@derek,
Thanks for the reply, I haven’t sign anything yet and of course the reason I ask this is that I wonder if this is a good pick or make sense for the IP in QLD.So far I have paid $880 only but have not proceed with the bank yet.
Derek wrote:Hi Henry,Is JDL (or a subsidary company) operating as a broker in this transaction too
If so looks like a pretty good deal for JDL.
Joining fee + finders fee + brokers fee for refinance + fee for new loan and maybe a marketing fee from vendor.
Does that sound right Henry?
.maybe a marketing fee? theres no maybe about it. They will walk away with $40k no doubt! just for sepnding 30 minutes to show that if you buy a property every 2 years using compounding growth you will be a millionaire.
Also Henry,
why negative gear in what is perceived to be a saturated, low market that is predicted to receive very low capital growth in the coming years? Why not positively gear after saving tax, keep the $8,700, negotiate the best deal you can with an independent mortgage broker, buy a property in a good area with solid growth and only have a real estate commission in the sale rather than a marketing fee? It may sound hard but in essence its really not, especially for that price
Josh,
Yes, I’m still new at this investing world and yes, by reading and learning from others in this forum has certainly an eye opener for me.
In conclusion this JDL strategy plan is quite expensive in the first place to spend $ 8700+$880 and also the Finance team push me to get the 95% loan.Henry Adams wrote:Josh,Yes, I’m still new at this investing world and yes, by reading and learning from others in this forum has certainly an eye opener for me.
In conclusion this JDL strategy plan is quite expensive in the first place to spend $ 8700+$880 and also the Finance team push me to get the 95% loan.Henry,
expensive or not, it is un-necessary. Our company for example, sells investment properties, we charge an REIQ capped real estate commission. A mortgage broker makes a commission and quite often a trailing fee from the bank, an accountant charges you by the hour, a lawyer charges by the hour. All of these fees are fair and reasonable, but to then charge the client to do the same job that 95% of the industry is doing for its regulated/quoted fees as standard is just plain rich. Sometimes, companies may charge a project management fee if they are managing the building process for a new investment property, however this is not a house and land package, you are paying for an end product which is what your stamp duty shows.
Also if you are buying a new house, why not build, save a lot on stamp duty and any interest paid in the construction period is a tax deduction that financial year.
The Gold coast would have to be the worst place in QLD to buy in investment property. I am qualified to say that as I deal with properties all throughout QLD.
Why go backwards $200 per month when you can go forwards $200 per month? I just dont get it? unless you have heaps of cash to burn for the sake of it?
Portfolio PI wrote:Henry,expensive or not, it is un-necessary. Our company for example, sells investment properties, we charge an REIQ capped real estate commission. A mortgage broker makes a commission and quite often a trailing fee from the bank, an accountant charges you by the hour, a lawyer charges by the hour. All of these fees are fair and reasonable, but to then charge the client to do the same job that 95% of the industry is doing for its regulated/quoted fees as standard is just plain rich. Sometimes, companies may charge a project management fee if they are managing the building process for a new investment property, however this is not a house and land package, you are paying for an end product which is what your stamp duty shows.
Also if you are buying a new house, why not build, save a lot on stamp duty and any interest paid in the construction period is a tax deduction that financial year.
The Gold coast would have to be the worst place in QLD to buy in investment property. I am qualified to say that as I deal with properties all throughout QLD.
Why go backwards $200 per month when you can go forwards $200 per month? I just dont get it? unless you have heaps of cash to burn for the sake of it?
Yeah, that would be make sense Josh. FYI this is not a brand new house it is already built house for 5 years but yes I feel it rather expensive still.
and thanks once again for the sharing about the investing in Gold Coast region I really appreciate your suggestion. I was fooled by them to buy in the slowing down area for the hope of CG in COOMERA, Therefore I’d be better off investing in NSW or Sydney suburbs as this is my area.I’ll go and seek any mortgage broker which doesn’t requires me to pay commission on top of my monthly spending like http://www.moneychoice.com/
My focus is CF+ at the moment to build enough equity for the next IP before getting married.
Henry Adams wrote:Portfolio PI wrote:Henry,expensive or not, it is un-necessary. Our company for example, sells investment properties, we charge an REIQ capped real estate commission. A mortgage broker makes a commission and quite often a trailing fee from the bank, an accountant charges you by the hour, a lawyer charges by the hour. All of these fees are fair and reasonable, but to then charge the client to do the same job that 95% of the industry is doing for its regulated/quoted fees as standard is just plain rich. Sometimes, companies may charge a project management fee if they are managing the building process for a new investment property, however this is not a house and land package, you are paying for an end product which is what your stamp duty shows.
Also if you are buying a new house, why not build, save a lot on stamp duty and any interest paid in the construction period is a tax deduction that financial year.
The Gold coast would have to be the worst place in QLD to buy in investment property. I am qualified to say that as I deal with properties all throughout QLD.
Why go backwards $200 per month when you can go forwards $200 per month? I just dont get it? unless you have heaps of cash to burn for the sake of it?
Yeah, that would be make sense Josh. FYI this is not a brand new house it is already built house for 5 years but yes I feel it rather expensive still.
and thanks once again for the sharing about the investing in Gold Coast region I really appreciate your suggestion. I was fooled by them to buy in the slowing down area for the hope of CG in COOMERA, Therefore I’d be better off investing in NSW or Sydney suburbs as this is my area.I’ll go and seek any mortgage broker which doesn’t requires me to pay commission on top of my monthly spending like http://www.moneychoice.com/
My focus is CF+ at the moment to build enough equity for the next IP before getting married.
Henry,
it looks like they still sell properties though? or somehow aligned? The best bet is a 100% independent mortgage broker that has good knowledge of investing. I put all of my clients who need a broker to Signature Lending Solutions ( a small purely mortgage broking firm) let me know if you would like their details if it would help. If you want any advice on areas in Qld i can help, outside of QLD im of no help at all as i don’t know there markets very well to be honest. But by posting threads on here you will get lots of advice. I think Terryw is from NSW? i could be wrong.
Make sure that there are significant growth drivers in a region both now and in the near future if you want to realise any capital growth in the short term. Do lots of research. You dont have to rush into anything. If you see a suburb that you like (well in QLD anyway) I can print of an RP DATA statistic report for you which will show you median prices etc. This will help you not get ripped off and pay above market value like the deal in Coomera. Always look at the median sales price, I think its a good idea to stay as close to that as possible. The more unaffordable your house is to the everyday person when you buy it, the less potential you have to maximise your capital growth in the future
Yes I am from NSW, but am a lawyer now (though i miss broking!). I think Michael here is a broker from Sydney.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
@josh, yes many thanks for your input and suggestion mate, I appreciate that. JDL confirms that the next big boom in housing and property is in QLD, especially COOMERA, when I asked them why not NSW metro or regional area, they said it is already over priced and not good for the following reason (cannot negative gearing which means CF+ increasing the amount of money that we pay to taxman, Chain reaction strategy needs time to build and hold for long…etc…), so in theory they only specialize in QLD property and in VIC but not in NSW.
Oh well, there goes $880 down the drain…
Henry Adams wrote:@josh, yes many thanks for your input and suggestion mate, I appreciate that. JDL confirms that the next big boom in housing and property is in QLD, especially COOMERA, when I asked them why not NSW metro or regional area, they said it is already over priced and not good for the following reason (cannot negative gearing which means CF+ increasing the amount of money that we pay to taxman, Chain reaction strategy needs time to build and hold for long…etc…), so in theory they only specialize in QLD property and in VIC but not in NSW.Oh well, there goes $880 down the drain…
Consider it $880 on a well learnt lesson! As JDL will say, it’s nothing on what the potential capital gains may be, when you purchase a GOOD property in a GOOD area! I think Qld will fair quite well in the coming years with the mining industries strength. That isn’t to say other areas won’t. Maybe they don’t sell stuff in NSW? If you are comfortable with an area than that counts for a lot also.
I want to explain negative gearing and CF+ as if what they have told you is as you just explained, it is incorrect. Let’s say you buy a $450k property, you rent it for $600 per week, after all expenses it costs you about $5000 per year to hold before tax. You then depreciate $15,000 in the first year (assuming its new). Now you have reduced your tax by $20,000 per year of which you receive a rebate at your marginal rate. Let’s say it’s 30% tax you are paying. You will receive a $6000 rebate. Making your property CF+ whilst reducing your tax.
Some people buy into these strategies of having to negative gear to reduce their tax and that’s the best way to buy an investment property. Whilst this is fine to do if the property and costs suit your portfolio and or strategy, it is not the be all and end all. What you are really doing is decreasing your income by $200 per month. Whilst many label this as “savings” it is savings that someone else can be making for you if you buy the right property, not you. By reducing your income, you reduce your borrowing power, and when you reduce your borrowing power you reduce your ability to buy another investment property. If you had 5 properties all loosing $200 per month, your down $1000 per month! To me that is not a viable way of investing in property.
Just my thoughts for you Henry.
Henry Adams wrote:Oh well, there goes $880 down the drain…Hi Henry,
Sounds like you have elected to opt out of this investment property – now I can sleep at night. Just be ready for the follow-up phone calls and stick to your guns.
Put the $880 down to learning expenses (not tax deductible by the way
) and move on.@derek and Josh: yes you guys are right, many thanks for saving my equities down the drain further, I was under the impression that by sacrificing $ 231 per week for the negative gearing IP in QLD it will be payable when the next booming cycle is on approximately 8-9 years assuming I always hold the IP and yes @josh you summarize it in more concise and clear way without asking for $880
that amount should’ve been shared among you and Terry.
$200 per week?? thats even worse!
currently the median sales price in Coomera for houses is $388,500 and has not been over $400k. The median sales price for units is $239k.
To try and sting you over $400,000 for a 2 bed unit is crazy! i would love to know the address to do an owner search and see if they or someone there owns it?
Unless your in a mining area at present, the property market isn’t really booming so just take your time and do your research, you wont miss out on anything spectacular in most cases.
Portfolio PI wrote:$200 per week?? thats even worse!currently the median sales price in Coomera for houses is $388,500 and has not been over $400k. The median sales price for units is $239k.
To try and sting you over $400,000 for a 2 bed unit is crazy! i would love to know the address to do an owner search and see if they or someone there owns it?
Unless your in a mining area at present, the property market isn’t really booming so just take your time and do your research, you wont miss out on anything spectacular in most cases.
Yes Josh, that what I would’ve thought so, but according to the CLient manager, it is brand new house so it is free stamp duty. The total monthly payment that I’ll have to pay to the bank is around $2400 p.w so renting it out at $400 p.w i will still have to pay some extras.
I don’t think that Coomera is mining town, unfortunately there is no address yet. THe funny thing is that the numbers calculated that I posted here a few page back is wrong so they now rewrite it with higher borrowing amount, this time with proper LMI and some other things added, This is so ridiculous as I’ve never met any mortgage broker re-splitting the structure of the loan after I ask them about the amount of LMI involved and why my current IP is used as the “Security”
So in short, now they have broken it down to an approximation- $200,000 for the land & $230,000 for the construction components as two separate loan facilities which makes me even more confused.
Hi Henry,
Okay now I am confused again. In another post you mentioned that JDL were trying to sell you a 2 bed unit for $435k. Is this still the same property? if so, then there is no “split loan” for the property itself. Maybe a split loan for the deposit and balance but you cant buy a unit / townhouse with 2 separate contracts. When buying a unit, full stamp duty is applicable on the entire amount.
The way you just explained it in your last post, is a house and land package. However you will still be required to pay stamp duty on the value of the land purchase. No matter what they say, this is the law. Unless you are an eligible first home buyer in QLD who is going to move in to the property for the required period, no one is exempt from stamp duty in QLD.
So were they trying to sell you a house or a unit?
Also, the two contracts shouldn’t make two separate loan facilities. It is a basic construction loan where the funds to the builder will be drawn down as progress payments from the one loan.
No, Coomera is not a mining town, it is a long way from it. None of South East QLD is. I was purely trying to say that it is the mining regions that are in the midst of a long term boom. So unless you were purchasing in a mining region, you dont have to worry to much about rushing in as you wont miss out on any/much capital growth in South East QLD. If you were purchasing in a mining region, and you entered the market in 6 months time, prices would be significantly higher than they are today. Sorry if i confused you before on this.
Also if you buy a brand new property you will eligible for a $10,000 Govt. boost grant. It seems they have not factored this in. Some marketing firms are filling out the paperwork for their naive clients and keeping the funds themselves and then paying for some of the clients fees ie: stamp duty etc out of this. Thus telling people that they don’t have to pay stamp duty. This may or may not be the case here I wouldn’t know, but it has been happening unfortunately.
Hi Henry,
Walk away – you don't know enough about the deal.
At various times you thought this was a 2 X 1 X 1, then a completed property, your last post tends to suggest it is a house and land deal (construction loan), ………….etc etc etc.
No available address suggests to me the property is in a brand new estate. There are lots of brand new estates in Coomera.
I can assure you from the bottom of my heart Coomera is NOT a mining town. It is suburb in the process of being developed about 30km (not looking at an atlas) north of Surfers Paradise and on the western side of teh Gold Coast Highway/Motorway. Commera would be slightly north of the Gold Coast theme parks.
Hell – if you want real mining town property we've got them in spades. But they're in WA.
Josh,
It would be possible to split the loan into 2 so Henry could have one for the land and one for the construction. I dont' really think there is any benefit to this though.
I was wondering about the stamp duty too. Maybe the builder is paying it by including it in the price of the land.
Henry, good way to learn things isn't it!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Josh,It would be possible to split the loan into 2 so Henry could have one for the land and one for the construction. I dont' really think there is any benefit to this though.
I was wondering about the stamp duty too. Maybe the builder is paying it by including it in the price of the land.
Henry, good way to learn things isn't it!
Right, I’ve never done it / seen it done this way. Interesting all the different ways!
The stamp duty concerns me, to quote that there is “no”stamp duty for an investment means they have just included it somewhere else. No doubt there is confusion on all sides here.
Henry, if they have sent you contracts they should have all land and building details disclosed. The purchase packages that we send to our clients (bearing in mind we dont get involved with the mortgage side of things except referring who we use if people need one) are about an inch thick with building plans on the land, building inclusions, HIA build contract, land contract, forms for the client to fill in for any grants/bonuses from the government etc.
Do not ever sign just one part of the deal at a time. Make sure that when you do purchase (and i suggest you take your time) that the whole deal is in front of you at once. I would even suggest that you have an independent solicitor/lawyer look after the contracts before signing. not that the bill would even come close but if you paid them $8700 to do that it would be a better investment than paying JDL to rip you off.
Portfolio PI wrote:Hi Henry,Okay now I am confused again. In another post you mentioned that JDL were trying to sell you a 2 bed unit for $435k. Is this still the same property? if so, then there is no “split loan” for the property itself. Maybe a split loan for the deposit and balance but you cant buy a unit / townhouse with 2 separate contracts. When buying a unit, full stamp duty is applicable on the entire amount.
The way you just explained it in your last post, is a house and land package. However you will still be required to pay stamp duty on the value of the land purchase. No matter what they say, this is the law. Unless you are an eligible first home buyer in QLD who is going to move in to the property for the required period, no one is exempt from stamp duty in QLD.
So were they trying to sell you a house or a unit?
Also, the two contracts shouldn’t make two separate loan facilities. It is a basic construction loan where the funds to the builder will be drawn down as progress payments from the one loan.
No, Coomera is not a mining town, it is a long way from it. None of South East QLD is. I was purely trying to say that it is the mining regions that are in the midst of a long term boom. So unless you were purchasing in a mining region, you dont have to worry to much about rushing in as you wont miss out on any/much capital growth in South East QLD. If you were purchasing in a mining region, and you entered the market in 6 months time, prices would be significantly higher than they are today. Sorry if i confused you before on this.
Also if you buy a brand new property you will eligible for a $10,000 Govt. boost grant. It seems they have not factored this in. Some marketing firms are filling out the paperwork for their naive clients and keeping the funds themselves and then paying for some of the clients fees ie: stamp duty etc out of this. Thus telling people that they don’t have to pay stamp duty. This may or may not be the case here I wouldn’t know, but it has been happening unfortunately.
Josh, Sorry to confused again, I should’ve updated the post with the new plan that JDL proposed to me, previously it was a townhouse unit but now they tried to sell me land+house package. I have bought my first property in NSW already which I turn into IP this year does that means I’ll be eligible for first homebuyer (free stamp duty) for QLD state ?
No worries Josh, now I understand more about that region after your explanation.
Terryw wrote:Josh,It would be possible to split the loan into 2 so Henry could have one for the land and one for the construction. I dont' really think there is any benefit to this though.
I was wondering about the stamp duty too. Maybe the builder is paying it by including it in the price of the land.
Henry, good way to learn things isn't it!
Yes it is, Thanks for the explanation and sharing guys, I really appreciate it. This JDL strategies client manager and the finance manager looks dodgy as they tried to confused me with the split loan and the stamp duty thing without mentioning the $10k grand / incentives at all.
) and move on.
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