Hello Guys,
Just a small introduction i am 17 and have been reading about property and very interested.
I wanted a bit of knowledge on the topic of loans and borrowing for the buy and sell strategy.
I understand there is some kind of insurance if your loan is under a certain percentage but how do you go with a buy, renovate and sell ? Do you still take the minimum amount and obviously have a buffer for renovations ? And how much does loan insurance cost ? also what are the tax implications with doing this over and over ?
Any other feedback and advice related to this topic is highly appreciated.
Thanks
Jason
PS: This forum is absolutely great , i have learnt so much in the past 2 weeks.
Jason957
Sutherland Shire Real Estate Agent - Jason Mikhail - 0402 640 630
Hi Jason,
The only advice I can give is that I myself am looking at my 4th property and the insurance (I think) you're referring to is mortgage lenders insurance.
In my situation this insurance applies when you're borrowing over 80% (maybe less depending on where you're borrowing from) of your current asset value.
e.g. current property value = $200k therefore anything more than 80% of $200k ($160) will incur mortgage lenders insurance.
I've had to pay it on one occasion a few years back and for a $200k loan it was roughly a once off $5000. The best way to get an idea of how much insurance they'll charge is to call them and ask.
Hope this helps,
– Angry
Jason957 wrote:Hello Guys,Just a small introduction i am 17 and have been reading about property and very interested.
I wanted a bit of knowledge on the topic of loans and borrowing for the buy and sell strategy.
I understand there is some kind of insurance if your loan is under a certain percentage but how do you go with a buy, renovate and sell ? Do you still take the minimum amount and obviously have a buffer for renovations ? And how much does loan insurance cost ? also what are the tax implications with doing this over and over ?
Any other feedback and advice related to this topic is highly appreciated.
Thanks
Jason
PS: This forum is absolutely great , i have learnt so much in the past 2 weeks.
I'm 17 as well, good to see other people my age on the forum. For your strategy, you would have to be making some killer capital growth to make a reasonable profit after buying and selling in a short amount of time, also known as flipping. This is because of the initial buying costs (stamp duty etc) and than selling costs (commission, capital gains tax etc), although you could get around capital gains tax by making it your PPOR for the time period that you own it.
Its a great forum, in the short time i have been on here, i have learnt heaps.
Cheers,
Daniel
Jason957 wrote:Hello Guys,Just a small introduction i am 17 and have been reading about property and very interested.
I wanted a bit of knowledge on the topic of loans and borrowing for the buy and sell strategy.
I understand there is some kind of insurance if your loan is under a certain percentage but how do you go with a buy, renovate and sell ? Do you still take the minimum amount and obviously have a buffer for renovations ? And how much does loan insurance cost ? also what are the tax implications with doing this over and over ?
Any other feedback and advice related to this topic is highly appreciated.
Thanks
Jason
PS: This forum is absolutely great , i have learnt so much in the past 2 weeks.
Hi Jason
The insurance is Lenders Mortgage Insurance (LMI). If you have less than a 20% deposit – than you'll need to pay LMI. With most lenders, it can be added to the loan amount.
It's a cost you'll need to factor into your numbers when working out the profit margin on the deal.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Awesome thanks for that!
Jason
Jason957
Sutherland Shire Real Estate Agent - Jason Mikhail - 0402 640 630
Thanks Daniel!
Jason957
Sutherland Shire Real Estate Agent - Jason Mikhail - 0402 640 630
So what are the tax implications with renovating over and over ? (Ie Capital Gains) How much is it ?
And do you have no tax implications at all when having it as a PPOR ?
Thanks
Jason
Jason957
Sutherland Shire Real Estate Agent - Jason Mikhail - 0402 640 630
Jason957 wrote:So what are the tax implications with renovating over and over ? (Ie Capital Gains) How much is it ?And do you have no tax implications at all when having it as a PPOR ?
Thanks
Jason
It would likely be just income tax, ie no 50% CGT exemption.
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
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