ok guys and gals I need some pro. advice here.
The smsf is setup, but we only just today got away the forms to rollover our existing funds to the smsf accounts. This could take up to 3 weeks apparently.
This morning we walked through the warehouse we are interested in using for a new business, and it suits very well.
Is it possible to place an offer subject to rollover of super funds plus finanace etc. We dont want to miss out on this opportunity and we fear if we have to wait 3+ weeks, we will.
One thins we could do as well is rent the warehouse of the current owner straight away while we wait for settlement, at least then he would have income coming in as it is currently not leased.
Any suggestions here guys ?
Also, broker suggested a 60 day settlement, I was more inclined for a 90 day settlement. What are peoples thoughts?
Hi Paullie
If it were the owner is hurting, i.e. the property has been vacant for sometime, I'd move a bit further down the road you've already taken a baby step on
Baby step? Yep, you've already thought about leasing it for awhile and delaying the settlement.Why not take the Lease/Option further, i.e. control the property with a lease and an option. Often called a Rent To Own in the residential marketplace. You could Lease it for 5 years at a mutually agreeable rental and take a 5 year option on the property at a mutually agreeable fixed sale price (the 'strike' price). It is likely you'll have to offer a premium rent to make the offer attractive to the seller but you then negotiate a 'price credit'. You get a 'price credit' by asking the seller, 'how much of the rent is credited towards my deposit?' I've often been surprised at the excellent 'price credits' that are offered.
And, as long as the property isn't in Victoria, you will only pay stamp duty on the 'option fee', i.e. full stamp duty is deferred until you exercise the option. The option fee is usually quite small and is, in effect, a small deposit.
It may sound 'different' but believe me you'd be surprised at the number of large commercial premises that change hands this way. We've found them to be a great way to 'control' factory units.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paulie
We do a fair bit of SMSF lending and set up's and to be honest i agree with you i think you will need more than 60 days for Settlement.
Realistically it could take a potential lender 21-28 days for finance and then documentation about the same again.
Costs and documentation requirements are obviously a little more in depth than they would be for a standard residential SMSF application so you need to allow for this.Also remember once the funds have been rolled over (and i think 21 days over Easter is possibly bullish depending on the retail fund they are coming from) you will need to establish the Bare Trust / Security Custodian so that the property Contract can reflect the correct purchasing name.
You are unable to go to Contract until this is set up and the timing is not ideal.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Paul and Richard
Richard, we already have the bare trust established, the only last thing to do is create the company custodian entity.Paul, apprently the owner is hurting, he cant even make his strata levies … apparently.
Timing is a little off on this deal at the moment. We dont really want to go down the track of a lease option, its going to be bad enough purchasing through our smsf.
Can you write up an offer to firm up an agreed sale price but delay the process? We would be happy to lease back in that time.
What about if we go in with an offer, subject to finance, 150 day settlement, 100 day finance approval and we lease for the period till settlement?
Long shot?
Or, we ask to lease the warehouse, then when the time comes put in an offer and make the deal… less risky.
Get some legal advice before putting the offers in. For example, Do you know what name should be on the contract?
Now you also need to consider if any of the non-land assets are mortgaged and may not be able to be sold to you – part of fittouts etc
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
Definitely not 60 days for an SMSF loan – there are so many potential issues due to the complexity of the setup. 90 days, at a minimum.
Hi Paullie
If you do happen to Lease the property, I'd consider paying his asking price, if he will give you an option for 2 years. When you've got that agreed, pop the question
i.e. 'how much of the lease will go towards my deposit?' It's certainly worked for us with motivated sellers.Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Definately get some legal / specialised Accounting advice.
If you have set up the security custodian trust set up prior to the Pty Ltd entity you are asking for ATO trouble.
Hope that advice wasnt from your Broker.
We see clients with set up problems every day of the week. Even Solicitors who dont specialise in this area have no idea .
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I hear what you’re saying Paulie about the motivated vendor. By leasing without negotiating the sales price the door is wide open for the vendor to sell to anyone else. A short term benefit will be that you may be buying a going concern and not have to pay gst on the purchase price. Again speak to your accountant.
Thanks everyone for your advice.
The deal was accepted today. I talked at lengths with my broker, accountant and settlement agent to make sure the offer was suitable.
Managed to negotiate a 35 day finance and 90 day settlement.
Baby step? Yep, you've already thought about leasing it for awhile and delaying the settlement.
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