Brand New Member – very first post!!
Current Situation
Recently finished reading both Steve’s books and also recieved his Buyer Beware. Just booked for the Sydney Masterclass (not prepared to wait until it comes to Brisbane). I am about to put two negatively geared porperties on the market and just completing our first renovation (in Ipswich) which looks like making a profit, though we have learned a lot! My 25 year old son did much of the work with my wife and myself doing as much as time permitted.Untill I was introduced to Steve’s books I had expected that we would simply focus on doing more renovations as I think we have an eye for it and although I am lacking in time, between us we have many of the skills required. I now see many alternatives that we should also include in our plans.
A Question of Structure
I now understand that I need to get the structure of our organization right, hence the need for a copy of WealthGuard! I am thinking that a partnership is likely to be the way to go. I have 3 children, the oldest (Jonathan) is the one who will be doing this full-time. My wife and I will do as much as we can within the time constraints of our jobs. I am an engineering consultant who spends seversal weeks travelling to clients sites followed by several weeks home based with ‘flexible time’. My wife works part-time in her ‘true vocation’ as a Naturopath. We are therefore the ‘money’ while Jonathan will be the ‘time’. We also have two other children that I assume we would make partners so that we could distribute funds to them at an appropriate time in the future. They may even become directly involved at times!Is this likely to be the right start point for our setup? Of course there are many futher questions that arise but I must start somewhere!
PeterO
Hi PeterO,
Welcome to the forum.
I am thinking that a partnership is likely to be the way to goDo a search on “hybrid trusts” on the forum and speak to an accountant that knows this area well. Also if you can get your hands on “Trust Magic” that will be a good starting point.
Cheers,
J.
Who took my MONEY[?]
The trouble with partnerships, is that each partner would be responisuble for the whole debt-not just their share. I owuld form some sort of trust structure, probably unit trust with a hybrid as unit holder. Keep you son out of being a director/trustee. Since you are the money man, you will need to be on the loan, but your son doesn’t have an income so he should be ‘saved’ for future use. ie when you run out of borrowing power and he has some income he can be the trustee of the next trust. You could still have a partnership agreement behind the trust.
also, I am interested to learn why are your selling your negative geared property?? I did the same thing a few years ago, and now wish I hadn’t.
Terryw
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Hi Peter and Terry
I have been debating very similar issues regarding partnerships and selling negative geared properties.Firstly – partnerships: As a safeguard I researched setting up something of this nature. In partnerships, you may start out being mates and being upfront however, as you know, life always has interesting turns and some turns affect others differently and when that occurs together with money, relationships are put to task – which is where you will need a safety net.
A trust fund with named beneficiaries and director and commitments on paper appears to be a great option especially when things are going good however if the plan doesn’t work out at least there are some safeguards in place where the trust can keep business separate from family matters. Best consult a good accountant/ CA / Lawyer.
Secondly: I have purchased a negative geared property, I have done minor renovations and will be looking to rent it out in Jan 05, then once tenanted I will be looking to sell asap for two reasons: firstly I wish to cash up as I feel, based on the books Steve McKnight has written and Olly Newland (looking at the Economic Clock and the current market indicators), that there is definately a turn on the way. I don’t believe it will be a soft landing and I think people are in for a little rude awakening. I intend to reinvest in commercial instead of residential as there is less emotion involved. Whilst residential is great, I find that buying a house I wouldn’t live in is very difficult for me. I tend to be a “tornado in reverse” and build everything in my path! I find it hard to ask for money for something I wouldn’t live in. How are you guys going with your investments?
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