The trouble with doing multiple structures is that as Director of a company, you must guarrantee the loan thru that company. So even if you set up another company, buy more property you will have to keep guarranteeing the loans. You would legally have to declare all loans you have guarranteed to the bank.

Terryw
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Here are some thoughts

Lenders all start to get a bit worried when the rental income starts to be more than your other income. They often then say you are too rental reliant at this stage and will lower the LVR and ask you to put more money into the deal.

You will always have to prove serviceabilty. Even with low doc loans you must state an income and if it is too low, you will be knocked back. (You don’t get a second chance either).

And the mortgage insurers have limits on what they will lend people. I beleive it is about $500,000 and there are only 2 LMI companys now. So that make it about $1 mil in lending if your loans are mortgage insured. Many of the low doc loans are mortgage insured-even when they are below 80% LVR.

There are private lenders that will lend based soley on the valuation, but they will generally lend only 70% and the interest rates are around 8%. You can increase this to 80% by giving a second mortgage and paying about 16% on this extra portion.

I think that after you are going for a while, you could argue that you are a property ‘business’, and as such there will be different lending requirements. I have heard of people with $60 mil in property loans.

Terryw
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Hi Boris

Steve, if this is classed as a resettlment of the deed of trust, then this may trigger the payment of stamp duty as the beneficial owner of the property has changed and it you could be up for capital gains tax. Is this not the case?

And I am not sure what would happen to the loans (if any) held by the trust. Would they have to be discharged and retaken out in the new trustee’s name?

Terryw
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make sure you put yourself down as the contact for access to the building, so you can be there when the valuer comes around. Talk up the property.

Show him/her figures of all the recent sales etc. Tell him what you think it is worth (but add about 10%). Maybe say you need it to be valued at $X for the finance to get approved etc.

Also ask him what you could be to increase the value of the property. eg add carport etc.

Terryw
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Hi 11111

This won’t help much, I thought it would be, but heard from an accountant that it is a capital expense and only claimable on selling the property.

But then when I did my tax return, my accountant claimed it all in that year.Which was good as I got a lot back!

Terryw
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MCW

I beleive that a is only corect for property in ACT and b is correct for property elsewhere.

Terryw
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David U

Just give them a call – or search the web site first. You may have to go into a branch to do the paper work. They would have to order a valuation which could take a few days, it could be done in a couple of weeks, but knowing banks better allow double that. Shoudn’t cost you too much. Maybe try to imply that you are thinking of changing banks…

Terryw
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go for at least 20%

Terryw
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Peter

It generally takes about 3 days, but with properties in outer areas it can take a lot longer. In the city they use big firms that are on the ball, but in the country they have sometimes just one company to choose from.

I have had the experience where the bank ordered a valuation for a property and the valuer went to the wrong state! (town with same name) It was the banks fault as they ordered it.

My advice is to use a broker as brokers can talk directly with the valuer (most of the time).

Terryw