Cloudus

I am located in North Sydney. if you want to chat, give me an email for further details:

Terry Waugh
Discover Home Loans
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Glad to see you have pulled out!

You also have to think about resale value too. these things are hard to sell.

Terryw
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Russell

We have done a few of these deals recently where the loan obtained was 70% LVR based on the end value of the property.

In your case if they are valued at $135,000 x 15 = $2,025,000, then we could lend 70% of this figure = $1,417,500 (or $94500 per unit).

Terry Waugh
Discover Home Loans
[email protected]

There may be a way to make the non-deductible dedcutible.

Steve Navra has suggested that if you were to use his ‘cashbond’ strategy it could help. This is what i remember:
-Get a cash bond (annuity) securing it on the investment property
– do this for the purpose of increasing your borrowing capacity (with a tax ruling to this effect)
-Place all of the income from your annutiy into a 100% offset account against your homeloan.

It doesn’t happen all at once, but the balance of your home loan decreases very quickly, you get to claim a deduction for the extra interest on your investment property to pay for the annuity and your borrowing capacity increases etc And you get to keep your property and get access to any future capail gains.

Regards

Terryw
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Thanks Andrew! Thats good news.

Terryw
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The trouble with doing multiple structures is that as Director of a company, you must guarrantee the loan thru that company. So even if you set up another company, buy more property you will have to keep guarranteeing the loans. You would legally have to declare all loans you have guarranteed to the bank.

Terryw
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Here are some thoughts

Lenders all start to get a bit worried when the rental income starts to be more than your other income. They often then say you are too rental reliant at this stage and will lower the LVR and ask you to put more money into the deal.

You will always have to prove serviceabilty. Even with low doc loans you must state an income and if it is too low, you will be knocked back. (You don’t get a second chance either).

And the mortgage insurers have limits on what they will lend people. I beleive it is about $500,000 and there are only 2 LMI companys now. So that make it about $1 mil in lending if your loans are mortgage insured. Many of the low doc loans are mortgage insured-even when they are below 80% LVR.

There are private lenders that will lend based soley on the valuation, but they will generally lend only 70% and the interest rates are around 8%. You can increase this to 80% by giving a second mortgage and paying about 16% on this extra portion.

I think that after you are going for a while, you could argue that you are a property ‘business’, and as such there will be different lending requirements. I have heard of people with $60 mil in property loans.

Terryw
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Hi Boris

Steve, if this is classed as a resettlment of the deed of trust, then this may trigger the payment of stamp duty as the beneficial owner of the property has changed and it you could be up for capital gains tax. Is this not the case?

And I am not sure what would happen to the loans (if any) held by the trust. Would they have to be discharged and retaken out in the new trustee’s name?

Terryw
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make sure you put yourself down as the contact for access to the building, so you can be there when the valuer comes around. Talk up the property.

Show him/her figures of all the recent sales etc. Tell him what you think it is worth (but add about 10%). Maybe say you need it to be valued at $X for the finance to get approved etc.

Also ask him what you could be to increase the value of the property. eg add carport etc.

Terryw
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Hi 11111

This won’t help much, I thought it would be, but heard from an accountant that it is a capital expense and only claimable on selling the property.

But then when I did my tax return, my accountant claimed it all in that year.Which was good as I got a lot back!

Terryw
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