[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 28, 2011 - 11:59 pm

Thanks Terry for explaining to us about that.

Cheers,

Henry

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 27, 2011 - 2:28 pm

Portfolio PI wrote:

Terryw wrote:

……….

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.

Yes, I also just realized that what they ask me to sign is the paper to execute the deal on the behalf of them (their solicitor). They don’t include the land and building details enclosed with this contract at all. It is just the Bankwest loan application form, National Finance Broker Contract and the projected value of my properties in the next 20 yrs value assuming 8.5% Capital gain per year in average with 8% interest rate and 3 weeks per year vacancy rate.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 27, 2011 - 2:20 pm

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.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 27, 2011 - 2:18 pm

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.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 26, 2011 - 2:37 pm

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.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 26, 2011 - 7:15 am

@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.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 26, 2011 - 2:27 am

SHoltz, Yes so do I, but it is their way of making money out of the momentum like today mate.

so far CWB is more expensive as they charge in percentage as oppose to flat fee with JDL Strategies. So if you are interested to buy in QLD and….do not have time to do all of the due diligence, then you’d be better off go with JDL strategies.

I’m not going with either of them as I mainly focusing myself in NSW area.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 26, 2011 - 1:44 am

@new2invest: I was going to CWB seminar with JLF as the speaker, they will charge you 3% from the property fee for their commission while the subsequent purchase will be 2%

I also joined with JDL strategies by paying $880 once off for lifetime membership but they’ll charge you fee $8700 for the first buy and then $3700 for the subsequent purchase. They only specializing in buying property in QLD especially COOMERA area as newly built house, no option at all for NSW since they think that NSW is already at the top of the boom so it is better off to buy in QLD as its in the bottom of the cycle now.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 2:53 pm

@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 AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 8:20 am

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 AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 7:56 am

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 AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 7:05 am

@sholtz: Good to hear that, I almost go ahead with that IP, so I’d rather invest in Central Coast NSW area like Terrigal or the Entrance then.

Thanks for the suggestion mate.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 7:03 am

@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.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 12:31 am

Terryw wrote:

But when you take the $79k out the interest on your loan goes up. You need to factor this in as the $79k is borrowings.

You also need to be very careful about how you take the $79k out.

ah yes, the interest from the initial account that I accrued i assume is now tax deductible as the property is now IP not my PPOR anymore.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 25, 2011 - 12:08 am

@terry and Derek: from my printed out report, it seems that the 79k comes out from my existing mortgage account (with redraw facility) as it has good equity in my account so I’ll leave the remaining $7-6k in my old mortgage account to service the new loan, so I assume no interest is earned from this $79k as it will go straight into the new loan account with Bankwest.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 24, 2011 - 11:55 pm

The chance is very minimal or impossible as it resides in Regional NSW area and with my current old PPOR luckily has gained enough equity so that I can withdraw $79k for the cash deposit.

in regards to the LMI yes, thanks for the spot on Terry, I didn’t see it how much does that cost me in the above report, but when I ask for the 90% the JDL finance manager told me that I’ll be left with no cash buffer to live with.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 24, 2011 - 11:26 pm

Terry,

thanks for the reply, yes I do have my PPOR which is now rented out so it becomes my IP (now I’m renting myself in Sydney)
and in the process to buy my second IP which is suggested by JDL in Coomera.

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 24, 2011 - 2:58 pm

Derek, many thanks for the quick reply I am in NSW

So in particular here’s the details:
Funds Required
Property Purchase Amt $420,000.00
Total Fees $15,279.10
Refinance Amount $0.00
Total Funds Required $435,279.10

Funds Available
Cash Deposit $79,000.00
FHB Grant $0.00
Proposed Loan Amt $408,500.00
Total Funds Available $487,500.00

LVR 54.83%
Surplus $52,220.90

Lender : BankWest
Product Name: Premium Select Home Loan $200k – $750k (>75% LVR)
Proposed Loan Amount: $408500.00
Variable Rate 6.95%
Intro/Fixed Rate 0.00%
Assessment Rate 8.90%
Repayment Type Interest Only
Actual Repayment (monthly) $2365.90
Assessment Repayment (monthly) $3029.71
Term 30

many thanks once again for the suggestion Derek

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 24, 2011 - 2:40 pm

Shape wrote:

LOC is easier to get approval and less hassle…but it’s def not the best structure in the long term + less flexabililty and costly.
I would suggest a standard equity release with a standard split loan…

Regards
Michael

Hi Michael,

many thanks for sharing the knowledge to all of us here.
surprisingly not many finance broker that I am dealing with now telling me to set it up like you told us to do (using standard equity release loan)

[Henry AdamsMember@henry-adamsJoin Date: 2011Post Count: 105]

August 24, 2011 - 2:27 pm

Terryw wrote:

Looks like your loans may be cross collateralised.

The conveyancing fee is not cheap. Extra valuation fee -probably because they are valuing your other property to use it as security.

Yes, you’re right, I’m with Bankwest here at the moment and JDL Finance Australia Pty Ltd (ACL# 388885) suggest to me that I must be with Bankwest for 95% Interest only loan with my used to be PPOR and now I rented out as the security (they said that this is semi firewalling in the separate facilities).