Are you looking to buy in the SMSF or in your own names?

If a SMSF it may not be a good idea to buy without finance as the property cannot be later mortgaged or used as security for further investing.

I presume the apartment is small – is that why you cannot finance?

woohah76 wrote:

Asking all the experienced/hardened investors out there for an opinion.

I have an opportunity to gain an instant increase in equity of close to 50% on a deal due to it being well below market value. However the immediate/short term on-selling prospects aren’t too great due to the particular market being tight, it has a poor rating on the boomtown app etc

So the question is, Is equity worth it if the immediate on-selling prospects aren’t too great? Or do you need both to validate the risk?

Thanks for any feedback and in sight

Sounds like you are not really getting instant equity if you cannot resell it qiickly. think carefully.

Assuming you will need a loan on the property why not use the lenders valuation

Not unless it was a 3 way marriage.

• This reply was modified 9 years, 12 months ago by  Terryw.

ssky7788 wrote:

Hi,
Thank you to all who may respond!
Does “SMSF” (Borrowing to create a property profile) outshine the “Discretionary Trust”?
Which strategy is better to create a property profile (may be negative gearing and at age around Mid-High 50s ) after comparing with all the setting cost, on going fees and the tax benefits….etc??
What if the risk that government may change the policy in future?
What do you recon?
Any information would be much appreciated. Thank you.

I reckon you need to learn a bit more before you start asking these sorts of questions/

You must be rich?

$55k on a car is crazy – what will it be worth in 5 years?

If you purchased $55k worth of vangard index fund what would it be worth in 5 years, and how much income would you have received?

It looks like the interest rate is 6.87% which is higher than now by about 2% so this is good to factor in a few rate rises.

capital growth rate is 7% which is pretty high.

rental expenses are about 30% which is about right. Is the rent realistic for the area?

The software used is the PIA – not not pain in the arse, but property investment analysis by somersoft.

What sort of ‘advisor’ gave you this? Are they also selling the property?
There is no licencing needed for this sort of stuff so anyone can do it and it is unregulated.

All title holders must be borrowers or guarantors of the loan.

But additional non owners could also be on the loan. However in Australia the general practice of the major banks is to allow non owner spouses on the loan in addition to the owner spouse. They wont allow this for non spouses = spouse includes defacto.

The ATO allows all the deductions to fall into the hands of the owner of the property so adding a spouse on the loan will not effect deductibility – generally.
But this should not be done unless the owner spouse cannot qualify for the loan. 2 main reasons:
1. Doubles risk
2. Hurts future serviceability.

I have seen 1 owner but 2 on the loan countless times where the 1 owner can qualify on their own. I have unravelled many of these to improve both asset protection and serviceability.

You don’t want to reduce future IP borrowings but the non deductible PPOR loan. Don’t worry about making the IP cashflow neutral by depositing cash in the offset as this will cost you money in more non deductible interest.

What you want to do is keep the cash in the IP offset temporarily and when you buy the PPOR work on a debt recycling strategy.

Don’t forget you can own the PPOR in one name but have both of you are borrowers.

1. Yes and yes, possible double duty. Will depend on the state the property is in and the circumstances. could be tax if there is a fee for the nomination or option agreements etc

2. no.

seek specific legal advice.