I have a question about a situation my husband & I will be in soon.
Current situation –
1 x Rental property Loan payments $320 p/mth Rent received $866 p/mth after fees
1 x home that we reside in Heavily mortgaged.This came about due to the area we use to live in (15years) is now our rental property. The area was not an area we wished to live in and the new place is close to our family so we have a great family support network which we didn’t have before.
New situation –
Current businesses will be sold and will leave us with approx. $100,000 to invest. But with out any jobs.
We would like to buy a couple of cheap run down houses and reno. quickly and sell. To do this I wanted to use 1/2 of the money for the deposit the other 1/2 for our up keep and renovating. Depending on the property we could make up to 100k+ profit from original purchase price
We thought if we did this a few times we would be able to generate enough cash flow to 1/pay off home, 2/ purchase more rentals – possibly use one of the reno’s.My concern is how the bank/lending authority will react to the lack of income during this time, how would you suggest we approach this and would it be best if one of us gets a job.
Also the money earnt from the sale of our businesses, how can we minimise the tax? Do we sent up a new company under our trust purely for the rentals and reno’s?Your thoughts much appreciated.
Bron
Hi Bron,
Thanks for your post.
My concern is how the bank/lending authority will react to the lack of income during this time, how would you suggest we approach this and would it be best if one of us gets a job.The way forward might be to look for a low-docs loan where your lack of income won’t necessarily be an issue. In return you will have to leave more of a deposit though, but given your situation that shouldn’t be a problem.
Also the money earnt from the sale of our businesses, how can we minimise the tax?There may be some CGT roll over relief available, but the best person to explain that would be your accountant.
Do we sent up a new company under our trust purely for the rentals and reno’s?This statement seems to indicate a lack of understanding of how structuring works. The real issue is will you need to set up a new structure for your renos.
Well – what I would probably try to do (to minimise tax if possible) is to live in the property while you renovate it. That way (unless you are in the business of renovating) the gain will be tax free.
Talk about this strategy with you accountant.
Have a wonderful day.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
The topic ‘Just Starting Out’ is closed to new replies.
