Forum Replies Created
Thank You so much for all your replies. Another question is, Is it wise to use a broker in your home town as apposed to one in a different state. I am looking at purchasing in other states now and wondered if there may be different products in othere states or are they all pretty much the same?
Thanks again
AnitaThanks Bob and Terry
I know that a Dicretionary Family Trust is not the best structure for property, but my accountant set it up as I thought I would be purchasing Positive cashflow properties – until I realised they were nigh on impossible!!!
However the property we purchased cost $172,000 18 months ago and is rented for $340pw and the 2 houses we are building will cost $210,000 each completed and we anticipate getting $320-$350pw each for them.
Total purchases $592,000 and total rent $980pw ($50,960pa). This almost makes it CF+ so perhaps the structure it is in is not so bad. We do intend to keep the properties and may sell of the existing one in the future though. Do you still think there is a better way?
Kind Regards
AnitaThank you for your comments above they are really appreciated and given me lots of things to think about. We are negotiating at $920,000 with rent back at $300pw for a year.
We are also thinking of selling 1 or 2 properties so we are not so stretched.
LR – I do understand your theories and agree entirely about watching other peoples lives on TV. I constantly remind and justify to myself that we are only here for a short time – so when do you ever get that dream??? I also agree about getting as much in the LOC as possible. I have done that already, as you have said thru a different lender. I have approx $645,000 LOC but this is to build 3 houses this year (behind existing houses on sub-div blocks). So I have left that out of the equation for now so as not to confuse things. I feel inspired by your words and feel that fear and lack of knowledge is affecting my judgment. I will let you know what our decision is going to be. The ball is back in our court just now.
All the best and thanks everyone for your kind and professional advice.
AnitaThanks Marc
I understand what you mean. I did get to speak to my elusive accountant today and he said similar to you and to sell down. Although I didn't mention above that I would purchase it as an investment at first as the owners are building and would like to rent back. As we are in no rush to move we would allow them to rent back for as long as needed. This would also give us some bargaining power on the price.
If I was to fix the loan surely the repayments will be the same for say 2 year after which I can revalue the property and draw more equity. Isn't this a strategy that many guru's use – to live of equity? Also the $2.4 mil I have in equity will have increased after 2 years and also all the rents. Am I still strying to bite off more than I can chew? The thought of selling anything off makes me cringe! I do appreciate your professional advice!
Kind regards
AnitaThanks for your reply Fernfurn
The headworks are the statutory water authority costs so I think they are fixed.
However we did go to see the salesman re this quote and went through afew things with him. The retaining is for the sewerage to fall. We also checked with the council and the water authority and they said we could build 1.5M away from the easement (which however is not on our block but next door) which would eliminate the piles and if we repositioned the garage also.
I am just amazed that the salesman doesn’t do this before he starts finding a house to put on the block!! They are going to re-do the quote and come up with a more realistic figure but I am going to get some ideas from other builders also. Apparently the soil is sandy and clay and if you don’t retain the soil can move underneath causing cracking in the walls. I will keep you informed.
Thanks for your replys
Anita
Hi Fernfurn
These costs include:
Headworks at approx $6000
Repeg survey, setout & contour feature survey $1000
Earthworks (higher floor to create fall) $10,000
Side access track $1000Retaining Walls approx 54sqm Concrete $7200
Engineers soil Inspection Class “S3” $7000
Sewer cut in and connect $4000
Pile footings & sewer diversion $7000Water service, cut in to mains and
Stormwater connect plus 3 Soakwells $6000W.Power connect fee & u/ground cable etc $4200
Temporary Fencing $1850
Block Paving 6M driveway & crossover $6000
Rubbish Bins 350I have rounded these figures but the estimate for site costs are $65,546. The house we are building is ony 130sqm . Would this be about right or are we being taken for a ride?
Regards
AnitaHi Tools
Yes I mean experience with piling and site costs. Are these costs normal for such a low cost house and why could it cost so much?
Regards Anita
Hi, you could try http://www.homeplanpro.com/index, You can try it for a month before you buy it. Can’t say if it is Mac compatible though.
Anita
Hi nsellar
I went to a “Wealth” seminar in Perth afew months ago and Investor Finance were there to give advice during the intervals. I made an appt with one of the guys and he was really helpful and worked out a way of refinancing for us to enable us to have access to alot more money.
However, I think they are brokers but seem to be Investor savvy, I was impressed with their help but I am concerned about having a broker who is in Adelaide and I am in Perth so I have not moved yet. Do any finance experts out there feel this to be of concern or do you think it shouldn’t matter.
Regards – Anita
Lucky for me I have all my properties in WA – only cause I live here!
But since the Results programme I have purchased 3 properties in WA but I must admit the market is very competitive here. You have to be very quick with your decision and have finance approved and make as few conditions as possible if you want to stand a chance of your offer being accepted.
Purchased 4×1 in Feb in Kalgoorlie for $172,000 on cnr 1/4 acre, possibility to build 2 facing onto next street. Rented at $235pw. Not sure of value as is, perhaps $220,000. (OK for 4 mths)
Purchased 3×1 in March in Armadale for full price of $190,000 on subdivisable block, front house in great postion to build at rear. Value possibly $299,000 (Not bad for 3 mths).
The last 3×1 purchased in April (only 2 mths ago) in Armadale again is one that we didn’t really want as it has a pool. A R/E agents I had been talking to regarding properties under $200,000 called to say he had a property that he thought finance was going to fall thru. It did, so we took the opportunity to put in a low offer. It had been on for $215,000 but he was going to put it back on the market for $225,000. I know the previous accepted offer was around $207,000 so I offered $205,000. Hence we have now have it rented on a short term lease at $250pw until summer then we will on sell it to create some cash to do the previous subdivisions.
Still feel that there are lots of opportunities here though, some areas are increasing by $5000 per week!!!!
Good luck with your searching.
Anita[thumbsupanim]
Thanks Cata
You are AMAZING!!! You have put my mind at rest, the structure I am in is not great but it’s not too bad either. When I am ready to move into more property I will certainly consult you.
All the best – Anita
Hi Cata
I have three properties in the Trust.
The developments will be subdividing and building another one on one property and keeping both.Then subdividing and building another two on another property(possibly selling the original house as it is old) and keeping the 2 new ones.
The third we will do a small reno and sell to give us money for the developments above.
OK it may be too late or too expensive to change the structure now but if I want to purchase anything else – should I form a Hybred Trust and is it possible to have several Trusts in place?
Thanks in anticipation – Anita
I do have just a normal Discretionary Trust and there is only myself as trustee and my partner as beneficiary. My son was in it but as he is 21, I was told that if he went for a loan for himself, then my debt would show up against him so we had to amend the deeds and remove him.
Is it possible to change to a Hybrid Trust as I only formed this discretionary trust earlier this year?
Thanks for you concerns and kind advice – Anita
Hi Everyone
This topic has just come at the right time for me as I just didn’t sleep last night worrying about my trust situation.A friend lent me a DVD from Ed Chan and in it he covers structuring and the importance of getting it right. He says that property in a Discretionary Trust is a disaster because I quote:
“with a discretionary trust you can’t distribute the losses or the negative gearing. It actually gets quarantined in that trust. You can’t offload it against your wages and claim a deduction. Also if it’s in New South Wales then you lose your land tax threshold as well.”My accountant in WA has formed a dicretionary trust for me and I have bought 3 houses in it – they were intended to be CFP but the rents never cover the shortfall so they are as close to neutral as I could make them but are still neg geared by about $25-$50pw. After reading the above article, I am worried that I have the wrong structure in place. One house I do want to sell in the short term but the other 2 have development potential and I intend to dvlp them, sell off the original and keep the new. Am I in the right structure for this???
CONFUSED TOOOO!!!!!! HELP!!! Anita – WAYes, Simon, thanks.
I have just got the OK from National for an 80% loan at 5.95% fixed for 1 yr so I hope this plan will work and I don’t overcommit my borrowings with Wizard. Plus all loans stand on their own!
Hope I am doing the right thing.
Anita
Anita back again
Thank you for all you advice. I don’t owe anything on my own home but have now released the title to Wizard so they have arranged to lend me $180,000 on an IP now near settlement , plus $341,000 to use whenever.With Low and no doc loans willing to lend 80% then am I able to draw down 20% deposits from the Wizard loan without questions asked, and get 80% loans from other institutions? Can you see any drawback to this? Is this how you would do it to progress into buying more property? I know the danger is in servicing the loans but I only buy properties where the rent almost covers the loan payments or at least $25-50pw shortfall.
Still confused![blink]
AnitaYes, we put in a European laundry when we renovated our house afew years ago with bi-fold doors to hide everything away. It is right next to my kitchen so that all the plumbing is in a straight line. It is really innovative and saves so much space yet is functional also. If you can afford the 2nd bathroom I think this will increase the value greatly and will get greater use than a large laundry.
Lots of the newer apartments have this style of laundry so you may want to visit afew display to give youself ideas. Good luck with the reno.
Anita[suave3]
Anita here!
Thank you so much for your informative replies. I get the impression that whichever broker you get information from seems to want their piece of the pie. I have had advice to pull loans away from ANZ (at a cost). I am not entirely unhappy with ANZ it’s just that they kept so much collateral from me and didn’t give me advice on how I could constructively use it. They could have offered me an equity loan or line of credit as they knew I was looking at investing further.
Anyhow, it’s their loss for not offering me customer service. Still waiting for my title back on PPOR after 6 weeks.
Unfortunately, as an offer has been accepted on another IP and only had 3 weeks to get finance – I am left with no more time to change from what Wizard have offered me. So, yes I feel that I have just created the same situation as I had with ANZ EXCEPT that I HAVE purchased another property and I DO have the funds ready to purchase more when the occasion arises plus I have access to money to do improvements too. I never had this facility with ANZ.
Oh well, no situation is 100% locked in, I may not have structured things quite how I would like but at least I am able to progress abit further with my purchases. I have to bear in mind that I am NOT a high income earner so sooner or later I will get stuck again because of serviceability.
Next time I will seek advice from this forum earlier as there seems to be a wealth of experience and advice to gain from it.
Thank you once again.
AnitaHi Grant
Interesting post as I have just had the same problem. After discussing with my accountant, I set up a family/discretionary trust also (don’t know if there is a difference between family and discretionary) and put my partner and my son on it as beneficiaries. My lender (Wizard Home Loans) then told me that as my son is over 18 – if he wanted to go for a loan in the future, then my borrowings would be against his name as liabilities.My accountant wasn’t in agreement with this but they spoke to each other and it was decided that the trust be amended (at my cost) to take my son off. This is an area that I do not know anything about and am forced to go on the recommendations of others. Speaking with Brendan my coach, this morning, he didn’t think this was right also. Hence causing me total confusion. Now I have a trust with myself and my partner only on it and I am not sure what the benefits are going to be. Does anyone have any clarity on this?
Thanks
Anita[blink]Hi, I too am from WA and I agree property is booming over here, nothing lasts more than 3 weeks it seems so you have to act fast. But as regards to the numbers, the rents are sadly lacking behind which makes the eastern States seem really attractive.
The rents are almost double in the Eastern States to what you can get in some areas here, so you do have to search well.
Good luck with your investing.
Anita
