Canterbury Property Services

Discussion in 'Property Experts' started by armorris007, 14th May, 2009.

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  1. armorris007

    armorris007 Member

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    I've recently discovered the Canterbury Property Services scheme for property investment. Sounds like an unbelievable proposition ... which raises alarm bells ....

    Does anyone have any positive or negative comments to make regarding their claims?

    Many thanks,

    Andy
     
  2. joanmc

    joanmc Well-Known Member

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    looks interesting, but I wonder what happened to their million dollar share portfolios in the last 6 months! especially since I would imagine they were on margin. The rental figures don't stack up for me either as they haven't allowed for paying the loan on the investment property, unless they are capitalising that interest?? It looks like a highly geared strategy to me so I guess it would depend on your risk tolerance.
    I put my details in, I'm curious to see more info. Did you?
     
  3. armorris007

    armorris007 Member

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    Yeah I did put my details in out of curiosity.

    You're correct they do capitalise the interest - which I guess is the part thats worrying me. I'd like to see how this works in practice ... surely there comes a point in time whereby if you're not repaying your home loan at the rate at which the plan is calculated, then the debt that is growing in terms of the investment portfolio becomes greater than the debt you originally owed on your main residence?

    I'm not sold on the share idea myself and wonder how integral holding the shares is to making it work. Shares seem too much like gambling - as you've pointed out.

    Can you pick any holes in any such capitalisation strategy?
     
  4. joanmc

    joanmc Well-Known Member

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    HI
    I wouldn't trust the ATO with regard to allowing interest on interest! I understand that it is currently allowed (noy sure though) but it wasn't allowed earlier on. So in the current climate I would think that might be something they would maybe tighten up on?

    I don't have a problem with shares as I am a trader for a living now, and I can see that writing options on your shares can be a way of increasing your returns but from what I read they are using borrowed funds and the getting margin loans....that is pretty high leverage if the market goes down again (like yesterday:eek:) and they could be getting margin calls with no funds other than more borrowings to meet them.

    I can see how the strategy can ramp up your road to wealth but I can also see how it could ramp up the road to bankruptcy:D
     
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  5. fisheye

    fisheye New Member

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    cantebury services and weatherford financial

    Hi, our friends have been with the above for one and half years, and now have an investment property and once again advised us to see them. Just wanting to know has anyone received any further info on them. Thanks.
     
  6. GregReid

    GregReid Well-Known Member

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    Fisheye,
    I have not heard of Canterbury before (I operate in Melbourne) but based on their website (fancy site but lacking any detail of who they are or directors) the finance strategy is used by many companies (including mine). I did not see anything on the site now relating to shares or margin loans (maybe they dropped that part after the Storm Financial debacle).

    In essence it is a debt recycling scheme, setting up a LOC on a property, generally the PPOR, using part of that LOC to fund an IP and borrow 80 or 90% from another lender for the majority of the funds using an IO loan. You direct the rental income into your PPOR loan (or offset) to reduce your non deductible debt and you pay the IP expenses including the interest on the IO loan from your LOC. Essentially this LOC increases quickly and once you run into the limit, you redirect the rent back into the IO loan to service that debt.

    It worked very well for a number of years when investors could easily use low doc loans (self declare income) to obtain further finance for the next IP or to refinance their PPOR or one of their IP's. The issue for many now is to be able to borrow again but on a full doc basis.

    It now takes a lot more skill and planning to set appropriate lending facilities and limits and be able to structure loan facilities. Lenders are very reluctant to set up large LOC facilities without a whole lot of detail and documentation.
    If you cannot refinance or obtain new lending and you operate too tightly, you may need to service some very large loans out of income.

    I would be interested to hear anyone using Canterbury and recent experiences.
    Greg
     
  7. migzcusto

    migzcusto New Member

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    Hi Everyone, any updates on how it's all going? Thanks =)
     
  8. venom

    venom Well-Known Member

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    Hi Everyone, My Wife and I have had two meetings with these Guys, Everything was explained, etc and sounds promising, I am 55, wife a bit younger, both dont have much in Super, have payed off near one third of our mortage, and still have twelve years to pay it off with how we are doing it now, If we go with a very conservative plan with these guys we could pay off our home in around three years, at the end of twelve years have two IPs payed off as well, May sound to good for some, but we are going to do something positive for our retirement instead of just wishing we had,
    Does anyone have anything New to add to this Thread?
    Will add more as we progress,:)
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think they rely on capitalising interest on investment loans while directing all cash to the PPOR thus paying it off earlier. This is fine, but the ATO released a ruling earlier in 2012 saying that the reason for doing this of "paying off your home loan sooner" is not good enough and they can apply Part IVA of the tax act to deny the deductions on the capitalised component.

    Therefore it would be wise to work around the issues raised in this ruling and to go so far as to get a private ruling from the ATO if you want to implement this strategy.

    Do they cover any of this?
     
  10. venom

    venom Well-Known Member

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    Update

    Hi there, just thought Id update how its all going, the ball had started rolling we were pre approved through St George, went to see our block of land and have the plans of the house, was getting all excited then St George wanted to change things because of my age, so to be able to use the same structure we are now going through Macquarrie Bank, Wish us not luck but good planning:)
     
  11. dirka

    dirka New Member

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    Hi venom - how is it going now?
     
  12. dp

    dp Member

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    we have done it

    :) , We have been with them for the past two years (they have done our restructuring). Their structure set-up initially worried me a bit, now,,, I kind of used to it. Just refinanced all my loans with SG, going to build the first property with them in SE QLD. Having said that bit worried about the area they choose, for rental properties I usually go within 10-15Km from the CBD but they choose bit far away.. I'm keeping my fingers X.

    Anyone to share their view to ease my mind??
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    2 things about this worry me.

    SG - did you get pushed into the portfolio loan?

    and,

    why did you buy a property they were selling? Something that you are not comfortable with? Did they make a very large commission on this sale?
     
  14. dp

    dp Member

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    Hi Terry.

    1. We had portfolio loan with another Lender, we have have been asked to transferred to SG. I have been told SG understands this scheme better. any how loan transfer cost around $10K with LMI and other stuff...

    2. property is off the plan ( house and land package). I'm sure they will have a decent cut from the builder and the land supplier (i'm not aware of if). my main aim is to knock off the PPoR (bad debt), I have done some research on the area, but sill have the butterfly in the tummy..

    Lets see how this pans out, they are predicting around 6 years to pay off my PPoR, without doing anything else.
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    DP,

    Sounds like they have set you up with cross collateralising the securities. Not a good move considering it can be easily avoided with the same effect achieved and probably at a lower interest rate. If you try to sell one property or refinance to another bank it will be a nightmare. If you get into financial trouble at any stage this can lead to bigger problems.

    It is not true that SG understand this structure better. This is mere sales talk.

    Butterflys for good reason.
     
  16. venom

    venom Well-Known Member

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    So Far so good

    Hi thought I'd pop in to let you know how things are going,
    Our loans through Macquarie Bank were approved, we to are building our first investment a bit further out of the Cbd 28k's but it is in a fab place that is growing fast 5 minutes from North Lakes. They find new area's to build that there is limited land avalable that cant keep expanding,
    Dp, I to have a few butterflies but anyone would starting off and increasing your mortage by an extra 400,000.
    These Guys have answered all our questions and eased our worries, they do search out the best Bank to fit in with the struture they work out for each person, They had set us up first with SG and we were pre app, but because of my age, SG wanted to put to many restrictions on our loan so we went through Macquarie instead.
    it is exciting as with our structure, we will pay off our 12yr mortage in around four and a half, even if we dont buy another, but we will.
    As you probably know Canterbury will, if you loose your job, unable to work etc within the first five years will buy the property back off you.
    I wonder why if you have been with them for 2yrs why has it taken that long to finally start building?
    We first contacted them in Sept 2012, and are just waiting for the plans to go through Council, then full steam ahead.
    I will be coming back to this forum often to see how everyone is progressing and post how ours is going.
    There are a few people who post stuff on here that is a bit negitive, as they have their own idea's, but the Guys at Canterbury do know what they know, they have been around for quite a while now, and I have tried and tried but have not found anything negitive about them on line, I for one am not going to sit back, and in a few years wish I had gone down this path, I am going!
    Hope to hear more from everyone, Venom.
     
  17. dp

    dp Member

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    We are moving forward

    Thanks Terry,Venom.

    Just to Clarify... I have approached Canterbury two years back to restructure my home loans (more than two) to streamline, I should admit , they were very helpful, especially Baydon (not sure name correct,) then by Robbie. We couldn't start the Canterbury system due to funds we maximised, waited till one of the IP to go away, and recently contacted them to start the Canterbury system. I'm very happy with the concept, and the approach, but bit worried about the Selection of the property, my view it was bit far away from the normal (rental area), but I have been told they look at both Growth, Yield when selecting area.

    Venom, I thought in order for Canterbury system to work (may be my understanding) you need to have at least one PPoR and one IP.. is that correct or this is your first IP?.

    Terry, you I'm bit wary about cross collateralising, but I didn't have better knowledge than that :), as I'm used to that since day dot...:confused:

    Worry for me is the process applied in selecting the property, When I reached there, everything was ready all I have to do sign the dots... then only we visited the site, which is not my usual way of operating , here I'm putting 500% trust on their selection where I used to do all the leg work and do the due diligence, before make up my mind.... hence the butterfly :rolleyes:

    Venom , how did yours gone?? are you able to elaborate??
     
  18. venom

    venom Well-Known Member

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    Hi dp, To answer your Q about if you need a PPoR plus an IP, no all you need is your PPoR with enough equity in it, to get started.
    If you have more than one IP now, things will move along a lot faster for you than me, as yes this will be our first IP, but will definitly buy another within the next two years,
    Canterbury do find propertys with growth and yield plus area's more appropriate for white collar workers than blue collar workers, places you and I would feel comfortable living in as apposed to places like woodridge etc, and expect your tennants to wish to stay for a long time.
    Also they like to build New, as you claim alot more back, than if you buy older house's, the idea is to struture it so you end up paying little or No Tax, which helps you move even faster.
    And (my View) if you build new, you are helping with the shortage of home's for rent, as apposed to just buying a house that was already there haha.:D
    Dirka are you thinking of doing this?
    There are lots of different ways to go into IPs, but with Canterbury they do know the ropes, so to speak, very well, and they have everything all in one place ( not the same address, but they all work together) like Lawyers Accountants, Builders etc so everything runs very smoothly, you can if you wish use your own Lawyer Accountant etc if you wish, it is up to you totally.
    Terry, maybe they do get a commission from the Builder, but I know how much I am paying, for both house and land, and have looked on line, in the area we are building, and both are the same price as if you just bought straight from the builder and land same price.
    so what if they do make a commission, they are doing a great job, and so probably get a comm from the builder and land developer, do you set this sort of thing up for Free? prob not hey:rolleyes: Not trying to be nasty, as I know you have your own idea's for this sort of thing, which is great, but I have great faith in the guy's at Canterbury, they will get me where I want to be, Debt Free with a lot of assets in front of me. as Super is a Joke!!!a very bad one that will get worse, take my word, or wait and see.:)
    Good on you dp, forget the Butterflies.
     
  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I am a fan of the Canterbury group and this strategy.

    but I am just a bit concerned about 3 things
    1. The cross collateralisation - this is dangerous, and can be easily avoided.
    2. I didn't realise they also steer people into particular properties. There is generally nothing wrong with this as long as the commission is not too high and it is disclosed. But I worry about properties being
    3. the recent ATO ruling regarding the capitalising of interest to pay off the home loan sooner.
     
  20. dp

    dp Member

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    Thanks for the detail mail Venom.

    I hope we can pay off PPoR soon as stated by Canterbury. they have estimated nearly 6 years to pay off in full, but talked about getting another one (may be blue chip shares) in about 2 years or so.. lets see. I hope the builder will be quick, so that the additional rent will be there to add to the PPoR. I will keep you posted with the progress.

    When are you starting the building?
     
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