Hi Nathan,

Last year Dave and I purchased a block of units for $530,000. We knew it was a great deal but didn’t have enough money to fund a 20% deposit needed as the bank would only lend 80%.

So what we did is pay $10,000 deposit (to the vendor) with the knowledge that we’d have to come up with the balance ($96,000) + closing costs within six months.

As a great stroke of good luck, the property increased in value to $800,000 during that time.

The bank was still willing to lend 80%, but because so much time had elapsed between the contract signing and our possession, they were willing to take the higher valuation figure rather than cost.

80% of $800,000 meant that this was not only a ‘nothing down deal’, which actually received cash from it!

And yes… it was +ve cashflow too!

Does this make it clearer?

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Once again, it’s important to look at what outcome you are trying to achieve.

Leigh has rightly pointed out that if you are planning to invest then you will need capital… but if you are already on the financial red line (coping only just) then there are perhaps some personal money habits that you need to first master.

quote:

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Question how can I improve my situation?

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Not enough money is a symptom, not the problem.

Throwing more money at the problem is not the answer. What’s needed is to sit down and carefully consider what you need to do differently to attract abundance.

Sorry this is “warm and fuzzy”, but before investing it’s essential to know which money habits help and which ones hinder.

Thanks for your post and welcome to the community.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

It might be tricky for someone to recommend a local from Geelong.

But what I’d suggest doing is ringing successful companies in the area and ask them if they would mind telling you who their accountant, solicitor, banker etc. was.

You never know where the thread will lead you!

Please keep us informed how your investing goes.

Bye

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Thanks for your post and welcome to the forum.

I’m not sure about the specifics of the FHOG in this area.

Only you can say whether it is a good idea or not, but be careful about mixing family and investing together.

You are making an investing decision and your son is making an lifestyle decision. I would hate some unforseen circumstance to cause a rift to occur.

Not knowing your relationship, I’d say there is more that could go wrong than right.

However, if you want to give your son a ‘leg up’ in life and this is your vehicle to do so… great! But that would be a lifestyle choice, not an investing decision.

Get all parties to sit down with an accountant or solicitor and work through contingencies and have a written memo of understanding if you want to proceed.

Eg. document:

1. What happens if you need the money but your son cannot refinance

2. How long does this arrangement last?

3. What if your son stops paying, who owns the house?

etc.

Agreements are for times when things go wrong, not for good times when everthing is fine.

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Remember that success comes from doing things differently.
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RC,

The way around the depreciation write down of the cost base is to assigned contract values for the land, buildings and chattles seperately.

As such, and getting a bit technical here, you could assign an ‘at written down value’ for the fixtures and fittings and have no problem with the chattles.

Re: the building, if you purchased it for $100,000 and then used the 2.5% writedown and sold 2 years later (value now $95,000) and then sold it for $105,000 – you would have a capital gain of $10,000.

$5,000 of this gain would be the recoupment of the writedown.

But as RC has said, the 2.5% write down would be at your marginal rate whereas the capital gain could attract a 50% discount.

Conclusion –

Depreciation is a tax deferral rather than a tax saving strategy.

Matt – once the property has been sold you are no longer on title and depreciation benefits now vest with the new owner.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Bob,

Thanks for your post.

You ask:

quote:

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Does Aust have this type of encumbrance on a property and where would I start to look for these properties in WA

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No, tax liens do not exist as such in Australia. The circumstance giving rise to the lien (ie: default on paying rates etc.) certainly does happen from time to tim, but the recovery process is different.

For example, most councils recover rates by getting the sheriff to take other take other property and if worst comes to worse then it is usually sold at auction.

I have not heard or seen of a position where you can pay out the debt and take a claim to the property.

One avenue you may like to follow though to get a ‘heads up’ on foreclosure property is to ring up your Sheriff’s office and ask them how they advertise ceased property auctions.

In Vic. it is in the Saturday Age. I’m not sure what the protocol for WA is.

Be sure you understand the process thoroughly though b4 buying anything. In Vic. you buy the property with the attached debt and the first thing you have to do is pay it out.

Good luck,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi RC,

One of the advantages of lease-options is that because you are just setting up a normal residential lease, it is much easier to get finance as banks assess the loan under normal lending criteria.

So, you’re right!

Bye

Steve McKnight

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Remember that success comes from doing things differently.
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Tails277,

OK. You’ve had your say, unsubstantiated and without basis as it is.

My opinion is that it is much easier to be Chicken Little than it is to be Nostradamus.

Please honour your word and don’t come back.

Regards,

Steve McKnight

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Please read the forum rules that you agreed to before posting!

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Anything worth doing is worth doing well!

50 properties sounds like a lot until you get there!

If you can develop a system rather than a deal-by-deal focus you will find that it becomes a replicable process and as such your results will accelerate.

This will be wise words to people with a system, and cryptic nonsense to those without.

It’s difficult to describe the view from the top of the mountain if you have never climbed before.

Bye

Steve McKnight

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Remember that success comes from doing things differently.
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