Buying 2 units on a single contract

[Cherry Pro]

Hi - I'm looking to buy couple of units in Brisbane and was considering buying them on a single contract ie single loan. I'm looking to buy through our SMSF and the initial costs can be as high as $2500 per purchase.
Any downsides here, would I be able to sell these units individually ?

Thanks and Happy New Year to all !
Amelia

 

[Aaron_C]

Hmm a 'single loan' across 2 properties means a cross collateralisation. I wouldn't do it.

 

[Player]

Hi Amelia

If they are strata titled already (I am assuming from your post), then you may need two separate non/limited recourse loans. That would implicate two custodian trusts and trustees and obviously expense.

I may be wrong however it's only if they are on one title that they could be purhcased and funded thru the one custodian trust.

That aside, the issue of X-coll that Aaron mentions is also a consideration. They may as well be on one title as the lender will have more control anyway if you proceed with your intent

 

[Rolf Latham]

Hi Amelia

You can purchase them as 2 single contracts and keep them with separate as long as you use the same lender ( and buying structure ie SMSF and bare trust) I am vertpositive the lender will be keeping the costs low for you.

If you current SMSf lender wont play ball on that, then maybe it would serve you to look at other lender options.

There are some BIG difference in the SMSF loan area, much more so than in resi

ta
rolf

 

[Rolf Latham]

.

I may be wrong however it's only if they are on one title that they could be purhcased and funded thru the one custodian trust.

No choice then, because the asset is only saleable over the one contract.

A additional bare trust would ( should ) be negligible in the scheme of things IF they were sep titles

ta
rolf

 

[Cherry Pro]

Thanks guys for your insightful posts, they are strata titled and I was keen to buy them on a single contract to save on purchase costs.

These are only cheap 2 bedder townhouses, less than 150 k each so I'm not keen to pay the set-up costs, two custodian trusts etc ***. In lieu may make sense to get a single 4 bedder property with equivalent rental returns.

Rolf, I'll call to consider purchase options.

 

[Peterw]

Cherry Pro, I think you can buy the 2 units in the one custodian vehicle. From my thoughts, the only problem may be, as long as the loan is in place, you may have to deal with them as a single "transaction". I am thinking that the transaction may be similar to shares. You dont need an individual custodian unit for each share, however they will stay as a block.

 

[MikeF]

Cherry Pro, I think you can buy the 2 units in the one custodian vehicle. From my thoughts, the only problem may be, as long as the loan is in place, you may have to deal with them as a single "transaction". I am thinking that the transaction may be similar to shares. You dont need an individual custodian unit for each share, however they will stay as a block.

Hi

I think Peter is correct in saying that “you can buy the 2 units in the one custodian vehicle” (same security custodian) however If there is no physical or legal impediments to the two strata units being sold separately then each unit would need to be acquired under a separate LRBA/bare trust arrangement. This includes the car space if also on a separate title.

The recent draft ATO ruling (SMSFR 2011/D1) if/when becomes law, will confirm the separate LRBA requirement.

(http://law.ato.gov.au/atolaw/view.htm?Docid=DSF/SMSFR2011D1/NAT/ATO/00001)