Great News if you are Stuck

Discussion in 'Loans & Mortgage Brokers' started by MTR, 27th May, 2016.

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  1. MTR

    MTR Well-Known Member

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    Though I am GST registered you don't need to be.

    just have to buy in a Trust, though not sure the timeframe.
     
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  2. dabbler

    dabbler Well-Known Member

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    What I mean, is will they take your income as...

    MTR has 3 places under contract and will make xxx $ most likely next financial year

    MTR would like to borrow 750k to construct new places on property she own, we project she will get income xxx from that

    Or, is acc tied to only what you have earned right now...

    PM me if this is not for public consumption, which I understand.
     
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  3. Terry_w

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

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    You have to get your story right. If you are not registered for GST but claiming an income of $100,000 this may not add up (it may depending on the circumstances).

    It could only be based on current income and not future projections.

    And if you need to show bank statements which show little income being deposited this may not match up to the income on your accountant's letter.
     
  4. dabbler

    dabbler Well-Known Member

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    If you have to show only actual earnings to date, then that narrows down how useful it could be, I do not pretend to know exactly what they need to give the loan.
     
  5. tobe

    tobe Well-Known Member

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    Sounds like you need to buy a rams franchise @MTR? They are only $40k. They have a min capital requirement of $250k for those new to the industry. the comm split is pretty good, but there is mandatory marketing fees and you have to open a high profile shopfront and employ at least 2 others within 24 months. Process wise, they are a little antiquated, as they don't use brokers anymore, its a little 'sheltered workshop' style.

    Regarding potential income for low doc declarations, its up to you and your accountant what income you declare. It is supposed to be based on current income. For a development you could certainly use the potential rental income at least. Using the potential sales income not so much IMO.
     
  6. Terry_w

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

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    Oh yes potential rental income could be used as in a normal loan.

    The trouble with opening a franchise is you are stuck to one lender.
     
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  7. MTR

    MTR Well-Known Member

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    LOL, no thanks.
    The thread was purely intended to help investors who can not source finance, this option may be the solution.

    MTR:)
     
  8. tobe

    tobe Well-Known Member

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    If they have an abn and an accountant willing to sign the declaration. In practice it isn't a great solution for developers as its hard to convince credit the applicant is going to hold all the properties for the long term. If you can get it done it's only good once, for up to a mil.

    The same developer can't come back the next year to do it again after they sold because it'll then be classed as short term finance. The franchisee won't be too happy either.
     
  9. MTR

    MTR Well-Known Member

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    Not so
     
    Last edited: 31st May, 2016
  10. MTR

    MTR Well-Known Member

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    I can not give personal. advice, I suggest you phone RAMs and your accountant.

    Also just to clarify I am not advocating investors fudge their numbers.
     
  11. tobe

    tobe Well-Known Member

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    You have found a franchisee happy to get clawed back? to do the work for nothing? You have done low doc development finance more than once with rams and they have invited you back for more?
     
  12. Terry_w

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

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    Toby - what is the clawback period for RAMS? - if you know
     
  13. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Yeah what Tobe says the franchisees (they all are) get claw-backs just like brokers do on loans that dont go more than 12 or 18 months so I don't think they would be too keen on doing this ongoing unless they do it out of a desire to build a relationship with you MTR in the hope of getting more biz from you / referrals.
     
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  14. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    RAMS' lethal policy is their 4 unit construction.

    We are doing our 5 unit development under resi lending (no val fee, no QS requirement, no 0.5% app fee, no presales) albeit a 70% LVR (still good).

    Bankwest and Heritage also do 4 units but their servicing calc is far less generous and they have no flexibility with this policy.
     
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  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I hope there wasn't something in the paperwork @MTR that says you have to pay the clawback - that would be an ouch.
    It's one of the reasons why brokers don't like developers much - we cause too much clawbacks if we sell.
     
  16. tobe

    tobe Well-Known Member

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    18months full clawback is my understanding. Franchisee's are forbidden to take an upfront fee instead of commission, or to have any paperwork making the client repay clawback.

    4 units is a great policy niche, but its not for developers who want to on-sell. Id say 9 out of 10 franchisee's wouldn't take the work on if they suspected it wasn't for a long term hold.
     
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  17. Cactus

    Cactus Well-Known Member

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    Hi @Shahin who do 5 units resi @ 70%?
     
  18. Matt Ad

    Matt Ad Well-Known Member

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    Would anyone mind explaining the "clawback" and how it would affect a developer? Haven't heard the term before.o_O
     
  19. Terry_w

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

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    Clawback is when the lender takes back the commission from the broker, in full or in part, due to the borrower paying out the loan early. This would happen if the borrower refinances or sells a property, or just pays out the loan. The clawback period is generally from settlement to 18 months or 2 years with some lenders.
     
  20. Matt Ad

    Matt Ad Well-Known Member

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    Thanks @Terry_w
    So Id assume brokers will be less keen to help developers for this reason,
    Interesting as Im looking at finance for a future development right now.
    Thanks again, I cant now add that to my vocabulary :p