Hi Brizza,

I have been talking to a mortgage broker to set up a 95% loan. This would be a loan for 93% of the property value and capitalising the LMI into the loan, bringing it to 95% LVR.

Unsure if you can borrow 95% of the properties value and capitalise the LMI on top of this.

Cheers

I am from Point Cook. Only a short drive to Melton.

I have wanted to play this game since I read Rich Dad Poor Dad.

Very keen to have a game!

The business structure is out of my league but it is an interesting post I couldn’t help but comment.

I have also read all of Steve Mcknight’s book and taken in a good deal of information. May I suggest that you also have a look through some different property strategies such as Michael Yardney’s book ‘How to build a property portfolio in your spare time”. It takes a look at property investing through a different strategy based on capital growth.

Lots of things to consider with the business idea
-How much money involved with renovating/buying and selling fees, capital gains, time taken to renovate ect.
-How much needs to be done to the property to add value – You don’t want to over capitalise
-Working in conjunction with your mate – How are the profits distributed evenly based on expertise and time spent in the various roles.

One of the suggestions I commonly read in these books is the idea of buying – Renovate – Hold for the long term.
-Buying a property in a good location with high rental demand
-Doing superficial work on the property to attract higher rents from tenants
-Leasing the property out for a increased rental return
-Revaluing the property – The renovation if done correctly may add equity in the property. You could potentially access this equity to start the process again.

Buying to renovate and holding will dampen any of the costs of buying and selling properties, plus give you a passive income from your own property portfolio.

Goodluck!

I used to believe rich was those who drove nice cars, lived in nice houses and ate at only the finest restaurants. I now know better, most of those people with these luxurious lifestyles are not rich. Some live pay check to pay check just like those on a medium wage. Being rich has much more to do than appearances alone.

Obviously there is more to it than just money, you can have a very rich life without much money, but my definition here will focus on money.

Being rich to me means you have accumulated enough wealth that you can live on your assets, without having to work, but still maintain a lifestyle of abundance. This may differ on someone’s definition of abundance – Donald Trump would never be satisfied with only a few million dollars in networth, however, others are perfectly happy to.

Going back to a few post above, someone living in Nepal would consider most Australian’s to be rich. This question has to take account of the subject answering it.

For me it stems down to a person’s definition of an abundant lifestyle and what price that comes to.

Which of coarse means, in the original post, someone who has near zero assets and is close to retirement, is likely to consider someone with assets of 750k outside their home to be very very rich.

• This reply was modified 8 years, 7 months ago by  Shane W.

Great post. This is one of the questions I am currently trying to answer in structuring my portfolio.

I recently heard Ken Raiss from Chan and Naylor Accounting talk at a seminar. He talked about the different type of asset protection structures such as companies and trusts.

He highlighted each structure was specific to the investor, however the most common trust structure was a “Property Investment Trust”. These trusts had been created specifically for property investors with some of the following benefits:

No vesting date Most trusts had a vesting date in which the trust would cease and the entire contents to be paid out to the beneficiaries. However, the property trust had no vesting timeline – Which is useful to avoid capital gains tax and passing assets to future generations.

Tax incentives Ability to pay the profits of the trusts to multiple beneficiaries – Those with lower incomes/lower tax brackets. Apparently as the trustee – You can choose how much is paid to each beneficiary. It was also stressed that the creation of a trust solely for tax incentives was considered tax avoidance and a criminal offense. However there are other valid reasons to create a trust such as asset protection.

Protection of a trust As stated above, protection of the assets within the trust from litigators.

Dynamic beneficiaries Able to appoint new beneficiaries – Such as children ect.

Ability to pass on the trust to wife or children if you passed on The trust would continue on, acting similar to a will and avoiding capital gains tax when passing on assets.

A few questions from me:

All of the books i have read have indicated the affluent hold most of their assets in trusts. In the next 10-20 years i aim to have a muilti million dollar portfolio and may wish to asset protection such as a trust. Is it a costly and complicated process once I am in this situation? Is it worth starting a trust now before beginning my property journey?

What type of trust is recommended? A trust similar to what i have described?

How much does a trust structure cost to set up? Does it cost extra during tax time if your assets are owned in a trust?

Can anyone validate the information I wrote above regarding a property trust?

Finally – Is there any good websites or books to research the subject further?

Many thanks

Shane