Hi Jaff

Yes, I misread your post, you would put 20% on the purchase price – before the FHOG was minused. Your numbers seem correct, but an 8% interest rate seems a bit high.

But from your original figures if you rented it you would be getting $19.69 per week +ve cashflow. If you wrapped it you would be getting $29.73.

So for getting an extra $10 per week you would be giving away any capital gain. You have to consider if you are better to just keep it and do a buy and hold (and/or reno).

BTW with a wrap when they cash you out (ie when they refinance) you will get some cash too. ie their loan to you less your loan to the bank.

The only other costs should be accounting.

Terryw
Discover Home Loans
North Sydney
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Elves. I think the family law court would see it differently.

Terryw
Discover Home Loans
North Sydney
[email protected]

yes you can rent your home from your own trust. There is actually a tax ruling abut doing this with unit trusts – where the ATO took a dim view. But to my knowledge there is no ruling on discretionary trusts. All rent must be at market value, and don’t forget the home will not be CGT free when you sell (if) and you will ahve to pay land tax.

Terryw
Discover Home Loans
North Sydney
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You haven’t given all details but,

Resale price would be about $45,600 (20% more than asking price).
The wrappee would pay a small deposit, which would reduce your upfront costs.

This deposit would come off their purchase price and the remainder would be a loan to you. The interest rate is usually set about 2 to 3% above standard variable rates.

There would be no vacancy rate and annual cost for you would be greatly reduced – maybe only insurance.

You profit would be their loan repayments to you minus you repayments to the bank. Plus when they cashed you out, you would receive a gain of their remaining loan to you less your remaining loan to the bank.

Terryw
Discover Home Loans
North Sydney
[email protected]

Your accountant is probably not in a position to give you advice on property – just on the tax aspects. An accountants dream is to reduce peoples tax, so he must be concerned about his clients doing things to pay more tax. But this is a narrow view and there is more to it.

However, I would be wary with buying cashflow positive property at the moment. It depends on where you are buying, but some of these towns have had an average of 1-2% pa growth for the last 10 years or so, and then recently boomed with 10 to 20% growth. This may mean that prices may even drop or stablise for a long time to come. So please be careful and research fully.

I myself sold one of my Sydney properties to invest in cashflow positive properties. Now I wish I didn’t.

Terryw
Discover Home Loans
North Sydney
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I personally like to have my loans with different banks (using 4 different banks at the moment), but if you have all loans with the one lender, you have more ammunition when negotiating deals with them. But then if their lending policy suddenly changes, you may have to go elsewhere for the next one – which is easy if you have a LOC setup for deposits.

Terryw
Discover Home Loans
North Sydney
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Hi

It is very easy to get the loan when using a trust. In fact it is vritually the same as when applying for a loan in individual name. The only difference is the bank will want personal guarrantees from the trustee and/or unit holders and will want to see a copy of the trust deed.

Terryw
Discover Home Loans
North Sydney
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Hi Ahmed (and Mel)

I suspected this was the case. Actually there are not many lenders that will go to 90% LVR on low doc loans. GE is one of the very few.

Terryw
Discover Home Loans
North Sydney
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AS it will be a different company, you can use whatever name you like. It may be better to use a completely different name as similar names may imply a relationship (people may dealing with the business may find out about the properties more easily).

Why is your accountant recommending a compnay strucuture? I would never use a company to hold an appreciating asset. Look into trusts as these are much better in my opinion.

Terryw
Discover Home Loans
North Sydney
[email protected]

It costs from $275 to $2000 to set up a trust. You could do it online, or pay an accountant (who will do it online). Check out this one:
http://www.LawCentral.com.au

Terryw
Discover Home Loans
North Sydney
[email protected]