Would you lend money to someone who couldnt repay?
Help with Strategy 2014-15
- Thread starter nhg
- Start date
Would you lend money to someone who couldnt repay?
Mainly because when you don't have a standard job and you want to borrow in your company/trust name you need to show it's income for 2 years for the banks to like you. That income can be profits or rent.
I'm currently in the serviceability dead zone between leaving my job and not having enough Trust income for 2yrs.
I'm in the same boat. Picked up a contract long enough to allow for refinancing of my properties and a couple of quick purchases. So I do have a window of opportunity. Banks don't seem to care I can comfortably service the loan. They want to see a pay slip.
As a developer you are operating a business by turning over stock you are bringing profits back to the table and showing profits.
I am still working through this process with accountant as mentioned and it wont be cut and dry, some may be holds depending on profits, tax etc. I plan to discuss this in detail when I meet with him.
I do know an experienced developer on SS who basically said the same, my understanding is that he sells down to show profits in his trust/business for finance purposes. Accessing equity is well and good but may leave your trust/company showing a loss making it difficult to source finance. Perhaps there is a way around this where your accountant can show profits from the development end product and banks accept this, perhaps, I don't want to be in the red when sourcing finance.
The decision to move from the outskirts to the LNS was the best decision we made - both personally and financially.
It would much more difficult for us to make that transistion now - so glad we did it when we could (before kids).
If you keep earning and saving enough then it should not be an issue - but sometimes the market in the area you want to buy can get away from you. Know quite a few people that wish that had of upgraded areas when they had the means to do so.
I have kept my eye on Forestville. I've attended a few open homes, the ones that overlook the water there. It is my ideal slice of heaven and quite affordable too (in a few years time).
No plan to move to SA. I will of course have a team and project manager, I have a couple of trustworthy people there already. I have factored in the cost of flying there quite often over the course of the project.
Close to home is my original question. But where? Thus the PM earlier this year in the hopes of utilising your BA services.
I just got off the phone from accountant, and discussed this issue again. You will have to be patient with me as I am also relatively new to this game and still learning lots and lots, this can really do your head in.
I asked him what if I did not sell my developments for whatever reason and what if my trust then shows a loss because I have not realised the profit.
He explained that as long as the end values of the properties/villas/units are higher than the costs to build etc then he will not show this as a loss as it becomes an asset in the trust.
When sourcing finance my accountant provides a letter to my broker which is always the case when I am buying in my trust to state that....."My trust is trading profitably". Hope that makes sense, now that gives me plenty of breathing space, as you never know the market can turn and you need to hold.
Hope this now clarifies things a little more
