Some good points there GP.

I know GP is a HDT user and knows a lot of ins and outs, while I only have discretionary trusts.

I guess if the unit holder of the HDT is sued, then the unit is at risk. The trust assets should be ok. I don’t know what effect this would have, if for example, a person went bankrupt and his unit was seized by a bankruptcy trustee. I suppose the trustee could arrange it so not income was distributed to the unit holder.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Are you sure you are only paying $15,000 for it? Or does your brother have finance on it, and you will only have to put in $15,000 cash? It sounds too good to be true.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Lenders will only lend on the lower of valuation or contrat price. So if your commercial lender will lend 70% based on a $100,000 purchase price, and the valuation comes in low at $70,000, then first you will have to ask yourself “am I being ripped off?”, and then have to decide if it will work at the loan would be only 70% of $70,000 = $49,000

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Yes it could work if you buy jointly – but I agree with the otheres, not enough details.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Cruiser, with a hybrid trust, you would be the unit holder and you would borrow the money so could claim the interest against you own personal income. The trust would then make a nice profit as it no longer has to pay the major expense of interest. This profit can be offset against building and fitting depreciation. The remander of the profit could then be distributed to your spouse or other low income beneficiaries.

If you have nothing to do with the trust, then you will naturally not be able to claim anything, but a loss could be carried forward to the next year to be offset against future profit. I know this is not much help now, but in a few years you will be glad you bought in a trust for sure.

Most bank staff do not understand finance, thats why they work in banks!

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

I think there have been a few posts about this before.

8% yield is not very impressive. Some things to think of:
– possible low capital growth
– hard to finance
– high management fees?
– hard to sell
– hard to add value
etc

Compare this to buying $50,000 worth of share for example.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Probably a good structure would be a unit trust, with each partner holding equal units. The trust should possibly have a company as trustee with all three directors (or one to reduce risk, if others will agree to this).

Because personal assets can be at risk if you get into problems, each person should set up a discretionary trust to hold their units.

You will also need various written agreements in place to determine how the operation will be run, with input amounts etc. Also need to think of what happens if one or more people want out.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

You will need to talk to your solicitor about this, mortgage documents will have to be drawn up. You need to decide on the term, the method of their loan (IO, PO, PI or a balloon payment etc), and the interest rate.

I have spoken to a few lenders about this, and they have expressed that they have no problems with it, but I have never see it done with a registered second mortgage (ie the first mortgage holder would have to give their permission for a second mortgage.)

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

This sort of thing happens all the time. Lenders are very slow when you you want to discharge. They seemt o try and drag things out as long as possible.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me

Don’t worry about postcodes too much. You can get 95% loans down there on the westcoast for amounts up to $150,000.

Only one mortgage insurer will approve loans down there, and they will generally only approve a few loans per client to reduce their risk.

Even without LMI, you will be able to get 80% loans.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email me