Hi
You could just get a couple of valuations done (and average them), and add your margin to this (20%) for the tenants purchase price.

Terryw
Discover Home Loans
North Sydney
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Lookup Lewis O’Brien.

Terryw
Discover Home Loans
North Sydney
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Banks generally want to see 5% genuine savings for your first property. genuine savings means money buliding up in a bank acocunt for about 6 months.

Buying a cheaper investment property is probably the best way to get a foot in the door. If you keep saving for a Sydney property deposit, it could grow faster than you could save.

Terryw
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North Sydney
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Hi

This is a difficult one. The B&B thing would be a commercial loan. You wouldn’t get 80%, probably 70% or less. There may be other difficulties due to location. You would probably have to show you can service the loan on existing income.

If you want to buy land and construct, it is also difficult. Some banks will lend you money based on the end value. If there is enough meat in it, you could defer repayments and capitalise the interest.

Terryw
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North Sydney
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It is not compulsory, but a good idea. If things go bad, the wrappee may end up saying they didn’t know what they were getting into, having legal advice means they can’t.

I think what you described happens a lot. Most solicitors don’t even know what a wrap is. To overcome this, you could send your clients to a solicitor that knows what they are doing. There is a list on the VFA of soliicitors for this purpose.

Terryw
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North Sydney
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Yes I think James is correct. With a hybrid, you borrow to buy the units in the trust, so you are not really lending to the trust.

If it was a standard discretionary trust, you may be able to do it, but it would in effect be diverting income from the trust to yourself. So you may end up paying more tax that you would otherwise. ie You would be making a profit on the interest rate margin.

Terryw
Discover Home Loans
North Sydney
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I owuld really look at a trust structure if I were you.
have a look at http://www.chrisbatten.com.au and watch all the free videos etc.

Terryw
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North Sydney
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Beware of fixing rates with LOs. I did this on one of mine, then the tenant cashed me out earlier than expected, and I had very high breakcosts – which I couldn’t pass on.

With a LO you could do either PI or IO, and you could access the equity while using either of these, but becareful you don’t take your loan over what the tenant can cash you out for, or you may have -ve equity when they cash you out.

Terryw
Discover Home Loans
North Sydney
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Anubus

What if your were at fault and the insurance didn’t cover you. eg you may have done some electrical repairs without being a licenced electrician – and the tenant is electricuted. Or any of a number of possiblities.

Terryw
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North Sydney
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If he is bankrupt, he cannot get a loan. If he is a discharged bankrupt, it will still be very hard to get a loan for a number of years. There will also be lvr restrictions and higher interest rates as lenders percieve a high risk in these sorts of loans.

Whatever structure you setup, you will have problems getting finance if the other party is the one with the income. If it was the other way around (is him with time on his hands and you with the income) you could get around it.

Terryw
Discover Home Loans
North Sydney
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