Having one big loan may save you a few dollars up front, but it can get messy – especially if one loan is for an owner occupied house. Even for investments, you would have to apportion interest per property at time time (which won’t be that hard if all are IO). However, what if you want to sell one property or to refinance it with another lender. This is when you will wish you had 3 stand alone loans.

Terryw
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North Sydney
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The two remaining owners would have to purchase the 0.5% shares from the other owners. The stamp duty should only be payable on the value of the 1% transferred. CGT should also be minimal.

Terryw
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North Sydney
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Hi

I generally think it is better to rent first rather than buy a home to live in.

With yields so low, you could rent something in Sydney for about $400 pw, which would be worth about $500,000. To purchase something for $500,000 would involve considerable costs (not claimable) and the repayments would be huge – about $650 pw interest only. And then you have council, stata fees (if a new unit these could be another $5000 per year).

So it may cost twice as much per week to live in your own purchased home as to rent the same place.

There is also the fact that you may just spend the money you are saving on ‘living’ if renting, whereas with buying you would be forced to put it on the loan.

There are also capital gains to consider. However, if you have a rental property while renting, then you will still have access to the capital gains – maybe not tax free though.

Maybe you could buy something, live in it for a short period and then rent it out. This way you may be able to claim it as your main residence for a period of up to 6 years and still claim the deductions and yet pay no CGT if sold during htis period.

I started doing an excel spreadsheet on renting verses buying a while ago. I don’t think I really finished it, but I could send you a copy to play with.

Terryw
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Mortgage Broker
North Sydney
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Yes having no money is a bit of a problem! It can be gotten around though.

<the following comments refer to a deleted illinformed comment by another poster. No it is not Terry going bananas [exhappy] – derek>

I am not sure what you mean by buy a positive geared property and use the equity. What equity? These properties often (but not always) have low grow, so it may take a very long time to build up any equity. You usually only have equity initially if you put in a large deposit or buy way under market value.

I have never seen a 100% low doc or a no doc. a No doc would be a max of 85% LVR on a good property.

Terryw
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North Sydney
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Hi Felicity. There is another one now! I think they are called “The Mortgage Insurance Company” or TMIC. The cover First Mac’s loans (and others maybe), and First Mac do offer low docs. So that may be another avenue for you!!

Terryw
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North Sydney
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What does he mean by renovate?

I would be worried that he may botch something up. Would you insurance cover this sort of thing? If could work out really well if done correctly.

You could get him to sign an longer lease, but that would lock you in as well. You could always kick him out if he breaks the lease.

maybe you should talk to your solicitor about this.

Terryw
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Mortgage Broker
North Sydney
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mainly CGT issues.

If you move out of your main home and rent it, you can still class it as your main home and claim the interest and costs etc. And it will still be CGT if you sell within 6 years of moving out. But you can only class one residence as your main one. If you move back in after say 5 years and then move out again, the 6 year period starts again.

I think it is section 118-45 of the ITAA.

Terryw
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North Sydney
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You never know when you will need to change banks. You may sell the property or you may want to refinance with another another lender in a year or so. I don’t fix any of my own loans anymore – after I sold a property and had a huge break cost of about $4000

Terryw
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North Sydney
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Furnishing a rental property would greatly restrict the market of potential tenants. Most people would have their own furniture-I imagine. So what happens if you buy all this furniture and then can’t rent it furnished? You may have to move the furniture out into storage.

Actually this could work well, you could store all of these new applicances in your home. You would still claim depreciation etc as they were pruchased for your investment property!

Terryw
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Mortgage Broker
North Sydney
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You probably can if they have broken the lease. Being late is probably means they have. CHeck with your agent.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]