Hi All
I have 2 properties my Home and a IP which i am about to start a reno and flip.I have $31,000 for a deposit available in my super, I can borrow around 119,000.
I need some recommendations for high yields i know rural is the way to go due to my low capital and wanting high yields. I just need to be pointed in the right direction.
I keep looking around and Orange keeps popping up as it isn't that far away from where i live so when i have cash available i can do a reno once ready without travelling to the other side of the country.
Any recommendations would be greatly appreciated.
I am sure there is going to be someone who has the opinion that i should just stay put and save a bigger chunk of money and borrow more but in my opinion people don't get places by sitting and waiting for it to slap you in the face so please leave negative feedback out.
Many Thanks
Realistically how much of a property could you afford with such a deposit? Setting up the SMSF and bare trust could take a third of that money. Then you have hte lenders legal fees, stamp duty and conveyancing/legals. A deposit of at least 20% and probably 30% or even more for country towns would be needed too.
The trustee of the fund would also probably be breaching their duties if they sunk the whole of the super fund's money into one property – especially a cheap rural one.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry
Super Fund is already setup.
Corporate trustee structure has been used so only 20% is required not 30% as per Individual trustees.
Closing costs around around $6000 inc stamp duty, bank legals, loan setup fee and setup of custodian trust. only fee not included is conveyancer fees.
Thanks
Hi Morgstar
Hate to say that is not the end of it.
As Terry has mentioned Bank application fee, lenders legals and Security Custodian Deed persual could easily come to another $3500 and you will not get an 80% lend in Orange.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Morgstar,
Whilst there are the costs people above have mentioned, I'd suggest you do the numbers on any property you're looking at before you buy anything. I'm a member of the RESULTS Mentoring Community and the coaches teach you how to do that as part of the program. I'd say go for it – high yields are available in rural areas – SO LONG AS THE NUMBERS WORK. You need to know that you will actually make money (rather than loose it) before you buy a property. Is it cash flow you're after? Do you plan to do another reno with it or what's your strategy?
Cheers
Rochelle
Oh….. and check out http://www.resultsmentoring.comAlso, you have to consider the minimum loan sizes. I have seen some SMSF lenders have a min of $200,000
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Probably minimum loan $50K for a residential deal but the costs dont change.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi All
$6000 includes stamp duty, bank legals, loan setup fee and setup of custodian trust. only fee not included is conveyancer fees.
Min loan amount is 100K and deposit is 20%
I have crunched all numbers involved and i can see i have a short fall of around $80.00 per week but there is room for improvement eg reno to the bathroom and kitchen.
Funny thing is if i did buy this IP with my own money (not super money) my short fall would be only $20.00 per week and would turn into cash flow positive within 12 – 18 months.
Thanks for your input.
Regards
MorganSorry Morgan
Hate to say you are wrong. Whoever has told you you can get 80% in Orange on that sort of loan is misinformed.
Also as Terry and I have both mentioned your costs are out.
I do 1 or 2 of these deals a week and deal with all 13 SMSF lenders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
As Richard says, the $6k stamp duty and fees is not realistic. I just did a smsf purchase with St George as the financier… Richard organised the mortgage (thanks Richard!
). To give you an idea of the costs you'll be up against, even after the smsf is set up:
Bare Trust : $800
Bank fees: $2300 (seriously – they charge $1500 just to read your 4 page bare trust deeds)
Solicitor: $800
financial advisor (requirement of St George smsf loan) : $450
Building inspector : $400
Pest Inspector : $330So you're already at $5k before you even pay your stamp duty. There are online stamp duty calculators where you can determine the stamp duty payable. Unless you're buying something off the plan, stamp duty will apply. You said you were planning to do a flip which means you are buying an established property, so stamp duty will apply, and it will be a good whack more than $1k…. which is what it would have to be for all your costs to come in at only $6k.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Morgstar,
Some of these expenses occur whether buying in an SMSF or not (ie inspections solicitor etc)
Generally, you may find $100k as the min loan size, you will need around a 30% deposit, and allow around $2500 in fees from the lender – it's mainly legals and certainly no different to legal fees in general. I would normally suggest around the same again for the set up of everything with your accountant including the two trusts, but as you mention you already have the SMSF set up so you are half way there.
Some places charge a fortune for set up and annual audits, that make any bank charges some have mentioned (maybe they work for nothing??) pale into insignificance so it pays to shop around.
If it helps, for assessment purposes it is generally preferred that the proposed rental income and your historical super contributions, or employer SG g't ee contributions are enough to service the loan repayments.
And nothing wrong with squeezing into a cheaper property if that's all you can get with your balance in the fund……beats the hell out of 'Fund Managers' 'looking after' your money.All the best with your future investing.
Cheers
). 
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