All Topics / The Treasure Chest / Joint ventures

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  • Profile photo of NewInvestorNewInvestor
    Member
    @newinvestor
    Join Date: 2003
    Post Count: 18
    May 30, 2003 - 1:25 am

    Hi,

    i am new in investing.Me and two other freind of mine are planning to buy a property in joint venture.
    two of us have our own house.only one person doesn’t own a house yet.
    we all three are earning above 75k.
    i want to knwo what are all the things that i should be knowing about joint ventures.
    can anyone pls explain me the do’s and dont of joint venture,the pitfalls to look for.

    these are the few questions

    1.should the expenses be shared evenly?
    2.can the deposit amount shared can be uneven?
    3.can we have a company and have the property under the company’s name rathere than in our three names.
    4.tax complications.

    trying to learn

    Profile photo of NewInvestorNewInvestor
    Member
    @newinvestor
    Join Date: 2003
    Post Count: 18
    May 30, 2003 - 2:35 am

    thanks Michael.[:)]

    iam a little confused with the few terms like thanks Michael.[?]

    iam a little confused with the few terms like company trust and discretionary trust.
    if there are website where i can understand these trusts structures?

    I am a newbie i just dont understand.
    for example if we start a company trust c1
    we three are beneficiaries b1,b2,b3
    we want to buy a propertY X.
    say for example we each deposit 16,000 dollars toward the trust.
    the trust has 30,000 dollars now.
    the property we are looking for is 350 K.
    deposit

    35,000
    stamp duty

    8500
    legals

    1500
    others

    3000
    total

    48,000 dollars

    the total thats in trust is 48,000
    now if our contributions is 25,25 50 then its 12,000,12000,24,000
    is this right.
    if so how much does the trust get taxed is it 30%.
    and when we try to seel the property we wont get the 50% rebate on CGT.
    Make sure you each protect yourselves (your current assets) from each other
    how do u do it.

    Profile photo of NomadNomad
    Member
    @nomad
    Join Date: 2002
    Post Count: 5
    May 30, 2003 - 2:44 am

    Hi New Investor
    I’m considering a JV as well, and will share my thoughts with you.

    1 SHARING EXPENSES?
    Well i don’t think it matters, as long as all parties agree, and are happy with the way that costs and returns are divided. I guess that you could use an accountant if like or just have a simple excell spread sheet to keep track of things.Do you have an agreement on how & who will look after any future expenses?
    2 UNEVEN DEPOSIT AMOUNTS?
    It shouldnt be a problem as long as all parties are aware of there percentage of return ie 30%/40%/30%Etc.
    3.PROPERTY/COMPANY
    Your solicitor in your state should be able to answer all you Q here, isn’t that what you pay them for? or maybe some one else on the forum could explain it better than I[8D]
    4.TAX
    Ditto with your accountant.

    Having an agreement for a JV is the hardest thing,once all concerned are happy with the blueprint, let other people (Accountant & Solicitors) put the nuts and bolts together.
    Have you got a plan for who moniters what – ie income & expense’s insurance Etc.

    Bottom line is that you don’t have to make it complicated, set your goals, have a system for keeping track of things, & review from time to time, can i suggest that you put some thoughts down on paper, like an agenda to keep you and the other parties clearly focused & on the same sheet of music too.
    I hope this helps a little, There is also the search on this forum that my help too!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    May 30, 2003 - 2:41 pm

    For some ideas check these sites out

    Chris Batten Accountant and structuring expert
    http://www.chrisbatten.com.au

    and
    Kevin Munro, Solicitors and accountants
    http://www.taxlegal.com.au/
    Lots of free articles on Trusts etc

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of SaskatoonSaskatoon
    Participant
    @saskatoon
    Join Date: 2002
    Post Count: 112
    May 31, 2003 - 2:23 am

    Hi New Investor.
    You should pay Michael for his great answer :-)!
    It is important to have all the legals done to protect your own assets.
    Also, while doing research look at unit trusts as a possible structure for your situation.
    Terry

    Terence McMahon
    HomeWin
    Finance

    Profile photo of hilaryhilary
    Member
    @hilary
    Join Date: 2002
    Post Count: 146
    June 1, 2003 - 4:40 am

    Recently had joint meeting with my solicitor and accountant, who advised that the easiest structure was a unit trust, as it has the basic set up ready to go, and joint ventures are usually project specific and are much dearer to set up.
    However, the determining point for me was that trusts can’t borrow – jv’s can.[;)]
    this was NSW

    Profile photo of SaskatoonSaskatoon
    Participant
    @saskatoon
    Join Date: 2002
    Post Count: 112
    June 2, 2003 - 12:28 am

    Hilary,
    your last comment has me puzzled. Our family trust has borrowings, i.e. the trustee co. has borrowed for the trust.
    Did you mean that a super fund cannot borrow?
    Terry

    Terence McMahon
    HomeWin
    Finance

    Profile photo of NewInvestorNewInvestor
    Member
    @newinvestor
    Join Date: 2003
    Post Count: 18
    June 2, 2003 - 1:38 am

    Hi,

    Thanks a lot for ur help and sugesstions.

    I live in NSW .can u anyone pls suggest good lawyers and accountants who are resonable.

    thnx

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