Redwing – yes, that probably does sum up the main objective, tho given that we’re DINKS the income can only be distributed between we two.
Have had a recommendation of an accountant, so will be calling him tomorrow.

Terry – Has the situation changed? A previous post of yours from July 1, 2004 (see below) suggested that some banks wouldn’t lend to trusts. Perhaps there are now so many trusts around that banks fear missing out on business if they don’t become more flexible – could that be the situation?

thanks,
Carlin

Hi Cajun

I would be wary of setting up a Hybrid trust online. It would be best to go to an accountant at first.

If you are looking for a property, you could get a loan approval in your name only and latter provide the copy of the deed. Make sure yu tell them up front that is what you are doing as some banks won’t lend for trusts.

But whatout, as some states require the trust to be actually setup before you sign the contracts – otherwise you could have to pay double stamp duty. Talk to your solicitor about this.

Terryw
Discover Home Loans
North Sydney

Hi All,

Many thanks for the responses. I have read Wealth Guardian and How to legally reduce your tax (the latter was the one where they’re pushing their Property Investor Trusts). Before anyone labels me as the epitome of analysis paralysis, I assure you we ARE going to act, and in the near future! It’s just that I had the impression that Lomas was well respected and therefore didn’t think I should just discount her strongly negative opinion of HDTs.

Grossrealisation – I’m just using this bulletin board (and books) to get some knowledge so that when I do sit down with an accountant or solicitor or whoever I have a decent idea about what we’re talking about. But, yes, I will now trawl the internet for an accountant in Adelaide who knows about structuring.

TerryW – you suggest there’s way more +ves than –ves with a trust. Some negatives you mentioned were extra land tax and running costs, but what about some lenders not being happy to lend to a trust – has anyone had experience of this? We would like to have a decent stable of lenders to choose from when we refinance.

CATA – you asked what our strategy is. Here’s the situation:

We’re a couple of DINKS – 40 and 44. Work full-time in fields unlikely to attract litigation (yes, I know all the “but what if” arguments – but I’m just saying we’re not obvious targets.)
Both now in the second to top income bracket following tonight’s budget, both in the same public service super fund (not many $$ in mine!).

Hubby wants to work until retirement about 13 years away, but would like to go part-time in 8-10 years.

I want to go part-time within 2 years and completely give up the day job within 5 years, with the goal of managing a property portfolio and also doing some residential developments down the track. (have renovated three houses so far, including contracting work on a major reno)

I currently manage our two investment properties – both negatively geared, but one is almost positive (in my name) and the other should be positive within 5-6 years (in hubby’s name). Both with interest-only loans. May sell the property that’s in my name once I go part-time, to free up some cash.

PPOR with about $300,000 equity in it – is currently security for both investment properties. Additional income from studio rented periodically at back of PPOR.

All properties are with the one lender.

Primary goal with structuring is flexibility with income distribution so that we’re not handicapped when negative properties turn positive. Also perhaps the ability to transfer funds into our super funds?

Do I want to be rich? Well, rich enough to finish renovating our PPOR, rich enough to indulge my love of overseas travel again, rich enough to buy a place by the sea, rich enough to have time to spend how I want to, rich enough not to be on the treadmill I feel like I’m on now, and eventually rich enough to put more into the causes and people I believe in.

Thanks again everyone for contributing your views. I’m sure I’m not the only one who’s benefitted.

Cheers,
Carlin

Well, I went on to that Bantacs site, and read the bit about hybrid trusts.

However, the writer (Bantac’s accountant Julia Hartman) suggests that salary sacrifice is “another and cheaper method of achieving the same result”.

We’re then encouraged to buy Bantac’s $150 “rental property salry sacrifice kit”.

So – does anyone know how salary sacrificing might work when it comes to investment property? And will it work for us, who work in the public service (but in very different areas)?

And what are the advantages and disadvantages of this set up compared to hybrid trusts? (I gather one advantage is cost 0 hybrid trust sound expensive to set up and run.)

thanks,
Carlin

Julie, your tenant sounds worse than mine was! At least mine didn’t flout his non-payment in my face. He opted to take the endless broken promises route – some people sure do have lying down pat.

I’d take her on, even if it does end up being just an exercise in masochism.

By the way – what does TICA stand for? Is it national or just WA? I’ve never seen it mentioned on a rental application or rental contract.

I have heard of a database here in SA, but I was told only agents could access it. I’m going to check that with the Landlords’ Assoc.

All I can say about your tenant is what a shame these people are such prolific breeders.

Good luck to you too.

Carlin

Thanks for the advice.

No, I’m not hiring a property manager. Too many stories about duds + I like to handle things myself so I know what’s what. I’m a firm believer that no-one looks after a property more than the owner.

Re-getting references from previous landlords – this guy who’s just caused me grief had been staying with friends. Claimed he hadn’t rented for years – how do you go about checking the truth in that??!!

Dazzling – pardon my ignorance, but what do you mean by a “bank guarantee”? Do you mean making sure that there is an automatic debit system (from their account to mine) set up before they move in?

thanks again,
Carlin

Hi all,

Thanks alot for all the advice and info.

Dr X – Yes, I’ve done everything by the SA Residential Tribunal book – Form 2, Form 7 – you name it, I’ve done it, and done it as quickly as I was allowed to. I realised immediately when he stopped paying as I check this account almost daily – I’ve heard of some landlords who haven’t realised the tenant’s stopped paying for months!!

RE-whether the bond is 4 weeks rent, it’s not quite. I had been renting to students so had kept it a little lower, and then didn’t adjust it when this guy moved in – lesson learnt.

As far as cutting the guy some slack (eg: if he’s down on his luck for some reason) well, I’m not running a charity here. He’s working full-time so don’t know why he can’t pay rent. I suspect he’s done this before and I’m just the latest sucker.

ON TOP OF THIS – this place is fully furnished and equipped. What’s to stop this guy just walking out with my stuff?? I’m very tempted to at least go there and remove the big ticket items – but no doubt that too would breach the @@!!!*** Tribunal’s rules.

So it’s off to the Tribunal this week, then no doubt we’ll be struggling to get him evicted, then off to the Small Claims court…..like I’ve got time for this crap.

Thanks again for listening and responding to my stuffed situation. I’ll see how I go and then relook at some of the ideas you’ve offered.

Carlin