All Topics / Help Needed! / Structures for larger positively geared portfolio

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  • Profile photo of JustinmGJustinmG
    Participant
    @justinmg
    Join Date: 2020
    Post Count: 0

    Hey guys,

    This is my first post in the forum. I’ve just completed both of @stevemcknight books and was interested in the structures he used to grow large portfolios. I understand he purchases in trusts for assets protection and borrowing capacity.

    Ive recently been in contact with some buys agents in the Sydney area that are know to have over 100+ properties. Both of these people are advising to purchase everything in your own name. I’m unsure why, as there’s is a whole chapter dedicated to not doing this written by Steve.

    can someone please help me or advise me. I know times have changed along with lending. It would be great to know before moving forward.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    G’day!

    A buyer’s agent who owns hundreds of properties? In their own names? Hmmmmm. That doesn’t pass the sniff test.

    I’m currently writing lots of new and updated products about due diligence and structuring. I recommend getting your hands on them once I have finished them (still some months away).

    Structuring though, as an overview, is the way you control and own your wealth. If you own everything in your own name, then you’ll pay the highest tax on your profits (assuming you are in the top marginal rate – or bumped there because of capital gains in the year you sell), and you have no asset protection between assets – if one fails, they are all at risk. That’s why individuals are usually poor entities to use to structure your investment empire.

    When borrowing, debt in your own name acts as a weight to being able to borrow more. Therefore, you would need a lot (LOT!) of income to support the debt on 100 houses owned by an individual (noting that equity would not usually be sufficient as you have to prove servicibility from income too).

    In respect to advice… it’s always sensible to find your own qualified adviser(s) who can tailor solutions specific to your needs and budget.

    Bye,

     

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

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

    I agree that doesn’t pass the sniff test!

     

    I am a lawyer specialising in structuring too and have never heard of such a thing!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

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

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Justin,

    Great question, and it looks like you have had a couple of great answers too.   When things just “don’t sound right” I always like to ponder WHY someone might say something like this to you.

    So, as we know that the answers from Steve and Terry are correct, WHY would someone else who sounds successful (100+ properties?) advise YOU to buy in your own name?  I wonder if they are need of a quick commission or two to make payments on some of those holdings of theirs?   Perhaps they are $10k short right now, and they don’t want to wait while you go away and set up a Trust before buying through them(?)

    Hey, I don’t know really – but it can be fun to ponder…..  ;)

    Benny

    Profile photo of JustinmGJustinmG
    Participant
    @justinmg
    Join Date: 2020
    Post Count: 0

    That’s for the reply guys.
    Thats exactly what I was thinking @benny & @terryw .
    I thought it may be a quicker process for me to gather a couple of properties in my individual names, but will stop me growing anything substantial fairly quickly.

    will you be posting the new information on structures and due diligence on the forum here @stevemcknight , or writing another book with the information.

    thanks again

    Justin

     

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    It will be a revised edition of Wealth Guardian, so a product for sale on the website, rather than a book in bookstores.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

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

    Keep in mind it won’t likely be one structure, but multiple legal entities and trusts together with individual ownership

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

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

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