You could just use something like a price of $240,000 (ie 20% markup) reducing to $1 over 25 years. Part of each weeks rent could go to reducing the strike price.

The way I see it, you have three choices with lease options

1) a Strike price higher than your purchase price that reduces over time.
eg $240,000 reducing to $1 over 25 years

2) a static price that for the period of the option.
eg $240,000. that remains the same until they exercise the option

3) a strike price that actually increases in line with the market.
eg. 20% discount on market value when they want to cash you out wiht a minimum strike price of $240,000. OR give them 50% of any capital appreciation off their purchase price. eg Original price was $200,00, in 5 years time they want to excercise their option and it is worth $280,000. they get a $40,000 discount and get if for $240,000.

Number 1 is just like an installment contract and benefits the tenant most. Number 3 is the best for you, the option seller, but the tenant also benefits as well.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi Shaunwalker said

quote:

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You must remember though that they are not 100% tax deductable but a percentage of it is ie the GST on the books/courses are.

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What do you mean there Shaun? I beleive that 100% of the costs should be deductible. (if it relates to your current investments, that is)

Terryw
Discover Home Loans
North Sydney
[email protected]

Spawn

I think deductibility is determined by the purpose at the time of the deduction. Eg you could buy a property, live in it, move out and then claim interest and other costs indefinetly if the property remained a rental proeprty.

I think you are thinking about the 6 year rule, which means you can rent your PPOR for up to 6 years, without it being liable to CGT if sold within that period.

Terryw
Discover Home Loans
North Sydney
[email protected]

Some of my clients have done this, and it has worked well in the past because of the high growth in recent years, but I agree that it would be very risky to consider this strategy now.

Basically all you have to do is find another buyer, and arrange a simulataneous settlement. So you do have to settle, but you immediately settle with the person that is buying from you. So you do not need finance. It can be hard to arrange sometimes as not everything always goes smoothly.

Terryw
Discover Home Loans
North Sydney
[email protected]

Firstly, you probably should not be investing in property using a company structure unless the company is trustee of a trust. SO check this witha good accountant.

If you do decide to use a company, it might also be wise to set up a new one. If the current company is a trading company, it could be the tartget of litigation (eg sued for a business related matter), this would put your properties at risk.

And if you are using a company to borrow, then you can use as little as 5% deposits. It is not really any different to borrowing in your own name as the directors must guarrantee the loan.

Terryw
Discover Home Loans
North Sydney
[email protected]

I have Tony Barton’s formula, but don’t like it as it gives too much to the tenant. Why don’t you use a % off the valuation at the time they want to cash you out, or a % of any capital gain? You will benefit more.

Terryw
Discover Home Loans
North Sydney
[email protected]

Adam

it is not easy to buy many properties in quick succession. You still have to come up with deposits and qualify for loans. $40,000 won’t go very far, but should get you a few cheap ones. Then you just have to keep saving and/or wait for some growth to be the next lot.

Terryw
Discover Home Loans
North Sydney
[email protected]

It sounds incorrect to me.

You can claim the interest on a property if it is rented out and you have previously lived in it before. Whether it is positively geared of not is irrelevant.

I read the first book by that author, and she had little money saving ideas such as cleaning the rubber seals on firdges to cut electricity usage! Great stuff, should help you save 30c per year []

Terryw
Discover Home Loans
North Sydney
[email protected]

Shit. I wonder what they would rent for.

Terryw
Discover Home Loans
North Sydney
[email protected]

I would be wary of using a conveyancer rather than a solicitor as they are not fully trained in law and if anything is amiss, they may not notice, and therefore not warn you about it.

Terryw
Discover Home Loans
North Sydney
[email protected]