Hi,
Does anyone know where to get information on how to purchase a property with multiple investors?
Has anyone had any experience at this?
Are there any legal tips or strategies I should know about?
I am spending my time looking for positive geared properties both commercial and residential and may need investors to help complete the deals. Please email me if your interested.
Cheers,
Scissors
Scissors
Many poeple have done just what you are considering both well and not so well.
A couple of things off the cuff to consider:
1) Maybe look at a Unit Trust structure so that investors can come and go without having to sell the property. They merely sell there units and life carries on regardless.
2) Look at the amounts of capital being raised and the numbers of investors to ensure that you do run fowl of ASIC regulations with regards to the Offer Documents or Prospectus you maybe required to issue.
3) Always provide investors with Due diligence that you have completed and with reference sources that they can check out the information themselves.
4) Consider your financing prior to going to contract on your first property so meet with a mortgage broker to discuss your options and the restriction potential lenders may place upon your or the borrowing entity.
Cheers Richard
richard at castlewhite.com.au
Email me for details of our Qld wrap CD which gives you a full Installment Contract.Richard Taylor | Australia's leading private lender
I was going to say “UNIT TRUSTS” also..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorI would say get it all everything down on paper. Spend the time and money engage a solicitor and an accountant. Start as you intend to finish, be professional in your approach. It never ceases to amaze me how people can hear what you say, hear the words that you use and still have a different interpretation of what was said.
Beware of how it will affect your borrowing capacity. Each person on the loan will be responsible for the whole loan if others don’t pay.
So when applying for your next project, on your own, the lender will include the whole loan for your joint purchase (even if you only own 1/3), but they will only count your share of the rental income.
Also look at http://www.lawcentral.com.au for a joint property purchasers agreement.
I agree with Richard, most people who get into situations like this end up regretting it. So plan carefully.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thankyou for the information. I shall do some more study before making any moves.
Cheers,
Scissors
Not necessarily Terry,
StuartW wrote an interesting article ( it was posted on the other forum) that was published in API which detailed how a number of investors can joint venture via a unit trust where each investor is only liable for their percentage of the borrowings.
It was acceptable to the lender as they still had first mortgage security over the whole property, even though there were a number of loans issued to various unitholders.
The key was it was the same lender for all the loans, and that the loan conformed to normal lvr criteria.I’ll see if I can dig it up…
kp
Yes I’ve read that article. It would be very hard, though not impossible, to get a lender to agree to that.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I have also been thinking of using partners to buy a property. What is a unit trust structure?. Is it where each partner own x number of units of value in the trust?
A unit trust is a fixed trust with each unit being a percentage of ownership. If one person wants out they can just sell their units. This can also be done with a company with share ownership. I beleive transfer of shares in a private company is stamp duty free if the company was incorporated in victoria (up to a certain level).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Scissors!
As Richard pointed out you need to be aware of the Managed Investments Act (either to abide by it or avoid being subject to it). Obviously this is just a start and more legislation applies.
On another note if you buy with multiple investors via a unit trust or otherwise you should consider your asset protection strategy.
What would happen if one of the investors gets sued or goes bankrupt? Are the other investors in a position to buy them out ahead of creditors etc?
Somthing like that qould quickly sour the relationship.
Cheers,
GregThankyou all for the information.
Hi There,
The challenge here is to find a lender that will lend to a unit trust or company that is a trustee to the trust. Most lenders require 2 years financials (your accountants). And you have to have been trading for at least 2 yeasr also. This can be an expensive excersize and painful awaiting for the day you can actually use the company for the task you want to.
Accountants fees to do the books and submit all correct documentation for a PTY LTD is not cheap….
Any add ons to this one people?
Cheers
KiwiSure Kiwi,
The simple solution is for you as the individual to guarantee the loan.
We have just completed two such applications, one for a unit trust with a corporate trustee, and another for a hybrid discretionary trust with a corporate trustee.
Both were approved but they wanted the financials of the individual director to the trustee companies, as well as a guarantee from the same individual ( ie…me )Beyond the extra scrutiny, extra delays and additional paperwork that needed to be filled out & signed, there were no problems.
Both entities were new and had no history or financials.
Hope this helps
kp
Hey Thanks :o)
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