I have not looked into these property trusts, but was intrigued when I read PS’s book. Do these really exist? And can you get margin loans at 70%?

You example looks good, but it looks like you already have a lot of equity to be able to do it.

You probably would not be able to borrow 80% of end value of your project. Maybe you could get 60% at an interest rate of around 12% though.

Terryw
Discover Home Loans
North Sydney
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There are also tax implications. Any money paid into a LOC or homw loan with redraw is considered by the ATO to be a repayment. When you take the money out again it is considered borrowins and the purpose you took the money out for determines whether the interest on this part is deductible or not.

Terryw
Discover Home Loans
North Sydney
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Yes I beleive they wouldn’t have to pay stamp duty on the option, but it may vary from state to state. beside the option fee, the only other cost would be probably legal fees to have a solititor check out the agreements and maybe lodge a caveat.

Terryw
Discover Home Loans
North Sydney
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You can charge for whatever you can get away with, but if it goes to the tribunal then you may be ordered to pay it back.

It may be better to build it into the rent.

Terryw
Discover Home Loans
North Sydney
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And if you do it right you won’t even need finance. But if your buyer cannot settle for whatever reason then you will be liable and will have to settle on the property.

Terryw
Discover Home Loans
North Sydney
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I think a period lease is just a continuation of the old one with no fixed term. They can lease with just giving the appropriate notice. Nothin to worry about, most people do this after 6 months.

Terryw
Discover Home Loans
North Sydney
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I agree with Kay in that I think you lose too much when selling a property in addition to all selling costs, you have purchase costs agian when you go and buy another property to replace it. And you missout on any future growth. I have sold a few properties years ago and wish I hadn’t now when I think what they would be worth now.

Terryw
Discover Home Loans
North Sydney
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I take it you are in SA, so you have to be very careful there that your option agreement is structured correctly so that it cannot be interpreted as a terms agreement. I am not sure, but beleive that if you structure it with weekly rent credits which act like a PI loan would, then it would not work under the SA law. So I suggest you do not do this by yourself, and go get a good lawyer.

Anyway, the option agreement should clearly list the parties, interpretations of terms, the option fee, the period, the excerice and the price they will pay. etc.

Terryw
Discover Home Loans
North Sydney
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In a nutshell, a trust is an agreement whereby you (trustee) hold an asset on behalf of somebody else (beneficiaries).

eg. having a child’s bank account in the parents name – the money is the kids, but the parent manages it.

Terryw
Discover Home Loans
North Sydney
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Good cashflow deals are still out there even in Sydney. In the past two months or so I have seen two people with cashflow +ve – or very close to it – on new purchases in Sydney. One was a unit renting for $700 pw which cost $500,000.

Terryw
Discover Home Loans
North Sydney
[email protected]