Hi,
I'm new to this site, in fact, just registered a few minutes ago.
Anyway, I've just finished reading Steve's book… 0 to 130… and it stirred a lot in me particularly in the area of postive cash flow property investing.
To get started, I'd like to know what type of entity should I do my property investing under. If I'm going to do it with some family members or friends and would like to register a business, what is our best option and why?
The same question applies if I do it with my wife.Thanks in advance for your insights.
Cheers,
Louie (Sydney)
LnM,
Hi, and welcome to the forum.Steve's book were written a few years ago now. So don't think that things stay the same, you will not get 10% returns in capital cities nowadays ( or course there are some exceptions ). I would suggest you do a bit more reading of other books and even this forum before jumping in, so you can get a feel of the market etc.
With regards to your structure – I suggest you keep it simple for you first investment property, start out small and see how you go for a year or two. Read up about Tenants in common and Joint ownership first.
Just keep it simple for a start in case you decide its all too hard and tenants drive you mad.
Good luck
LnM wrote:To get started, I'd like to know what type of entity should I do my property investing under. If I'm going to do it with some family members or friends and would like to register a business, what is our best option and why?
The same question applies if I do it with my wife.First of all, welcome!
Unfortunately, the question you ask is a bit like asking how long a piece of string is unless you can first define what your objective is (as opposed to who you are investing wth, though this will have SOME bearing on it).
Are you investing for cashflow? Tax minimisation? A Legacy? Do you value asset protection?
If you are looking at investing with friends / family and you are investing for cashflow and asset protection, perhaps look at a unit or hybrid trust, controlled by either a board of trustees (All of you + an independent if necessary) or a $1 shelf company controlled by all of you. Most importantly, this would give each of you a defined 'share' of the investment. It also covers you if one of you get sued for any reason, or if one of you claim bankruptcy etc, though bear in mind a bankrupt cannot be director of a company. It would also provide an avenue for any of you to sell your share should you wish too. That's probably a little complicated for you at this stage though…
Read, Read, Read.
Define your objective.
Define your structure.
Speak with an accountant to get more advice.
Create your structure.
THEN start looking.Good luck!
Thanks WJ Hooker and Imugli.
My main objective is to invest for positive cashflow. I understand that it will take a lot of smarts and hard work to find positively geared properties nowadays, but still, I'd like to give it a go and I'm willing to invest anywhere as long as it meets my main objective of giving me positive cashflow.
The reason I want to know about entities is I want to have some level of protection for whatever assets (not that I have any) I have before I venture in my investing.
And yes, I am only going to start simple and small 'til I get my head around all the knitty gritty involved in investing.
I guess I'll start by asking my accountant. Any suggestions on what intelligent questions I should be asking?
Thanks for your feedback guys. Will welcome more.
Cheers,
LnMHi Lnm
In addition to the entity that you intend to use to purchase your IP's you should also start considering how you will structure the financing of these acquisitions as not ever lender will be upto date on Trust or Investment structures and the terms and conditions will differ greatly.
Obviously depending on your personal circumstances with regards any existing non deductible debt will have a bearing on your ultimate structure and the entity you should use as the two will go hand in hand.
Make sure your mortgage broker is au fait with structures and not straight out of the franchise sausage factory.Good luck in your endeavours and take my word for it they are out there.
Richard Taylor | Australia's leading private lender
Sounds to me like a trust will be the best structure but best you do lot's of reading first. The books you read will give a start on your accountant questions. Simply telling your accountant your objective should be enough for him to recommend something, but his time is your money so best to have an idea first. He can advise you the pro's and cons of any ideas you may have.
Thanks everyone. That'll do for now. 'Til my next question.
Cheers,
LnM
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