FAQ's

You can. However Merlot is a specialist property investment manager and has integrated all of the components and uncertainties of this investment into one product saving you significant time and money on research, purchase price, tax and accounting, mortgage facilitation, nil vacancy, property management and maintenance. 

Merlot is the only company of its kind in Australia which provides such a fully integrated direct property product. We are the only company who actually signs an RTA Agreement becoming the tenant and paying the rent, the only property manager who pays for routine repairs and maintenance, and the only facilitator which completes all taxation and finance matters for the clients. Merlot is unique and our clients receive the most service driven product in Australia. 

Further to this and considering Merlot’s contingent liability, it is critical that we select the right land to develop and build the right homes for tenancy, tax effectiveness, management, and sustainable growth over time. This balance is crucial to our clients and Merlot.  

Yes. All Merlot properties on offer under the terms of this POD are brand new four bedroom, two bathroom, brick and tile homes with double lock-up garage for sustained rent, maximum depreciation and tax effectiveness.

All contracts are subject to finance approval which may take up to 4-5 weeks. Upon settlement of the land (typical 2 weeks after finance approval), the builder will move onto site. The construction process is typically up to 20 weeks.

The property does come with builder warranties and developer guarantees as required by state and federal legislation.

Interest rates will probably rise and fall during the term of the investment. Mortgages can be fixed to reduce potential risk or changes in returns and cash flow. Remembering however, if interest rates do rise then there presents greater opportunity for tax benefits.

Many experts recommend that mortgages on investment properties should be interest only. Tax relief is not applicable on principal payments and cash flow is critical for such an investment. In the case where a client has an existing mortgage, any residual cash is best used to offset the mortgage rather than being wasted paying off principal on the investment portfolio.

Leverage is the ability to borrow money for the purposes of investment against equity that you already have, generally in your own home. Most people who own a home don’t realise that they can use the equity in it to borrow against and buy another property which apart from possibly appreciating in value will produce tangible tax advantages.

Rent is paid each Friday weekly and in advance via electronic funds transfer for the term of the RTA Agreement. Rent is paid in accordance to the RTA Agreement’s initial rental amount taking into account annual reviews and less the 12 percent (plus GST) property management fee. 

This will not impact your cash flow. The rental agreement is in place for three years and incurs annual rent reviews meaning regardless of the rental market increasing or decreasing your exposure to risk on cash flow is reduced.

It is an industry standard document that provides independent authorised facilitation under RTA and the PAMD Act, and delivers protection for all parties in the event of a dispute, if any.

There are three mains areas for tax effectiveness in your investment property. The first being immediate deductions (those costs which are deductible in the year in which they occur including interest only loan repayments, property management, accounting fees and rates), the second being medium term deductions (those costs which are deductible over a maximum of five years or the life of the loan/investment, whichever is less and include mortgage insurance and professional fees, and the third being depreciation or long term deductions (which includes the capital allowances, plant and equipment, and low value pooling items, all of which have different effective lives and are documented in the depreciation schedule prepared by a quantity surveyor). 

Merlot alongside your accountant will help you complete an Income Tax Withholding Variation Form (ITVW). This form forecasts the deductions you will have from the property throughout the year and allows you to receive your annual tax rebate throughout the year (total rebate divided by 52 weeks) thereby increasing your net weekly income to help you service the investment alongside the rental income.

This is an administrative fee that covers items including but not limited to the associated costs of research and due diligence, documentation set-up and processing, client and adviser services, project management and our rent ready package (air-conditioning, dishwashers, screens, blinds and smoke alarms).

In essence, through due diligence and expertise. Merlot acquires land in emerging growth areas and develops or jointly develops this land into residential subdivisions. The margins created through the development of large land parcels and developments is where our clients achieve discounts, and where Merlot makes revenue. 

Merlot Finance Australia (MFA) is a wholly owned subsidiary of Merlot and provides strategic finance and mortgage services specifically for Merlot clients. While Investors may choose their own broker, we recommend that broker is specialised broker who understands the intricacies of tax effective property investment and mortgage reduction models. MFA provides ongoing loan management and advice for the life of the loan. 

Merlot recommends that you use a reputable accounting and taxation firm that specialises in tax effective investments (or property). If you do not have a close relationship with such an accountant Merlot can refer you to Wood Accounting who works with most of our Investors to ensure all tax benefits are achieved.

Yes. The bank requires this as a condition of the loan and reduces risk on the asset for the Investor. We also ask that Terri Scheer house and landlord insurances are kept up to date at all times, ensuring Merlot can act on these in the event of insurance related incidences.  Two insurance policies are put in place to protect you as the owner and landlord, being house insurance which protects the home in the case of major damage, fire and or natural disasters, and replaces the home as new if required, and landlord insurance which protects a landlord from malicious damage from a tenant and absconding tenant, and may pay up to 52 weeks rents in the case where the home may have to be rebuilt after a fire or such.

Increasing the number of homes in a client portfolio is a case by case thing. Typically clients who wish to build a property portfolio over time tend to look at getting another Merlot home every 2-3 years, pending equity, income, tax benefits and other factors.

In reality you will only lose your property manager. You still own the property and you have someone occupying the property (being the sub-tenant). You would simply appoint a new property manager, convert the occupier to your tenant and claim on your insurance policy for any loss of rent if owing from Merlot.

This is dependent upon personal circumstances, but generally an investment property will always produce income and continue to grow in value (and tax benefits). In time the equity growth in a property can enable leverage into future investments for long term wealth accumulation.