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Add Succession Planning into that mix KP [biggrin]REDWING
[WILL…..when theres a will, theres a wae….[blink][biggrin]
kp
Some interesting reading here….
http://www.somersoft.com/forums/showthread.php?t=7959&page=1&pp=15
How about:
Asset Protection
Wealth creation
&
Maximum FlexibilityThe last one is with reference to maximising tax benefits ( neg gearing properties in a trust structure)as well as minimising the flow on effects of capital gain ( upon selling), as well as being able to change your properties from ‘trading stock’ to ‘buy & hold’ stock without penalty, and under the same structure…
This is what they were alluding to..
kp
OIC Red,
Now I understand.
They probably don’t want to give any secrets away unless you proceed with them.
He did recommend you do a $250 financial health check ( download the forms from their website) from which they would come up with some recommendations.He also said they do work in with other accountants to assist them, but using Chan/Naylor trust structure.
Cata: a healthy scepticism is probably a good thing….
I have spoken to three different ‘experts’ on trusts and structures, and now have three different opionions.
Now I’m confused.kp
The obvious answer would have to be ‘it depends’.
Depends on your circumstances.
You are in the box seat since the value of the property has increased so much, that you now have more choices open to you.
What was the plan when you first purchased the property? Was it to hold as a long term rental, or to develop asap ?
If it was me, I would go ahead and develop.
Then you would have two properties able to generate rental income as well as maximum depreciation benefits( they’re brand new).
You could then sell one if you really wanted to, to lock in some profit, or better still, keep both & refinance based on the new market value, and use the proceeds to ????? ( reinvestfor example.?)Some consideration you need to take into account:
Holding costs while you subdivide and build ( rent stops and you have to keep meeting repayments for the duration, maybe 12 montrhs or more)Subdivision costs and demolition costs to clear the site before commencing.
Subdivide as a green title or a strata title.Green takes a bit longer and costs more but is worth it in the end as a seperate title is better than a strata title.
Finding a builder who can deliver in a reasonable timeframe( construction in Perth is running red hot at the moment as you would know)
Based on your borrowings $95k/$280k, your lvr is down to an incredible 33.9%, so you should have no problems borrowing the full amount required to complete the building as well as for the initial subdivision.
In fact, if your cashflow is tight you could also borrow the amount required to fund the repayments for 12 months.( effectively capitalise the interest)As an exercise, do a quick calculation of the market value for the 2x new dwellings, take off the cosat for building and subdivision as well as the holding costs, and your original purchase price, and see how much better you are compared to selling now for $280k.
My guess would be that there is at least another $80k gain to be made if you go ahead with the duplex option.You’ve done really well to get property at such a fantastic price, now just follow through and maximise to return you can get out of it.
kp
** OOPS !! **
The lesson here is don’t ask me for advise as I will probably direct you to the wrong subdivision.
Pass……
But that $500pm must be pw ???
Not a good return otherwise for such a high risk investment.Noticed in the West Australian some of the businesses ( dive shop etc) being advertised for sale.
Apparently no tourists arriveing any more, so businesses are doing it tough.The place is closer to Java than Aust, so I am wondering when the Indos decide it should be part of their archiepelago and not ours ???
kp
According to Ed, its property investing trust, not a disc trust or a HDT or a unit trust.
He says that none of the above are suitable long term, for holding property assets in.
They all have their place, but not for property investing.I can’t say any more than that, as it would be pure speculation.
Best to email them direct and ask them.
kp
Thanks Westan.
Appreciate it…kp
Yep,
I was looking at the ‘retirement village’ site…..on the wrong side of the road……trust me.Thats what comes from being left/right challenged. I much prefer the location you pointed out Ausprop.
Seems like good buying compared to Two Rocks.kp
Originally posted by Dazzling:[/i
Surely it’s a big numbers game. Get the numbers up to a level where they dwarf your private consuming level…and viola.
Whats the wooden musical instrument got to do with it ??? ( confused)[confused2][blink]
kp
Gross,
Coupla Ruskies??Does the money come in a black violin case as well ??
13% is not outrageous.
What sorta LVR is acceptable, and is short term ( 12 months) OK as well ?
What sorta security is requirted ( is 2nd mortgage, or ‘caveat’ OK, or does it have to be 1st mortgage?)You could do a lot of damage with a bucket load of 13% money in 12 months…
kp
You guys need to write a book.
You could title it
“Speccy Bubbles’
Where to buy in WA..and where not to…
by Aus n’ Red…..specially written for ‘special’ investors
kp
Hey Nigel,
Do you have an example of a property with some numbers?I am sure there are many of us curious investors who would better understand the value if we could break it down to some numbers to work out the ROI of investing here vs in other parts of the world.
ie…Purchase price vs rent return vs expenses vs potential loan lvr vs current interest rates, etc.Some numbers would be very helpful..
Rgds
kpHave to agree with brahms.
Furthermore, the concept of yield is more relevant to commercial real estate where it is used to determine both the market value of a property, and the potential rent that should be charged.
Prevailing market sentiment determines where the yields should be, and property values are worked out the current yield.
ie…when times are good, business is prosperous, and the economy is strong, the yields may be down to 7% or 8%, and conversely when the economy and business are struggling, vacancies may be high and the yield expected may be around 10%It has been’borrowed’by the residential property brigade, where it does not necessarily make a lot of sense as a figure.
If it was broken down into ‘gross’ yield, and ‘nett’ yield, then it might make more sense as an indicator.The variable between the two, is the expenses incurred on a residential property which are traditionally paid for by the owner ( but not always the case!)
Therefore two residential properties with the same market value, and the same rent return will have the same gross yield, but not necessarily the same nett yield as the outgoings or expenses will probably be different, thus one will nett you more rent after costs than the other.
Clear as mud eh?
kp
Not yet.
I saw Ed at a seminar a couple of weeks ago, and apart from having potential as a stand up comedian ( if he gives up his day job), he was the highlight of the seminar.Worth following up in my opinion.
website for anyone interested is:
http://www.chan-naylor.com.aukp
Buy, buy, buying….and selling.
kp
LOL……….
Thats funny Red,$25-$28……pretty cheap for concrete..
kp
Bizarre!!
They’re a standard inclusion when you build in WA.
Sometimes the tenants ask for the flyscreens to be replaced with security screens ( that also incorporate the flyscreen material)If they won’t supply flyscreens, how about setting up a mozzie net above your bed, and having one of those burning anti mozzie coils in the room. ?
I reckon they smell nicer than the aeroguard.
kp
Thank you suzieq and Richard.
I have been meaning to call you Richard…in fact I should have tried to catch up with you while I was in Bris. 2 weeks ago…kp
