Hi All,
I’m a newie to this forum also, but I’ve learned SO much already from reading all your posts.[
]I was very interested in Spring1’s post. I’m 53, just divorced and very excited about getting into this property thing, to secure my future financial independence.
My brother (& sister-in-law) and I have decided to pool our home equities in order to begin purchasing our first (of many, we hope)investment property. We are working on a strictly positive cashflow strategy.
My questions are:
1. Should we form an investment company?
2. We have a mortgage broker, who is very helpful. However, instead of re-financing our homes, could we do a “Line of Credit” to access the equity, to buy property.Thanks again for all this terrific information.
Regards
Wellyboot []Hey Wellyboot,
Welcome to the forum …or as Bruce says….PI.com []Just a thought as to what you guys shoulg set up… It really depends on the situation and the money split. You should speak to a solicitor to consider the four main approaches.
1. Form a company.
2. Set up a Unit Trust.
3. Do a Joint Venture.
4. Form a partnership.All of these have pro’s and con’s and the best person to see would be the solicitor and or accoutant. It may seem like a lot of money but it will be more expensive if things go wrong.
As to LOC or not to LOC…….
It certainly brings the costs down if you uses your own money but it also means a lot fewer deals. I use the LOC for deposits through a broker. Another clever way people use LOC is to buy the place “cash” and then be able to negotiate a lot tougher. After purchase they then refinance the house and pull their money out.
Hope this all helps.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David Brink
Hey Wellyboot,
Welcome to the forum …or as Bruce says….PI.com []Just a thought as to what you guys shoulg set up… It really depends on the situation and the money split. You should speak to a solicitor to consider the four main approaches.
1. Form a company.
2. Set up a Unit Trust.
3. Do a Joint Venture.
4. Form a partnership.All of these have pro’s and con’s and the best person to see would be the solicitor and or accoutant. It may seem like a lot of money but it will be more expensive if things go wrong.
As to LOC or not to LOC…….
It certainly brings the costs down if you uses your own money but it also means a lot fewer deals. I use the LOC for deposits through a broker. Another clever way people use LOC is to buy the place “cash” and then be able to negotiate a lot tougher. After purchase they then refinance the house and pull their money out.
Hope this all helps.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David Brink
Many thanks Ad – hmmmm….plenty of food for thought there.
Best wishes
WellybootHi Wellyboot !
Welcome welcome……
further to AD’s comments we have had a bit of luck doing exactly as he said, i.e. paying cash, then doing some refurb and refinancing with lender. On one occasion it became a “no money down deal” (still generating positive cashflow income) as after the refinance we had effectively put no money in !!
cheers
the Bruce [
]Hi Guys
A twist on the LOC option is to get a interest only loan with a 100% offset capability.
The advantage of this method is a cheaper interest rate.
The down side is that they review this loan as the interest only component is for a fixed period.
As AD says it is very important that you set up the structure correctly.
Some of the things you need to consider are
a method by which people can exit the investment without detriment to the other parties.
what happens when one of the group becomes non financial (sickness death etc)
Basically contingencies and what if’s
Cheers
Cheers
Hi Bruce,
Many thanks for your help. Very much appreciated.Cheers
Wellyboot [
]
Hi GuysA twist on the LOC option is to get a interest only loan with a 100% offset capability.
The advantage of this method is a cheaper interest rate.
The down side is that they review this loan as the interest only component is for a fixed period.
As AD says it is very important that you set up the structure correctly.
Some of the things you need to consider are
a method by which people can exit the investment without detriment to the other parties.
what happens when one of the group becomes non financial (sickness death etc)
Basically contingencies and what if’s
Cheers
Cheers
Hi ziz,
It’s amazing the ways around financing. Thanks for giving me contingencies to consider!
Cheers
Wellyboot []Hi Wellyboot.
AD offered excellent ideas.
I must add, from experience, to be VERY cautious of partnerships. A saying from the 19th C:’the only ship that’s certain to sink is a partnership’. Have your solicitor explain all the pros & cons of each of the structures.
Regards.
TerryTerry
FinanceMany thanks Terry
Cheers
Wellyboot
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