Testimonials
Sales Process - Entry Level Superannuation Investments
Superannuation funds can acquire property in two ways:-
- Investment without gearing
- Investing is a geared bare trust - in which the debt is paid form contributions and rent. When the debt is paid off the bare trust collapses and the property reverts to the superannuation fund.
The second option is known as Limited Recourse Borrowing which a few banks do. the bank cannot take any assets of the superannuation fund if the investment goes bad. Consequently, the lending margins are generally around 70% of value. The set up cost is around $ 8,000 . The initial set up of around $ 3,000 then as all the documents have to go through the bank's lawyers ( around $ 3,000 in fees) and the bank's financial planners ( around $ 2,000 in fees).
The advantages of the arrangement are that
- You get a tax deduction for the contributions which are a saving of 31.5% in tax.
- The contributions are used to pay off the principal which would otherwise have to be paid from after tax money.
You build up assets that cannot be taken from you as they are segregated in the super fund.
Applying this to the entry level property at a purchase price of $ 250,000, you need:
- A 30% deposit - o n a property costing $ 250,000, you need $ 75,000 for the deposit, $7,240 for the stamp duty, set up costs and the bank's fees of around $ 8,000.00 .
- With two contributions of $ 25,000 each plus the rent , the property can be paid off in less than 4 years.
- After year 5 , the rent is accumulated in the fund and taxed at 15%. The contributions and the rent will accumulate in a very short time to enable the fund to buy another property.
- On retirement, any gains on assets held in a superannuation fund can be sold free of capital gains tax.
The Sales Process - 90% on Completion
On Exchange:-
LG supplies - House and Land contract for total price of $250,000.00 with attached full set of Council approved plans including Site Plan, Floor Plan, External Elevations, landscaping , Electrical and Plumbing for the Villa; also included are soil test and site survey.
Client supplies - Deposit of 10% of $25,000.00 for house and land contract and plus NSW Stamp duty estimated at $ 7,240.
Client confirms lending arrangement detailing payment method of $ 225,000.00 at completion of the build as evidenced by release of Interim Occupation certificate by Albury Council. This will be a provisional Occupancy Certificate relating to the villa to be purchased only. The Final Occupancy Certificate will be produced by Albury Council after the completion of all 15 Villas and the common area landscaping and roads.
On Settlement :-
LG supplies - transfer of Certificate of Title to the client . Land and house now owned by Client..
Client supplies - Full payment of $ 225,000.00 ( being $250,000 sale price - deposit of $ 25,000)
Sales Process - House and Land Package
On Exchange:-
LG supplies - Land contract for total price of $60,000.00 with attached full set of Council approved plans including Site Plan, Floor Plan, External Elevations, landscaping , Electrical and Plumbing for the Villa; also included are soil test and site survey.
Building Contract for $190,000.00 with details of inclusions and Schedule of Progress payments for building contract.
Client supplies - Deposit of 10% of $ 6,000.00 for land contract and $9,500.00 for building contract plus NSW Stamp duty estimated at $940 Client confirms lending arrangement detailing payment method of both land contract of $ 60,000.00 and expected payment method for building contract of $ 190,000.00.
On Settlement :-
LG supplies - transfer of Certificate of Title to the client . Land now owned by Client and construction by Builder will commence.
Client supplies - Full payment of $ 54,000.00 for the land component plus mortgage documents and capacity to pay for the remaining Building Contract of $ 180,500.00 being $ 190,000 - deposit of $ 9,500 ).
SCHEDULE OF PROGRESS PAYMENTS FOR BUILDING CONTACT
| Stage | Description | Percentage | Amount |
| 1 | Deposit | 5% | $ 9,500.00 |
| 2 | Main House Slab poured | 15% | $ 28,500.00 |
| 3 | Trusses ready for fascia and gutter | 15% | $ 28,500.00 |
| 4 | Roof covering complete | 15% | $ 28,500.00 |
| 5 | Frame ready for plaster board | 15% | $ 28,500.00 |
| 6 | Plasterboard complete | 15% | $ 28,500.00 |
| 7 | Fitout complete | 10% | $ 19,000.00 |
| 8 | Vanities and wet area tiling complete | 10% | $ 19,000.00 |
| 9 | Practical Completion | 5% | $ 9,500.00 |
| TOTAL | 100% | $190,000.00 |
