Home Loans
North Sydney
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Sounds alright to me. I would much rather a good IP in Marrickville than in whoop whoop. The figures you quote, are they before tax, PI loan with extra payments? If you just change it to interest only and put all extra payments into a 100% offset account, this should ease cashflow.

You would have had good gains over the last few years and it would be asham to sell it, just to buy another property or 2. CGT is a killer. What about just borrowing against the equity and buying positively geared property or 2 which will help offset the loss – if there actually is one.

Terryw
Discover Home Loans
North Sydney
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ANZ is good with 95% loans (with the LMI added on top). They do multiple 95% loans, even on investment properties – I obtained 6 myself at 95%.

Terryw
Discover Home Loans
North Sydney
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great location in my opinion.

Terryw
Discover Home Loans
North Sydney
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Seems to be heavlily in their favour (of course). I think borrowing 105% will give them a 40% share of any capital gain.

Terryw
Discover Home Loans
North Sydney
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Hi there

I have done a few lease options like this and have come tot he conclusion that I shouldn’t have!

1) I think to make it worthwhile for yourself, you should base the rent on PI payments on the strike price less the option fee. ie about $393 per week. adjusted quarterly in line with the CPI. This does not always work for properties in areas of low rental yields.

2) yes, 2 to 3% would be good (for you)

3) I think 6 years is too long. But after the end of the lease, the tenant would have to either:
a) buy the property
b) move out and lose everything they have paid.
c) renew the lease, with a new rent and new stirke price based on market values at that time. Make sure you have the right to decide if you want to renew or not, and charge a new option fee.

4) yep if they back out, all option fees, extra rent etc are not refunded. unless you want to of course.

From what I have seen, giving up a potentially large capital gain for a small weekly profit is not worth it.

Terryw
Discover Home Loans
North Sydney
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