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My solicitor advises one property per trust.
He says that if you get sued, even possibly by the tenant,
your losses are limited in that way.
We live in such a litigation minded society, that I think its a good idea.
He says it costs about $500.
I asked him about the possible inflexibilty with profits and losses. He says, that profits in one trust can offset losses in another trust.
The accounting is no more difficiult than owning multiple properties.
I use the quicken software, which I find excellent and keep each expenses and income for every property separate.
Reginathankyou for reply.
Hopefully I have found an honest builder who seems
to do a good job. My solicitor also seems very familiar with drawing up a suitable contract.
If the first venture works out ok, hopefully I can do a few more
ReginaActually that clarifies a few things.
I was feeling a bit anxious about having to hold a wrap loan for 25 years, because I will be ancient by then and probably wouldn’t want to bother with that sort of thing anymore.
ReginaI agree totally with Tara. It is better to spread the risk and buy two properties for that price. It is always easier to find tenants in the lower rental price range, because that’s were most tenants are.
If one property is vacant, you’ve got a good chance of the other one being tenanted.
If you provide clean premises and perhaps do the lawn mowing yourself and attend promptly to any problems, the tenants are likely to stay for longer. It is well worth while getting a good property manager.
At the present I am focusing on the outer east area, there are opportunities if you look for them. I think, if interest rates rise and the market goes flat, those property owners with seriously negatively geared properties are the most likely to have difficulties.
If your properties are offering reasonable cash flow, you can survive much better.
ReginaHi, I can’t comment on the wrap issue, but one way to minimize
land tax according to my legal advisor is to have a separate trust for each property, therefore, each is in a separate entity and not in your name taxed as a whole.
It costs apparently 500 to set up each trust but well worth it also in terms of liability issues.
I think land tax is another one of those hugely regressive taxes and perhaps we should be starting to lobby the politicians about this.
The cost of stamp duty is prohibitive enough.I plan to have all my properties in the company and trusts positively geared, one comes with bungalow, a great cash flow proposition. The others, I plan to sell off the back yards, subject to council approval
and reduce the mortgage to a positive cashlow.
The property in our name, well its only one negatively geared (block of 3 units)property and gives us at least some tax deductions.
It has had great capital gain,so I plan to get it revalued to borrow more against it for further property deposits. This will throw it back into negative gearing but I’ve brought more property and increased my assett base which will be positively geared. I hope this makes sense.Apart from a great lifestyle decision, we have owned our home for 10 years. we had finished paying of the mortgage some years ago now and then decided to start investing. It was quite a zig zag pathway with a few errors, since we had no mentorship and learnt the hard way.
(eg never buy anything serviced in QLD, but that’s another story.)
The best thing about our home assett, is that we have borrowed repeatdly against it to use as deposit for other assetts and property, via a Commonwealth bank home equity (now viridian account).
You can repay or borrow as often as you like and the minimum monthly
payment is the interest and you don’t exceed the proerty’s borrowing limit.If the builder is doing a lease back, is he prepared to pay all the
outgoings. Also, there is no guarantee that you will have capital gain in 2 years. Check other property prices in the area to make sure you are not paying too much.You can also try leaving details with the real estate agents in the areas you are interested in and let them know what you are looking for or ring them up periodically. Unfortunately, looking for property
is a time consuming exercise, but the right property is definitely worth while.Because I am in a high risk litigation profession, my solicitor has advised a company structure and to place each property in a separate trust. Any profits in one trust can be offset against losses in another trust. We also have our home in our names and properties.
I try and maintain them negatively beared and plan to borrow against one of them again, for a deposit on further properties.
Should there ever be a problem, at least they are heavily mortgaged and mostly owned by the bank. the cost of setting up a company was $2000 and each trust, I think will cost $500. I think the cost of transfering property to another entity is fairly prohibitive in terms of stampduty.Hi
Great site.
QLD property; above all, be careful about how much the outgoings
are, eg rates, body corp.
Especially body corp in QLD can be very high, it can a significant sum
of your bottom line. I also wonder about capital gains, this will to some extent depend on population growth.
Regina
