Thanks Michael,

I don’t know whether I mentioned it or forgot, but the company structure I set up recently wasn’t for a property deal, it was for another type of project.
Although I thought was still worth mentioning, your comments were very interesting and give me a better understanding of the differences in companies and joint ventures and their different suitabilities.

however – this bit i don’t understand – “unless you have the resources to move forward as a sole proprietor and establish equity in the company, forming a sole proprietorship in the first instance may counteract the benefits of a joint venture. “

I didn’t think a company needed to start with any equity? And couldn’t you do it like, Shareholder A is the boss and gets to decide who Shareholders B and C are. Shareholders B are those who share the profits. (Let’s say, 10 shareholders with 10 percent each, one of whom is ‘the boss.’)
then, let’s say there are 8 c-class shareholder who put in $20K each, but there are two more B-s than C’s, because two of the people sharing in the profits aren’t putting in any money, but time instead.

Would that work?

cheers-
mini

What’s so boofheady about Richmastery guys?

*scratches boofhead*

Carlover, badabing! that’s right, you’ve just reminded me of something I forgot, but which we should all remember, which is that it’s FIRST HOME OWNERS who drive the market, primarily. They are not necessarily ‘investors’, meaning they don’t care or know about yields, they just care about buying the best house they can afford.

the market used to be 92 percent driven by owner-occupiers a few years ago and it’s probably less now, but it’d still be the biggest buying group in the property market – NOT investors. Much as we’d like to feel all influential and important and stuff.

this person Kay talks about, AKA ‘your average investor’, is a person with ONE house. Their own.
THAT’s the average investor. If you have 3 or more, like moi, you’re in the top 0.5 of investors.
( not the ‘average’ investor)

Elves,

good on yer mate.

I was part of an 8-person business venture a few years ago, which lasted about 2.5 years before splitting. the main problem with 8 people was making a decision. Firstly, getting a quorum people to either turn up or have their input phoned in, wasn’t easy! Secondly, nobody was ‘the boss’ – it was a democracy. Eventually we made one of the members ‘the boss’ for certain administration issues. But then, you’d always get whingeing about it from the one or two members who didn’t vote for it.

So the lesson I learned is that basically democracies are flawed if wanting to move forward, simply because the chances of 8 peoples’ hopes and dreams exactly aligning with yours are very slim. So there will always be someone who is not happy, and the cumulative effect of that over time is not that great. So I reckon, be the boss. Be accountable to your joint venture partners, but be able to kick them out if they’re not working out.

ie don’t be able to be kicked out by them.

Just thinking worst case.

You could always start a company with you as sole director, and invite members of the joint venture to come in as shareholders, sharing profits. You have your legal documents drawn up specifying exactly what goes on etc a la Michael’s points.

Might cost you several K to get the documents drawn up
not to mention a few months so it might be too much trouble etc, nevertheless i thought it was worth mentioning because it was the option I went for while trying to figure out the best way to run what I’d call a ‘joint venture’.

It was not the cheapest option, but it was the most professional one. it also allows for another class of investor to be added in as C-shareholders. And if all else fails, you have a company you can recycle.
The reason I decided to pick that structure is that I decided I needed the right to be able to decide who was in the joint venture.

Pisces,
eww…

“It is hard enough having to cope with my wife putting her nose into
my affairs let alone the wives of other possible joint venture partners.”

double ewww

“thought you would know the difference between men and women.
It isn’t a matter of one being better than the other. The facts are that men just appear to be making decisions in a more rational manner.”

I just lost all respect for you.

*ewwwwwwww* *shudder*

The negative stereotype of the boorish, bigoted Aussie bloke will survive a bit longer, thanks to you. Is this what you are teaching your children?

*ewwwwwwwww*

“For example, I married my wife for her money (rational decision making) whilst she married me for more emotional reasons.”

*ewwwwwwwwww*

“I hope everyone realises that this is just an in bad taste joke”.

So didn’t. Too little, too late, mate. “just joking” is often used by people trying hard to backpedal out of something that went down really really badly and pass it off as a joke. However, I don’t fall for it. My bullshit detector is UP.

There’s a card called ‘supersaver’ available from 7-11s. in fact there are many different brands offering 5 cents a minute to the UK, US, etc etc.

Without having to spend 99 or 199 to become an ‘affiliate’ or a ‘consultant’ and get into MLM.

i’ve been using the supersaver to call NZ on property deals lately and it’s unbelievable value.

cheers-
mini

Yes, for the record.

but how many will think ‘yes, YAY!’ or ‘no, YAY!’

The Yes, YAY!’s will think, cool, maybe sometime soon, i will be able to find a house i can afford or a deal that stacks up seeing as there might be a few more on the market.

the no, Yay’! will say, phew, don’t have to sell up just now.

interesting huh…

cheers-
mini

A ‘depreciation schedule’ might not make sense on a 35K (older) property such as I own, but it might make sense on a brand new apartment costing 350K plus, to spend $420 and get one. Basically, get one, if it will save you more than it costs.

when buying an IP, the list of things I add up to get my actual in hand return are – and they are all expenses, apart from ‘rent’ –

purchase price (plus renovation if doing that)
closing costs (lawyer, stamp duty if in Aus)
expected vacancy (write that in as a ‘cost’ or take it off your rent)
property management fees

maintenance budget -work out what you would expect it to be, based on age, price, style of house etc
holding costs, i.e. rates, insurance, borrowing costs.

cheers-
Mini

I don’t think I forgot anything but if I did I’ll be back.

Hi Michael,

I for one value your comments. Yes, ‘as noted in a prior discussion’ we don’t agree on everything, but I totally get that you’d be operating in what I’d call the opposite end of the spectrum to the new investor, i.e. me, whatever kind I am. Anyway, it’s all good that there is someone like you with your knowledge and it is appreciated that you share your time.

cheers-
Mini

yack, “I cant see how the lord of the rings effects real estate prices in NZ.” so I take it you haven’t seen the movie then? Because otherwise it would be obvious, wouldn’t it?

hehe!!

Steve, you asked me to comment on this thread, but really, it’s out of my league. (but hey, i will anyway!) A friend of a friend made millions as a 20-something year old on buying off the plan in sydney a few years ago (during the big growth spurt) and drives a ferrari now etc, but isn’t doing it now (surprise surprise.)

I think highly leveraged things such as deposit bonds, or anything that relies on cap gain is RISKY.
i don’t know where Auckland is in terms of it’s cycle. It could very well be close behind Sydney, 1-2 years. So i don’t know. I think it’s a gamble. i think Michael R is a legend, he’s in that area, he finds investments in NZ for yanks ( i think) and is an expat Kiwi, and gives good advice, listen to him.

cheers-
mini

i will try and do it as a webpage. (just in case there are more…!! heehee!!)

haven’t done it before, but should be able to figure it out. give me a few days tho’.

cheers-
Mini