There are still plenty of options after that. If LMI is not invloved, then no probs (as long as you can service). It is generally only the securised lenders that have LMI on all of their loans, but many major banks also have LMI on their low docs no matter the LVR. It is best to plan big from the start and this will enable you to go further in the long run.

Terryw
Discover Home Loans
North Sydney
[email protected]

Yes, Simon is correct. A telephone blemish is nothing these days. Maybe it is something more serious and they don’t want to tell.

If you want to proceed with the vendor finance, just ask your solicitor is help you out. You should probably take out a second mortgage to secure your debt. Charge them around 20% pa for the hassle, and the extra legal fees.

Terryw
Discover Home Loans
North Sydney
[email protected]

I paid land tax on my wraps in VIC, but I remember that there was a form which you could send in and claim an exemption, and I beleive having sold the property on a terms contract was a valid point for exemption. I just never followed it up as it was too small to worry about.

It seems everybody is getting different from different staff in the same givt departments. It may be wise to email them so that you get a reply in writing.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi Simon. I thought it was more like 3 years!?

Kaye, the man may live to be 119 years old!

Terryw
Discover Home Loans
North Sydney
[email protected]

Yes, good question. Just bear in mind that you can structure lease option is so many ways, so it is hard to know how they are doing this.

Probably the property would only rent for $200 pw normally. So they want to charge an extra $190 in rent, of which they will give you back $130 IF (note big IF), you buy the property off them. With LOs I think there is less chance that the tenant will eventually buy from you (compared to wraps). Since it is only a lease, tenants would be more inclined to walk away for various minor reasons.

If they walk away, then the owner would have collected an extra $130 pw in rent which they would get to keep.

Even if the too up the option in say 2 years time, the property may be worth $240,000, but they can get it for $230,000 less $13,520 rent credit = $216,000.

So the owner may have made $16,000 on the gain, and an extra $19,760 more in rent than they normally would have (ie $190 x 52 x 2).

You also don’t know the details, the strike price could be increasing annually in line with the CPI, and/or the tenants rent could be increasing as well. In addition they are probably getting the tenant to pay all rates, insurance, repairs etc saving them another $2000 per year.

Terryw
Discover Home Loans
North Sydney
[email protected]

Delboy

It would depend how you structured the LO.

eg one way, you could have a 2 year option, when they wish to renow after 2 years, the value would have risen so you could determine a new strike price and you could increase you loan to this amount (subject to serviceability).

Terryw
Discover Home Loans
North Sydney
[email protected]

Pelican

Yep. Good point. LMI will restrict you, but I think it is better to ‘get it while you can’.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi Delboy

I have made a few posts on this before.

I prefer LOs for a number of reasons such as
– easier to get finance
– less problems with equity ownership (ie it is all yours)
– you can access the increased equity
– Can be shorter, say 2 years per option, allowing you to be more certain. ie wraps could drag on for 30 years.
etc

Terryw
Discover Home Loans
North Sydney
[email protected]

I would be very wary of the postive cashflow strategy now. When Steve did it, it was a totally different market. He was getting good cashflow in major regional towns and these had loads of potential for good capital growth – which is what happened.

These days it seems that the only postive cashflow proerty you can get is in the small outer outer whoop whoop type areas. These may have limited capital growth – maybe even negative growth. Even in the so called good areas, we may be seeing a period of low growth for a few years.

So just be careful with what you buy.

BTW you can still get postive cashflow proeprty in the good areas, you just have to look harder and get creative.

Terryw
Discover Home Loans
North Sydney
[email protected]

I agree with Derek, but if you have ever lived in your home, you may be able to claim this as your PPOR instead of the unit – depending which one has grown in value more.

I think GEO means, that if you are classed as a proeprty trader, then there is no CGT. But there is income tax and you do not get the 50% discount on the gain. So it would probably better not to be classed as a trader. I don’t think you can register for this either. You just submit your return and argue your case if audited.

ps I am not an accountant.

Terryw
Discover Home Loans
North Sydney
[email protected]