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Hi there,
As outlined below, your company will need a registered office (CORPORATIONS ACT 2001 – SECT 142), which must be a physical address (i.e. where notices can be sent). It cannot be a PO Box (CORPORATIONS ACT 2001 – SECT 100 (c)), but it can be a home address.
The requirements of a Registered Office are (CORPORATIONS ACT 2001 – SECT 144) are:
Company’s name must be displayed at registered office etc.
(1) A company must display its name prominently at every place at which the company carries on business and that is open to the public. (2) A public company must also display its name and the words “Registered Office” prominently at its registered office.
Interestingly, CORPORATIONS ACT 2001 – SECT 145 goes on to say that only a public company needs to be open to the public.
So, it seems that a registered premises for a PTY LTD company needs to identify that it is such, but need not be open to the public.
If you don’t want to use your home address, and you don’t have an ‘office’ address, the common practice is to nominate the office of your accountant or solicitor. Note that you should have written permission for this arrangement. See CORPORATIONS ACT 2001 – SECT 100.
Assuming you are on good terms with your adviser, you shouldn’t need to pay anything.
All the best,
– Steve
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This reply was modified 4 years, 1 month ago by
Steve McKnight.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks for the question, and you ask something that seems simple but is in fact very sophisticated and compelling.
Many properties have an ICR (Income Cost Ratio) which is negative (i.e. costs are higher than income), but that is due to their heavy leverage causing interest to be excessive. Other properties have higher hidden costs (such as body corporate, marketing, etc.). As such, operating (i.e. EBITA) rather than net income is the better base.
That said, getting an industry-wide number is difficult, because different people use different cost inclusions (because their definition of operating varies). Consider two properties – one externally managed, one internally managed. The ICR would be higher on the non-managed property, but the investment performance could be compromised because the management attention is lower.
All that said, for my US fund, we work on a gross margin of >60%. That is, operating expenses, including management, need to be contained at 40% of gross income or less.
Thanks again for the question. This is the best forum post I’ve read seen for a long time.
– Steve
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This reply was modified 4 years, 5 months ago by Steve McKnight.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Properties in regional areas tend to be more income orientated than growth orientated, but of course that is a generality, not a rule. Student accommodation is definitely an income maximisation strategy though.
Some questions I would work through:
a. Who is going to manage it, and at what cost?
b. Who is going to buy it off you? It will need to be another investor? How will you add value or create a compelling investment opportunity to achieve your exit?
c. With a 10 year horizon, and with a growth focus and a passive mindset, might you be better off with the classic “worst house, in the best street, in the best suburb you can afford” approach?The approach I advocate today is this:
a. Spend less than you earn to create savings (or cash surplus)
b. Use the surplus as capital to invest
c. Invest for growth – either active and quick turn, or passive and generic growth
d. Once you have accumulated enough capital, redeploy to income (commercial property)Regards,
– Steve
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This reply was modified 4 years, 9 months ago by Steve McKnight.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Flynn,
In the US there is what is called a 1031 like kind exchange, where you can roll a property’s realised gain in to another purchase. Australia does not have such laws, although there is capital gains tax rollover relief if you sell a business (in some circumstances).
To answer your other questions…
Is now a good time?
Well, it depends on your approach, in addition to your level of skill and experience. Now is a poor time if you are speculating and low on skill, but if you are educated and experienced, then there are always opportunities to make money.
1% rule
Once you find a property that meets the 1% rule then you need to do further due diligence on the property to make sure the information you’ve been given, and you discover, supports the purchase. I have a resource called STEPS that walks you though the 12 STEPS process for how I recommend you complete due diligence on a property acquisition.
Utilities
Different jurisdictions have different rules. Make sure you know what the rules are in your investing area.
Offer Price
You should offer a price that is commensurate with the risk, and allows you to make your required return.
Bye,
– Steve
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This reply was modified 4 years, 9 months ago by Steve McKnight.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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This reply was modified 4 years, 1 month ago by
