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Q: We are waiting on the loan approval to buy a property but it is taking longer than we thought. The agent has said they will take the property off the market if we pay a 0.25% deposit but we want to know if the loan is not approved will we lose the deposit? Property price is $970,000 so it is a bit of money?
A: Susan
Sounds to me like the agent is referring to the cooling off rights under the Contract. If that is the case you’ll lose the .25% deposit if you don’t proceed under the Contract after 5 business days.
If you have a lawyer/conveyancer you should check with them before signing any contract and handing over any money to the agent.
All the best.
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Q: NRL Grand Final, who will win
Sydney Roosters or Melbourne Storm?
A: Storm by 1
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Q: AFL Grand Final, who will win
West Coast Eagles or Collingwood Magpies?
A: West Coast by 8.
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Q: Consider for a moment or two.
In 2008 (GFC) the Australian Government gave a guarantee on bank deposits to Australian Financial Institutions to the tune of $600B. It was in the eyes of the Government a necessary initiative to shore up local confidence and protect the nation’s international competitiveness and funded by taxpayers.
Fast forward 10 years and Australia is drought-stricken.
The big four banks in Australia now have a combined market value of approximately $384B. When you consider, 82% (20,500,000) of Australian’s are over the age of 15, the $384B represents a value of $18,731 per person.
As a Friday 3 August 2018 the big 4 banks have donated $3,300,000 to The Big Drought Appeal to help the Australian Farmers.
• Commonwealth Bank - $2M
• ANZ - $1M
• Westpac $200,000
• NAB - $100,000
Using the same parameters as above their donations represents $0.16c per and 0.0008% of the value each person over the age of 15 delivers to the banks.
We’d love to get your thoughts. Are the bank's donations fair and reasonable or should they be donating more?
A: Good on simplyaskit for raising this discussion.
I agree with all of the comments above. Support for our farmers as an industry is vital to the continued success of our country.
However, putting aside the economic reasons to support our farmers, put yourself in their shoes. Imagine being so affected by something you cannot control and that you have no idea of when it may end... Imagine every day waking up to the reality of not knowing how you're going to get through to tomorrow... Imagine a day's work being spent loading your shotgun so you can (as humanely as possible) remove your stock from any further suffering. Imagine having to put on a brave face to your family while all the while not feeling like getting out of bed and facing another day....
The mental toll on farmers and their families is huge.
Donations are needed to ensure food can be put on the table and farming families have access to clean water etc. But it is also critical that mental health and counselling services are sent into farming communities urgently.
Banks and other large corporates (supermarket chains for example) can assist financially by making donations - but by giving repayment holidays, revising trade terms etc., can also lift the financial burden that must weigh heavily on the mind of the farmer.
Australia has been known as the lucky country thanks in no small part to our farmers. Now while they feel like they are all out of luck - it is for the rest of us to show our appreciation by not just providing financial support but by also letting them know we care.
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Q: Hi all, if a shareholder of an unlisted public company is wanting to sell their shares what information is the company obliged to provide in relation to the financials and performance of the business to allow the shareholder a reasonable chance of selling their shares?
A: Paul
Correction on my last post.
Take a look at s.294A of the Corporations Act.
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Q: Hi all, if a shareholder of an unlisted public company is wanting to sell their shares what information is the company obliged to provide in relation to the financials and performance of the business to allow the shareholder a reasonable chance of selling their shares?
A: Paul
First place I would look is at the shareholder's agreement if there is one. The shareholder's agreement may place requirements on financial reporting, but it would almost definitely have provisions relating to the sale of shares.
If the company has not prepared financial reports (or at least not made them available to shareholders) - shareholders who hold at least 5% of the company's shares can direct the company to prepare financial reports and provide them to the shareholders who make the direction. Take a look at section 249A of the Corporations Act for more information.
It may be an idea to engage a lawyer to assist you with this - especially if the company doesn't play ball.
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Q: Sports fans it’s State of Origin Game 2
NSW or QLD and by how many?
A: As much as it pains me. Queensland by 4.
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Q: Ok sports fans...
State of Origin - NSW or QLD?
A: Blues by 10
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Q: What is the one thing, your major priority, you would do to help ease housing affordability in Australia?
A: This is a very hot topic, particularly if you live (or want to live) in Sydney and to a lesser extent Melbourne.
All of the contributors so far have provided a number of solutions/ideas which can help address the affordability issue.
In my opinion (particularly in the case of Sydney) the planning system needs to be addressed to increase supply. My memory of Economics 101 was if we increase supply, demand will decrease and with decreased demand we will achieve lower prices. If only it was that simple…..
James is correct. Renting as a means of living closer to employment has to become the new normal. Essential and service workers cannot be expected to own their own home if they work in or near the Sydney CBD. But as John suggested rental assistance in many instances is needed – how many of those same workers struggle to cover their rent by choosing to live closer to their employment. How much disposable income does the barber cutting your hair for $25 have? How far do they have to travel every day to get to their employment?
This is a major social issue with people travelling further and further to get to work. Spending more time commuting and less time with family.
The idea of home ownership should not be governed by owning the title to the land. Affordability outcomes around leasehold title are one obvious answer with those large tracts of residential leasehold land possibly being a very desirable long term annuity-based investment to large institutional investors.
I also agree with Brendan that there are a number of places outside of Sydney that are affordable and have employment opportunities. I know a number of families who have relocated to regional cities and love the quality of life that they now enjoy. However, there is not the supply of jobs, or housing, in those other areas to totally alleviate the affordability crisis in Sydney – at least not in a hurry.
Whilst my immediate solution would be around planning considerations I accept it is not the answer – there is no single answer. There are a number of moving parts and this discussion needs to continue in order to find a solution.
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Q: Fun Friday,
Can you name a movie quote that gives away the film without saying the title?
A: Make my day.
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Q: Hi All,
I'm a mortgage broker and I am looking for a Burmese speaking solicitor in Sydney that can assist a client of mine with independent legal advice and signing loan contract documents.
Can anyone help?
Cheers,
Frank
frank@truewealthfinance.com.au
0414924447
A: Frank
If you use the 'Find a Lawyer' search on the Law Society of New South Wales website, www.lawsociety.com.au you can find a Burmese speaking lawyer.
To find a specific language you need to search by firm.
I conducted a search and found one result of City of Sydney and it seems Mackinson D'Apice lawyers have a Burmese speaking legal adviser. (www.makdap.com.au).
Best of luck.
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Q: Can anyone tell me what the current average loan duration for a principal and interest (owner occupied) loan is in Australia?
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Q: I have a couple of teenage children who are being invited to various social gatherings, many of which I suspect involve alcohol. I am not so naive to assume that nothing is going to happen, but what is the legal obligation of the parent host of a teenage birthday party where kids turn up with alcohol? I presume that the parents might be placing themselves in a bad position without knowing what the legal implications are....
A: Hi Brendan
Just like you I have a couple of teenage children who have reasonably active social lives. I am aware of a number of instances where my eldest has attended parties and alcohol has been supplied.
Luckily, most parents seem to be responsible and don't allow alcohol at parties. However, oddly there are those out there that don't seem to think it is a problem.
The Liquor Act in NSW expressly forbids persons supplying alcohol to minors unless they are a parent, guardian or responsible adult, or are authorised by a parent, guardian or responsible adult to supply alcohol to the minor. Fines are significant and a prison sentence of 12 months is a possibility.
If a parent hosting a party is aware of minors attending with alcohol, and those minors share alcohol with others, the parent may be liable on the basis of the concept of secondary supply. In that case the parent host may be fined and prosecuted as though they had supplied the alcohol to the minors directly.
It certainly is a minefield for parents of teenage children.
All the best.
Brendan Curran
7 years ago
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Q: I’m looking at selling some rural land which could possibly be developed into residential land. The buyer has said that they need FIRB approval. Is this correct, and if so, how long will it take?
A: Hi Nick
It may not be the case that the buyer needs FIRB approval. Depending on where the buyer is from and what other 'agricultural land' assets they hold they may not need FIRB approval at all. Generally, a foreign person can hold up to $AUD15M of agricultural land.
The fact that the land could possibly be developed into residential land does not mean it is no longer agricultural land. The land needs to be conducting, or capable of conducting, a primary production business. If that is the case with your land then FIRB may not be applicable.
You are best to consult a lawyer who will be able to obtain all the necessary information and advise you accordingly.
All the best for the sale.
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Q: Is there a general rule about the returns on pub freeholds… current owners are owner operators so if we buy the freehold what return should we expect for the lease?
A: Damien
There is no strict guidelines on this as it will be impacted by a number of influences such as the quality of the operator; the percentage of EBITDA to gross revenue; the duration of the lease and the covenants in the lease etc.
As a rough guide though.
EBITDA should be around 20% of revenue (prefer Aly closer to 25%). The annual rent under the lease should be about 55% of EBITDA or 15% of revenue.
Assuming (for ease of numbers) the pub turns over $10,000,000 annually EBITDA should sit around $2,500,000 per annum. On that basis the annual rent under the Lease would be somewhere between $1.375M and $1.5M per annum.
If you buy the pub on a capitalization rate of say 8.5% the pub values at let's say $29.5M. In the current market and based on the example I've given this pub may be closer to 8%!
If we assume the pub was bought for $29.5M the yield on your lease would be somewhere between 4.5 and 5%. This may be acceptable if the pub is located in a great spot and there is some upside outside of simply holding the lease. If not, you want to buy the pub on a capitalization rate of 9-10% (at least) to increase your return under the lease.
There is no single answer to your question - but I hope the above helps and all makes sense.
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Q: Curious as to how a boarding house would be valued? Would it based on the asset or the income it generates? Or both?
A: Justin
Have you discussed with your banker?
Boarding houses are specialized assets and each bank may have a different criteria.
The bank will instruct the valuer based on their requirements or valuation policy - so it is a good idea to talk to them before you instruct a valuer.
More often than not the valuation will be based around the income produced from the asset unless you have some plans around re-development in which case that may be taken into account.
All the best
Adam Huxley
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Q: I have a legal question ....If I am buying a Propety from vendor at market value or greater but also made a donation to a charity of the vendors choice are there any legal / taxation issues?
A: Justin
If the purchase price paid to the vendor includes the donation, that is, the vendor at settlement of the purchase directs you to pay the charity you will pay stamp duty on the purchase price (which includes the donation); and, the vendor will receive the tax benefits of any donation that was made as they have in effect made the payment via. a direction to pay.
Without knowing the full details of the transaction. I cannot see any legal issues for you, I also don't see any tax benefits and/or issues for you. Is an agent involved in the sale? If not, you may need to satisfy the Office of State Revenue that you have paid a market price when it comes time to pay stamp duty.
If there are any tax issues and/or benefits these are likely to be for the vendor and not you.
Hope that helps.
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Q: The section 32 disclosure statement has contractual conditions that weren't incorporated in the contract note I signed. Am I bound to the section 32 statement?
A: Hi Nerka
I am not a practicing lawyer in Victoria. However, a section 32 notice as I understand it should (must) be served prior to the contact. On that basis I'd expect that the section 32 would prevail. However, you really need to consult a lawyer/conveyancer in Victoria.
I wish you all the best.
Regards
Adam Huxley
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Q: Looking for advice around the best potential structure for a company so that its assets are protected. Some accountants have suggested:
1. Setting up a private company and allocating its shares to a discretionary trust
2. Setting up a private company and allocating its shares to a discretionary trust where the trustee is a private company
3. Setting up a private company and allocating its shares to a discretionary trust where the trustee is another discretionary trust
Which do you recommend?
A: Hi Mireille
Assuming you were to take out finance for your business and grant the financier a general security interest over the company (in the old language a fixed and floating charge), then whatever shareholding structure you have in place will not protect the assets of the company if you fail to service the facility granted to you by the financier.
If you are more concerned about product liability claims etc., I would suggest you may be best to speak to an insurance broker.
I would be more concerned to ensure that your personal assets are protected in the event that the company was to fail or a claim was made against the company that is not fully covered by insurance.
Putting aside the asset protection issue, you may want to speak to your accountant about the tax effectiveness of the structures being proposed.
NOTE, a trust cannot act as a trustee as a trust is not a legal entity in the same way that a company or a person is. Therefore, I'd suggest that the third structure proposed is not an option.
All the best with your venture.
Mireille Salloum
7 years ago
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Q: How far can the gap between RBA rates and bank rates spread? Is the cost of funds truly growing at the same pace as bank rates are moving upwards? Will the RBA or other governing bodies to anything to stop this if it is actually just profiteering?
A: Rob
You've touched on a very topical issue that has been talked about for many years. I've read a lot of papers from leading economists and others that have explained why the banks lending rates don't move lock step to the cash rate. The most uniform explanation amongst them all seems to be that the lending rate is quite often higher than the cash rate due to the banks assessment of risk in the market, and competition.
Clearly at the moment the banks would be assessing that the property market is at the top of the cycle and this would be one explanation for their rates being higher. Even more clearly though a lack of 'real' competition in the market with the big 4 dominating the lending market I would suggest is an even bigger factor.
If your bank have increased rates ask them the question directly and if you are not happy with the response shop around and see if you can get a better deal - I have done just that recently and went back to my bank and they were only too happy to change the rate and throw in some other 'benefits' for staying with them.
Whilst we need to accept that banks will set their rates for a number of reasons - that doesn't stop us as a consumer from always seeking a better deal.
All the best,
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Q: I am looking at buying the freehold of a hotel and would like to know what the maximum LVR is with the hotel as the stand alone security?
A: Sid
Banks will tend to finance a hotel on an earnings multiple rather than LVR.
Depending on the quality of management, the gaming revenues (machine entitlements) and other unique factors around the hotel - they will all have a bearing on multiple the bank will feel comfortable with. Another factor is the location - metro (and that will have a number of subsets (especially in Sydney for example) which govern poker machine entitlements), outer metro and rural.
If you are buying a freehold pub with a manager in place with a lease - you should be looking at capitalization rates no less than 8% and probably more like 10% and above outside of Sydney.
To really understand your options I would suggest you speak to a speciality hotel broker and/or talk to your finance broker/banker to seek out the assistance of a valuer who specializes in hotels.
Hotels are at the top of the cycle at the moment so if you are going to buy one I would be looking at as little gearing as you can get away with at the moment.
I wish you all the best and look forward to having a beer in your pub some day soon.
Regards
Adam Huxley
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Q: Just started my own business and interested in what some experts say is the best business advice they ever received?
A: Megan
A high school teacher of mine once suggested that the smartest person is the one who is prepared to ask the stupid questions.
Applying a similar principle in business is sound advice.
Never pretend to know all, always ask if in doubt, and seek advice from those in similar businesses/situations. Learn from experience!!! You may think that people won't want to help you - which is the main reason no one every asks for assistance. However, this website should give you comfort in knowing that there are plenty of people out there who are always happy to offer some advice and to answer what you may think was a 'stupid' question, sound in the knowledge that you were smart enough to ask it in the first place.
I wish you all the best for the future.
Regards
Adam Huxley
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Q: I have just started investing in Acorns. ($2,000 + $25 per month + rounding up of my purchases) Is this a good investment or do think I am wasting my time & money?
A: Hi Michael
If you are investing in acorns I'm with Ken and Jason. However, I assume you mean the Acorns app.??
I've not invested in this but have followed it with some interest. I guess the jury is still out as the ETF's that Acorn offer are still relatively immature - but they are managed by respected industry names such as Pimco etc.
I'm obviously not aware of your financial circumstances but it seems to me your loose change is better invested somehow/somewhere, rather than staying in your pocket to be spent on something you don't need.
In a nut shell (pardon the pun) - I'd stick with it.
Regards
Adam Huxley
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Q: I don't live in NSW & am looking to buy an investment property in Sydney. Will I have to pay land tax?
A: Lou
Without knowing your precise circumstances and assuming this property will NOT be your principal place of residence. If the property's assessed value exceeds the land tax threshold (which is currently $549,000) you will pay land tax on the amount over and above the threshold.
If you are buying a strata unit there is a good chance it will not exceed the threshold. However, before purchasing your legal adviser should be able to carry out a search at relatively low cost to work out whether there will be a liability for land tax or not.
All the best
Adam Huxley
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Q: My wife and I are looking at a house & land package as an investment option. Which areas should we be looking at... Brisbane, Sunshine Coast, Melbourne or Adelaide?
A: John
Obviously, your budget will dictate where you buy.
In my view I would be searching for affordable options in the greater Sydney metropolitan area and parts of the Central Coast. Because of NSW's poor planning regime there is a continual supply issue for new housing - that headache for developers creates a win for investors.
I personally wouldn't invest in outlying areas of Melbourne and anything west of Brisbane.
In short, depending on your budget I would stay as close to Sydney as I could right now.
All the best,
Adam
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Q: I'm looking to purchase a new 7 seater and tossing up between the Toyota Kluger and Prado. Has anyone got any advice based on experience?
A: If you have young children that need booster seats etc., you may also want to consider the Landcruiser. I think that they are a little wider in the body.
Sachs Real Estate
8 years ago
