Terry,I have a discretionary family trust.  When buying an IP do I use the name of the company (the trustee) or the name of the trust?PJ

I have never rented a place. I am trying to understand why someone would rent so I can begin to understand what type of property would command better rent. Understanding this will mitigate the risk on the cashflow which allows me to keep control of the property in the first place.I am guessing their are different types of renters with dif…[Read more]

Hi JacM,Ok, that sounds logical enough.So, with 20 properties you will have around, I'm guessing, 6 trusts?Each trust is linked with a pty ltd company who acts as the trustee. Does that sound correct?How have others structured themselves when there are more than a handful of properties?Also, if many of these properties are quality properties w…[Read more]

Terryw wrote:
I think you misunderstand how offsets work. One offset account only works against one loan. So the money in offset A will only offset loan 1.

  So if if I want to have an offset account working away to reduce interest payments on an IP and I have 20 IP's that equals 20 offset accounts.Which is what I said in the beginning.In a…[Read more]

Guys,Now I am confused.I understand an offset account works to minimise the repayments towards the loan it is attached to up to the value of the IP loan.If I had 20 IP's with a number of different loan amounts with different banks and credit societies, How many offset accounts would I have to minimise the interest payments to those loans?A – One…[Read more]

Hi Richard,If I had twenty different IP loans with a range of banks and a range of values all linked to one offset account, how is the offset account attributed to each IP?If the offset accunt has 100K in it does this get divided up to service the 20 IPs or does each IP benefit from the 100K as if it was the only loan being offset?Please excuse…[Read more]

Thanks for the replies.I am obviously in the early days of sorting out my overall game plan.  The property game lke mnay other games we play (shares etc) is all about managing the downside.For me, in my current situation (limited disposable income with ample equity) its seems the biggest and first risk I need to mitagate is the cashflow needed to…[Read more]

Richard,Thanks for the experienced insight. It is good to see there is some scope.However, even though I have ample equity (at least to set up a LOC) I would be lucky to have maybe 20K a year net in disposable income to put towards negative gearing. This is without having money set aside for those emergencies property seems to through up from time…[Read more]

Hi Richard,Yes, that is so true.Over the last few years I been focusing on increasing my cashflow with the knowledge I will be servicing debt. The only trouble is the ventures I have pursued to create more cashflow, have all ended up going south and giving me bad debt. I have gone backwards instead of forwards.My goal is to generate a passive inco…[Read more]

Hi Richard,Yes, I agree. I think wrapping is a good technique however, I suspect and you are confirming, it is a time hungry venture.Currently, I am working the 9 to 5 and making a reasonable income. Nothing fantastic and it will not get me the passive income I am looking for. Hence taking a look at property investment. I need to find a positive c…[Read more]

Richard,Haven't crossed that bridge yet.I am still not convinced wrapping is a technique I can use to address the cashflow needed to feed the hungry mouths of my B&H properties.I do not have an excessive income problem. I have enough disposable income but I am trying to completely avoid negative gearing if I can. I do not have a tax cha…[Read more]

Duckster,I am looking at the VF process as a commercial enterprise which will service my personal B&H investments. I am taking the stance I will be required to have a credit licence. I'll cross that bridge once I am clear and sure the VF technique will work in Perth.PJ

Paul,Just to clarify,Your best client will have:- Steady employment (no brainer. Somone who hase held a job consitantly)- Serviceability (Income to Debt levels shows they can service he VF repayments. I presume you work on the 30% rule of thumb)- Visit them (This suggests they are close to where you live. Probably visiting them after hours)This…[Read more]

Hi Paul,I mean to sell to.I am trying to develop a profile of the type of person who is best suited to sell a VF property to. This is of course linked to my risk profile. That being, ensuring interest payments are met (VF deals do this) and protecting my cashflow (ensuing I have sold to the best type of person).I am guessing the most critical…[Read more]

Paul,Thanks for confirming my thoughts.I am guessing your strategy for operating under any market condition is to take the stance you are not playing the VF game for capital gain and your VF clients are only interested in setting up a credit history. The knowledge your interest payments for your prime B&H properties are covered and when the VF…[Read more]

Paul,Thanks for the insight.Given this and based your experience, who are the best people to do VF deals with and Why?PJ

HA Ha! I have been biting my tongue also!

Paul,Can you offer some insight into your comment; "……….This has forced us to structure our VF business so it works well in both high and low capital gain environments."How have you done this?Also,Capital gain isn't always at the top of the list for clients is it?PJ

Hi Paul,Thanks for verifiying my assumption. This is what I was guessing.My initial goal is to limit or remove negative gearing as much as possible on my B&H properties while I have control.Do you still have a negative gearing factor on your B&H once the VF properties are in play? OR do you ensure the B&H is at least neautral?Also, do you know a…[Read more]

Thanks Paul,I'll take a look.I am keen to understand this technique.  I like your approach of setting up a VF deal to service a quality B&H. I am keen to gain control a B&H property that has development potential (R30 upwards) giving me options down the track. However, although I have ample equity in my PPOR to set up a LOC for deposits my 9 to 5…[Read more]