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Definitely get a building and pest inspection done and don't use the one that the agent recommends. Use a completely independent one.
Arguably I think you should buy properties unseen when you already have a few under your belt – otherwise pay a few hundred and inspect the property.
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SMSF is a great vehicle to purchase properties however please get specific advice as it is not suitable for everyone and specific types of investment strategies.
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Why are you choosing these areas and these types of properties? Also whats your budget?
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Yes consider CGT and tax implications.
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Also use the increase in funds (albeit not huge amount) so negotiate a better rate.
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Sounds good – make sure you get the loans separate so you do not cross contaminate the deductible tax interest. Also keep your properties unlinked.
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nkrasn wrote:Hi ShahinI am referring to Melbourne CBD. My house is 7 yrs old. It was built 7 yrs ago. It is not new exactly.
The tax a/ct told me it would not be wise to rent out existing property and move into a new property close to CBD because I will have to pay tax on the rental income from 1st home. He said it would be better to sell it and buy a new one. But I want to keep both properties until I decide whether I want to move into the investment property (close to CBD) down the track (after I buy it of course)
But I like your thinking!
cheers
Nat
Rightio – then that is a different story. You may be able to keep both. The other thing to consider in this scenario is CGT. Again looks of different elements to consider along side doing the numbers so speak to an accountant and broker and set up a clear strategy.
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Speak to an accountant and broker ASAP and run the numbers. The glaringly obvious point is that your current property is new so if you converted it into an investment property you may be able to claim deprecriation benefits. How will this affect the overall picture?
Also which CBD are you talking about?
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Ideally, you want to have a linked offset and save all your funds in there instead of paying the mortgage down. Also sounds like you are cross securitised so you may want to fix that up. The flexi loans are @ 5.12% so you should definitely get your banker or broker to do the funds as there are plenty of lenders that will give you less than 5% on variable and rebates for refinances.
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Well I assume that you would be paying an arm and leg for the AHL loan?
A whole bunch of lenders offer free upfront vals. Some do desktop valuations, modelled estimates, etc. Im not saying you have an excellent chance but there is no harm in trying to see if you get back a decent val.
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Why on earth are you still with AHL?
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Be very careful with the above strategy. Too many unsecured debts will create an uphill battle for finance. Plan careful and talk to your banker or broker before talking any further loans. Tell them what you want to achieve longer term and they should be able to create a path for you to get there. Quite often this could mean that you need to wait and save.
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The one big thing that sticks out for me is CGT. You need to plan for this more than anything else. Please see your accountant about this point.
It will also make sense to talk to your banker or broker about correctly structuring your finance to meet your tax objectives. You need to think about what you plan to do with the property in a few years time as well.
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You cannot earn interest on the 10% deposit. This is another reason to try and negotiate 5% instead of 10%.
The funds go into the real estate agent's trust account. Trust account do not earn interest. Therefore, no one (you, agent or vendor) benefits from this.
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Talk to a solicitor and accountant about asset protection, CGT, income distribution and then tackle the JV. Plenty of people out there that are willing to do JV but you need to understand the taxation, legal and finance side of things first.
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You mention you want to start a business – from a finance perspective it is important for you to understand that lenders will require a minimum of 2 years financials and they will require the ABN to be registered for at least 2 years. This means that you will not be able to use the income from the business if it falls under this rule. There are some exceptions to the rule if the LVR is under 80%, application is strong and it is the same line of work when you were a PAYG.
Make sure you are on an IO loan with a linked offset particuarly if you are converting the property to an IP.
Finally most lenders provide free upfront valuations so you can get an idea of how much equity you have to use and to fund for further IP purchases.
Who is your current lender?
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By splitting a loan is a type of strategy for people that want to manage their risk (by fixing a portion of the loan) and take advantage of the benefits of an offset (by keeping a portion variable).
Now some lenders do offer an offset on fixed loans but ultimately you are paying a premium on the rate. I have used this strategy within my own portfolio.
Re the rates – they are not very competitive rates from ME Bank. You can definitely do much better – e.g AMP is offering 4.69% on 2 year fixed rates and many others are both competitive and offering cashbacks for refinances. Choose wisely before locking in a rate and lender.
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We have referred a lot of clients to Maxtax in Parramatta Sydney who have been very happy. We refer a lot of SMSF to them as they charge a price for the set up and most importantly it is set up correctly!
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1. Make sure that you create a separate loan account so that you do not contamanate the tax deductible interest for that portion of the loan.
2. Make sure you get a decent Granny Flat builder – there are lots of builders doing GF's now days in Sydney and some are expensive and some do a really bad job.
3. Try and ascertain the DA via a private certifier – a bit expensive upfront but will save you time and money in the longer run
4. Valuation is going to a big variable and unfortunately Westpac doesn't allow for upfront vals on construction loans. Having said that you have plenty of equity so you should still fall under the 80% LVR mark. Other than rate I cannot see a obvious reason for you to need to move.
Which part of Syd is the GF?
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4. You need to figure out whether the strategy is cashflow or CG
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