All Topics / Finance / Advice needed

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  • Profile photo of calebmcalebm
    Participant
    @calebm
    Join Date: 2011
    Post Count: 1

    Hi. I am 22 and live in Perth and am extremely interested in building myself a property portfolio that can help me on my way to being financially free.

    I have a problem though; I had my dream job and was making a bucket load working on minesites as a mechanic, but I was involved in an accident (riding my bike to work and a car run me over) that has left me unable to work in that field anymore. I have recieved a decent payout and after paying off any debt I had and going on a holiday (to clear my mind a bit as my payout took nearly 3 years in which time I was not permitted to work or re train) I have $500k in a term deposit for the moment but no job or other training as I left school in year 10.

    I am wondering if this is going to affect my ability to have loans approved or if there is a way of still having finance approved using my money as guarentee? Would I able to use a self managed super or a trust or something that would give me a better chance of finance?

    Also if there is anyone that is in Perth and would be able to give me some advice on taking my first step in property investing and would be available to meet up for a coffee and a chat it would be much appreciated (and my treat lol) send me an email at [email protected]

    Thanks heaps in advance
    Caleb

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Caleb

    sorry to hear about your accident. $500,000 is a lot of money to have and you should therefore do some careful planning and seek professional advice from a good lawyer too.
    I think there are many things to consider such as asset protection for that $500,000. Implementing some strategies now could help save you money years down the track if something happens.

    Taxation also needs to be considered. If you are suffering from a disability you should look into disability trusts and discretionary trusts.

    If you are not working and have no income, other than the interest, then you will find it hard to get finance initially.But there may be ways around this later on.

    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 Kent CliffeKent Cliffe
    Participant
    @kent-cliffe
    Join Date: 2011
    Post Count: 110

    Hi Caleb,

    That's horrible to hear about the accident.

    If you would like, I would be more than happy to meet up for a coffee and give you some direction and more importantly answer all your questions, no cost. We don't sell property, so you don't have to be worried about being sold an IP.

    I'll even chuck my recommendations into planning report for free so you can compare it with all the other advice you receive and there is no obligation to follow it.

    PM me when you're free.Kent

    Profile photo of Scott112Scott112
    Member
    @scott112
    Join Date: 2011
    Post Count: 2

    Hey caleb,

    First of all sorry to hear about your accident.  I think main thing you should do is build up your mental confidence. I think terryw is right. Youn should seek professional advice from a good lawyer.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    Hi,

    Sorry to hear about your accident :(

    Terry touches on some really important point;
    1. Seek professional help from a Financial adviser, accountant and lawyer- yes they may charge you; but in the long run it’s money well spent

    Yes there are ways to borrow from the bank using your own cash as “security”.

    Regards
    Michael

    P.s Terry- Never heard of a disability trusts- how does it work and how does it differ compare to normal trust?

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of EleaElea
    Member
    @elea
    Join Date: 2011
    Post Count: 24

    Sorry to hear your accident. Yeah, you need to talk to some experts who can help and guide you as well.

    All the best,
    Elea

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Michael,

    Did see your post there. Special disability trusts are just trusts set up for someone with a disability. If it is set up for the maintenance of the person with the disability and the disability is severe then there are many tax and centrelink benefits – the trust assets may not count as the person's assets up to a certain level, so someone could still receive centrelink benefits and be a beneficiary of the trust.

    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 Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    I’m going to pose a question to brokers here…would buying a property with some of the 500k outright work which you would then receive rent from. Question is, would the rent then be counted as income given employment? In my situation i know it is so I would assume that would be the case here.

    So depending on Caleb’s strategy that he chooses and should it be a property portfolio, can he then use rent received from properties as serviceability for more properties later on?

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    Portfolio PI wrote:
    I’m going to pose a question to brokers here…would buying a property with some of the 500k outright work which you would then receive rent from. Question is, would the rent then be counted as income given employment? In my situation i know it is so I would assume that would be the case here.

    So depending on Caleb’s strategy that he chooses and should it be a property portfolio, can he then use rent received from properties as serviceability for more properties later on?

    Yep- rent= income…
    But speding $500k to achieve a rent of say $600pw-isn’t the best “structure” financially i have to say;
    1. Risk
    2. A huge lump sum into one investment
    3. $600pw= $30,000 gross PA- can’t afford much for the next purchase + cash for deposit and stamp duty
    4. Next purchase needs to be under 80%….LMI do not like “unemployment”

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269
    Shape wrote:
    Portfolio PI wrote:
    I’m going to pose a question to brokers here…would buying a property with some of the 500k outright work which you would then receive rent from. Question is, would the rent then be counted as income given employment? In my situation i know it is so I would assume that would be the case here.

    So depending on Caleb’s strategy that he chooses and should it be a property portfolio, can he then use rent received from properties as serviceability for more properties later on?

    Yep- rent= income…
    But speding $500k to achieve a rent of say $600pw-isn’t the best “structure” financially i have to say;
    1. Risk
    2. A huge lump sum into one investment
    3. $600pw= $30,000 gross PA- can’t afford much for the next purchase + cash for deposit and stamp duty
    4. Next purchase needs to be under 80%….LMI do not like “unemployment”

    Regards
    Michael

    Thanks Michael,

    Even a smaller purchase – $350k range could land good rent (500 pw) and maybe he goes for a high rental yield area first to build up income, obviously coupled by good capital growth. This might not be a good strategy but thought I would pose the option.

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