Hi,

Trusts are generally seen as an attractive way to control wealth without owning it.

However, since a trust is usually set up just prior to buying, it often lacks the necessary financial history to properly comfort a lender (such as 2+ years of financial statements).

Even if a relatively low LVR is sought, the bank will want some surety that the loan can be repaid – or that someone will repay it should the trust default.

That is wht lenders typically require a guarantee from the Trustee(s). In this case, the ability of the Trust to borrow money will depend on the ability of the Trustees to be seen as worthy guarantors.

Hence, the credit history, personal asset statement etc. all come into play for the individuals behind the loan – either as individual Trustees or as Director’s of the Trustee company.

More commonly these days, lenders are starting to become a little more suspicious of elaborate schemes involving multiple entities and / or ‘bare guarantors’ – those with little income or assets but with a lot of contingent liabilities in the form of guarantees.

Like many things in the lending market, there is the lender’s formal policy and then there are the advantages that come from having a relationship with a senior lender who can cut to the chase and make things happen.

I am not suggesting anything illegal is done, only that these banker understand structures more than the standars loan officer at a branch level.

As you can see, there is a little more to this question than a simple answer. Terry is right to say that it shouldn’t make much difference, but often getting the bank to approve the loan is a matter of taking away all the reasons for them to say no as much as it is getting them to say yes.

All the best,

– Steve

Hi Supagirl75,

Thanks for your post. Welcome to the forum.

By ‘owner occupied’ I assume you mean live in…?

In that case what you are doing is making a lifestyle decision while trying to maximise the financial outcome.

I say this as it is important to make this observation as many people mistake their home for an out-and-out investment.

That is, the question that you need to ask yourself is: ‘First and foremost, is this property a home or investment’

Your answer will dictate what sort of property you acquire, and your timeframe for ownership.

Again assuming that you are looking for a home, select somewhere that has appealing features that will become more scarce (and therefore more valued) over time.

Examples include access to ammenities, land size, proximity to landmarks etc.

If you are looking for an investment that you can also live in then you have a choice of doing a ‘buy-reno-sell’ or ‘buy-reno-keep’ (with or without subdivision and development). This option sees you living a less glamourous lifestyle but potentially making tax-free profits while also having a place to live.

Food for thought.

Keep us posted on your progress.

– Steve McKnight

Hi,

It is likely that the ATO will view your activities as a business given your intention to ‘trade’ properties.

That is, your choice of investment structure (that is, the entity) will not be able to get around the tax treatment of the transaction.

For example, it doesn’t matter if you use a coy or a trust, the profit will be taxed and not subject to CGT.

However, from an asset protection point of view, a trust may be better as it allows you to split income while also securing assets.

It would be wise to have an accountant look over your situation and provide an opinion.

All the best,

– Steve

Hi,

Yep – Dave and I have shaken hands, thanked each other for the memories, and decided to part ways.

There is no gossip or hidden agenda. We had simply reached a point in our business relationship where we wanted different things.

Rather than compromise and end up with a lose-lose outcome, we respected each other enough to end on a high.

No doubt our friendship will continue and we’ll be able to bouce and support each other in our new businesses.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

I find it funny that people who jump to Dale’s defense here openly defame me on another forum site. Good old tall poppy syndrome.

Anyway, without any agenda, I have met, heard and chatted with Dale on several occasions. While I would regard some of his tax claims for personal expenses aggressive, he creates a reasonably arguable position. Ultimately, such claims are made under the Australian self-assessment tax system and so they will be honoured, until such time as they are tested (which may be never), in which case it is up to the lawyers to fight it out.

Like most advice (my own included) it’s up to you to take it or leave it.

Now, as for Dale as a person – never, not once, has his integrity been called into question with my dealings with him. This is a rare situation in the world of wealth creation, and speaks volumes for his professionalism and approach.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hello,

We’re tyring hard – very hard – to deliver everything that was promised in the program, and more.

There have been frustrations and disappointments, and the program is not perfect, nor is it the right opportunity for everyone.

I accept full responsibilty for the things that have not gone to plan, and that have gone down right wrong. For instance, I’m going to scream if one more CD or DVD is stuffed up in the duplication process!

I’m far (far!) from perfect, but that is not going to stop me having a go. I’m learning and refining as I go.

Geoff, I will be contacting you on Monday to talk about a successful resolution to your ongoing concerns.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi ToothKnight,

Okay – I’m confused.

Normally, in a lease-option, you have two prime parties:

> You have the investor who buys the property; and

> You have the homeowner who is leasing the property from the investor.

Now, the homeowner may be an investor, but that would be a rare situation. In most cases it is someone who likes this idea for various reasons.

Therefore, it seems to me you are looking for people to live in the property. That is, you are the investor and you are looking for homeowners – is that right?

If that is the case, I suggest that you approach real estate agents and let them know what service you offer. From time to time they come across buyers who do not qualify for finance, and they can refer them to you – for a commission of some sort or other.

Be very careful though, the key to a wrap or lease-option is in ensuring that the payments are affordable.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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