I am. If you mean rent where you live and invest elsewhere aka rent vesting

I want to live in places where i don’t want to buy – CBD – so I rent at the moment.

Richard Taylor wrote:

Would the correct way to approach lenders be going with Commbank until we max out (take a $700k loan for an IP), then approach other lenders and banks that are less strict: eg: ING bank, Citigroup, Macquarie (Commonwealth bank is known for having very strict lending policies)

It is probably best to go to a broker who could compare your serviceability across several lenders. I find that CBA is generally more generous than ING for example.

But like Richard said there will be not a huge difference. Generally not enough to make that much of a difference.

I am not sure what you mean exactly but Company A could lend money to Company B which could buy the property. Company B could buy the property without a loan using Company A’s money – thereby creating a resulting trust. Company A could pay income out to its shareholders who could lend to Company B to buy property.

There are lots of legal and taxation issues to consider.

And this would not prevent Company A from being taxed on its income either – which seems to be a common misunderstanding.

Its possible, but unlikely to be agreed with by the vendor.

yes

1. no

2. All owners will need to provide a mortgage. If the mortgage secures a loan a new loan application would be needed. You would need to seek advice on ownership % to satisfy the lender. All owners would be jointly and severally liable for the debt and servicing as one unit

3. decrease

4. heaps

That would result in stamp duty in most instances. You would need to resell about 10% higher to make it worthwhile.

This is like insurance in a way. You don’t need to insure your house until you smell smoke, but by then it is too late.

I can think of real life examples x 3

Peter had 2 properties and the LVRs were relatively high. He had a heart attack and his wife left him and lost his job (not necessarily in that order). He needed to sell one property to unlock some cash to live on, but the other property had dropped in value. I think he did sell the first one, but couldn’t settle as the lender said the value of the second one had dropped and he needed more than the proceeds of the sale to reduce the LVR to 80% so they refused to release the mortgage and he couldn’t settle. He went bankrupt after that

Another was a guy who rang me because he had 10 properties and decided to retire and live on the capital gains by selling one every 5 years or so. The trouble was he had already quit his job when he sold the first property and they took the proceeds to pay down the remaining loans so he had nothing to live on. i suggested he go and get a job and then refinance and uncross, but he didn’t like the idea of coming out of retirement.

And the last was similar. An elderly lady had 3 properties mostly paid off and therefore unable to get the pension. She needed to sell one for some unexpected costs and to supplement living expenses as the rents where not enough. But her bank said they would only release the mortgages if all the proceeds was used to reduce the remaining loans on the 2 properties left. so she needed to sell a second property. In the end I think she would have had one paid off property and a bit of cash.

All could have been avoided, but for their crossing of securities.

chrisdusting wrote:

Terry, you were the expert until the last post :) I went bankrupt from 2011-2014, I lost the one property in my own name, the other 5 were not touched as they were bought in a trust so have to disagree there as I’ve been through it. Liquidator was worrels in Brisbane. But anyway, to make a video like that , maybe 6 hours script writing, 1-2 hours shooting and then about 7 hours editing… add another 40 minutes if I got to trim a bit for the firsT time like today :) and your still the expert I know what you mean by trust the other way round going personal.

Yes, I was probably not thinking about this sort of thing when I wrote the above. There are 2 aspects to trusts and asset protection

a) you personally become bankrupt

b) the trust itself is sued – the trustee actually.

If you personally become bankrupt assets you hold on trust are generally not available to creditors.

If you as trustee are sued your personal and trust assets will be available to creditors. But assets held in separate trusts would be generally ‘safe’.

So if you set up a trust, perhaps have a company as a trustee and give a personal guarantee, if the trust doesn’t pay its loan they could come after hte property used as security for the loan. If this is not enough to satisfy the debts the other assets of the trust, if this is not enough then your personal assets.

If there were separate trusts with also personal guarantees from you, the assets of these trusts would generally be safe.

if on the otherhand, you are sued for something personally, such as defamation or negligence then they generally could not get at assets held in a discretionary trust, even if you were the one that controlled it.

Like that article says they are very rare in Australia.

I have been a broker for over 20 years and have never seen a non-recourse loan for residential property other than for SMSFs.

They just don’t exist. There used to be some available for commercial property at around 30% LVR. Not sure if they still are.

Here is an article I wrote which explains that even with a loan that is not cross collateralised the lender can still come after the borrowers other assets.

https://www.propertyinvesting.com/topic/5071821-can-a-lender-come-after-other-assets-of-a-borrower/#postnewtopic