Hi,

I’m a little confused by your opening line:

“I have just set up a family trust as trustee for a real estate investing company.”

I think you mean you have setup a company and appointed it to act as a trustee for the family trust, as this is the way it would normally work.

If as you say this is the way you have chosen to set it up, would you mind explaining to me why.

You might like to just double check this.

We’ve found that typically it will cost $2000 on-going to have a trust and the company entities.
I don’t believe it would really make a lot of difference to the on-going costs if you have 1 house or 10 houses held, expecially if you keep good and accurate records.

The setup sounds a little steep, but is in the ballpark. Quite often you can actually save yourself some $$$ if you purchase a shelf company or trust, however you need to be 100% confident of what you are doing. At the end of the day this is all the accountant actually do on your behalf. Luckily my business partner is a qualified accountant so we were able to take this option and save a little$$$.

Hope this helps.

Tim Wilson.

“Poverty is not an option”

Hi Soma,

Alarm bells are ringing here for me!! I don’t want to be negative but some friendly advice – I would be very careful if I were you writing your own contracts. It might be the cheap option (I entertained a similiar idea some time ago) but at the end of the day, I would strongly suggest that you need to at least have a lawyer have a good look at your finished product.
I’ve learnt it really is not worth cutting corners here. I think every single dollar we have spent with our lawyer is well worth it (providing you find the right one)!!

All the best.

Tim Wilson

Hi Fireman,

My advice to you when you are puting a budget together (regardless of what method you use) is keep it simple!! Don’t make it any harder than it absolutely has to be. Because this is a very necassary foundation for your wealth creation it’s important that it takes as little effort as possible so that you are not discouraged from doing it.

I always like to try and help people out so tell you what to save you some work – if you send me an email to [email protected] I will email you two speadsheets that I use for budgeting, and keeping track of my current finacial position (this is useful when you go to a lender for a loan etc).

How’s that!!

It is nothing flash but it works!

Hope to hear from you.

Regards,

Tim Wilson.

Mate,

Steve was actually refering to you – his newsletter used a computed field which looked up your name and inserted it from his database.

i.e. everyone would have seen thier own name there

Pretty clever hey!!

Regards,

Tim.

“Poverty is not an option”

Hi,

You say you are going to return to Aus in the next few years.
Why not just hang fire, save like crazy while you are in the US, invest what you save in something that will keep up with inflation – then when you return to good old Australia, you should have plenty to keep you going, and hit the ground running.

I guess it depends how you want to work it.

Tim Wilson.

“Poverty is not an option”

Hi,

The following points are important when wanting to make sure you will be able to continue to secure finance.

– You are purchasing your properties in an appropriate structure (i.e company / trust setup).

– The properties you buy must be positive cash flow from day one – puting money in to your pocket rather than taking it out.

– You are borrowing with the correct LVR (preferably 80%).

We have a company structure – we buy all of our properties using this structure. As directors to the company we become guarantors for the loan. i.e our personal asset’s and income secure the loan.
If you are also in a situation like us where you also run another seperate company and are also directors to that company you can have that company go as guarantor to the property investing company / strucutre. It just means you have upped the stakes a little So long as you can sleep at night!!
Eventually the company will be generating enough income for us not to do this.
In the event that we max the first structure out we will move along and setup another structure and start again.

I’m no expert but these are some of the tactics we are using in our investing to ensure the bank keeps on lending us money.

My recommendation would be to put in place the correct structure form the word go – and keep a close eye on your acceptable risk (don’t take on more than you can chew).

Sorry for the quick overview but I am a little pushed for time – Maybe some others will be able to fill in the gaps for you.

Regards,

Tim Wilson.

“Poverty is not an option”

Hi Dan260,

I have often struggled with this question – and I think in general terms the answer is – it depends on your particuliar cercumstances.

Up until now I have always lived with my parents – so it’s not been such an issue – however I have recently been forced to move out, and was presented with the option of renting or buying. For me, the choice was to buy. The biggest reason for this was because of the market I am in. Being in Tasmania meant that I could actually buy a reasonable property with a weekly repayment considerably less than what I could actually rent that same property for.

For example:

Currently loan repayment is $86.00 a week.
Rental of the same property is $130 a week.

On top of that payment i have been able to put two other people in to the property (being a 3 bedroom) charging them $65 per week. Which means this money goes towards my loan and as a result will be paid off in 5 years instead of 25. Everyone wins.

The other thing I liked about this option was that I could then borrow against the equity in the property to do “other” things with. It looks good on the balance sheet when I go as guarantor for our property investing company when obtaining finance. Additional income etc.

So basically – it would depend on where you live and the current market. If you can buy a property (which meets the 11 sec solution) in your market for less than the current weekly rent, then financially that might be the best way to go. And having said that I strongly believe that this can be done in any market in Autralia – if you really try hard enough and get creative.

A simplistic view but it might help!

Regards,

Tim Wilson.

“Poverty is not an option”

Hi Rachel,

Just a word of warning – be careful with providing your clients with a list of lawyers, as this can be seen as influencing your client in thier decision making process. A general list of lawyers would probably be OK, but don’t encourage them towards any one specific one.

It’s a grey area, but I believe it is better to be safe than sorry – even if you do have to miss out on a deal because your client shy’s away. There are always plenty of other people out there that would like to make use of your services.

As for what we do:

We have a standard “Acknolegement of Independant Legal Advice Obtained” form that we ask for the client and thier solicitor to sign once they have recieved the advice. And we will deffinately not proceed if the client refuses or does not wish to obtain this independant advice. It is in the best interest of both parties.

Hope this helps.

Regards,

Tim Wilson.

“Poverty is not an option”

Hi SG,

A good place to start would be: https://www.propertyinvesting.com/files/content.asp?cid=wrapintro

Secondly if you have not already done so, sign up for Steve’s free report (button on the menu). This might also explain a little further.

Hope this helps.

Regards,

Tim Wilson.

“Poverty is not an option”

I’ve been, and I’ve seen!! You guys will love it! When I read your post I was wishing I could go again

Just make sure you don’t walk away without taking action! There are so many “opportunities” out there!

Regards,

Tim Wilson.

“Poverty is not an option”