Hello everyone.
I have abit of a dilemma that I hope you could all help me with. I would like your opinions as I know there is many answers to my problem.
Here goes….
My brother and I bought an IP 6 years ago (50/50 share) and have seen a capital gain of about $100000 gross. I have shares worth about this same amount and about $20K in cash. I would like to purchase another 1,2 or even 3 IP’s for myself before the end of the year but I don’t want to use any of my money or as little as possible. Can I borrow against MY equity ($50K) in the first IP? Or must we sell it? (Which I don’t want to do….) Or should I buy him out? (Again I don’t wish to give up any of my own money)
I hope there is an easy solution to this as I feel I’m blind and can’t see it!!
Please help.
ThankyouYes, you could borrow against the property. but you couldn’t just borrow against your share. he would have to agree to it and you could get a LOC, for eg, but it would affect his borrowing capacity as he would have to be a guarrantor (as his property is being used as security).
I purchased my first IP with my bother too, and it can get a bit messy when each person wants to do something different. I ended up buying my brother out. If you are going to buy something, you might as well buy his share (no real estate agents commission to worry about).
Or get a LOC (or 2, and have half each). And use that as deposits for you next properties.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thankyou Terry. I’ll have to consider that. But are there any other ideas?
Am I better off just selling my shares (which mind you are doing very well and will continue to do so) and putting down deposits for 1-3 IP’s? Is this the easy way out?Whilst on the topic of buying with family members, are people of the opinion that it is a good or bad idea in general? Obvioulsy there are a lot of determining fiscal factors but I guess with family members there are a number of emotional factors also.
I was thinking of investing with my sister in order to boost the start up capital, however there are all sorts of issues like the ones mentioned previously that have since put me off the idea. Having said all of that though, is it possible to use a structure such as a trust to alleviate some of these problems?
Hi [
]
If you have superannuation you can set up a self managed superannuation fund. With a self managed fund you can use the money to buy property or shares, by selling the shares to the super fund. The money received from the sale of your shares can be used to then invest in property without further outlay.Bryce Inglis
Ph: 03 9530 2111
http://www.ipal.com.au
Hello everyone.
I have abit of a dilemma that I hope you could all help me with. I would like your opinions as I know there is many answers to my problem.
Here goes….
My brother and I bought an IP 6 years ago (50/50 share) and have seen a capital gain of about $100000 gross. I have shares worth about this same amount and about $20K in cash. I would like to purchase another 1,2 or even 3 IP’s for myself before the end of the year but I don’t want to use any of my money or as little as possible. Can I borrow against MY equity ($50K) in the first IP? Or must we sell it? (Which I don’t want to do….) Or should I buy him out? (Again I don’t wish to give up any of my own money)
I hope there is an easy solution to this as I feel I’m blind and can’t see it!!
Please help.
Thankyouplease tell me how you would go about doing that.
I know squat about self managed super and this sounds like a solution to our problem.
Hi Crashy, [8D]
It is complex and is done through a financial services adviser who is licenced with the Australian Securities Investment Commission (ASIC). Alone or as a syndicate you set up a superannuation trust or company. The trust or company can then invest super money in a way that you see fit but this has to be in line with ASIC and the ATO. There are annual accounting fees and a setting up cost. Returns from the models that we use can be 17% per annum. (5% to 6% in capital growth and 12% in cashflow). This results in doubling your super every 5 years. This is done by pooling your super money with 5 like minded investers each investing an equal amount (a syndicated investment) needed for a project, in a company structure managed by a ‘responsible entity’. One model of purchasing property could be investing into aged care which is safe and secure growth area. If you would like to talk to someone in Queensland about syndicated investments for super I can find a contact for you if you like.
Bryce Inglis
Ph: 03 9530 2111
http://www.ipal.com.auI know that self managed super can invest in property, but can you borrow to buy investment property?
Kind regards
Chandara
[Keep going, you’re nearly reach the end of financial freedom]hi Chandra, [
]The answer from the ATO & ATSIC is no, however if the company/ trust is set up properly with a “responsible entity” as part of the company structure then as I understand it the company/trust can borrow up to 50% so that the title would show the joint owners to be xyz super fund 50% and xyz person(s)50%. It is the xyz people who can borrow. Now having said all that I am an investment advisor in property & super is not my area of expertise. You will need to get expert advise from a financial adviser from a company such as the one listed below or another financial adviser before doing anything.
Bryce Inglis
[email protected]
http://www.ipal.com.auHi noddies
I am also a financial advisor (well kinda…got my diploma but not yet employed) but I didnt do the superannuation module, thought it would be too boring. Instead I chose derivatives, insurance & risk, stockmarket, fin planning & wealth creation, law, economics, company performance. I think maybe it was a mistake to miss the super module and might do it as an addition. Plus having a diploma doesnt mean I know everything I need to know, property investment is a major subject which is skimmed over very lightly. It really deserves its own module.
Seems to be quite a few advisors here, and the overall level of financial knowledge on this site is extremely high.Hi Crashy,
Thanks for that.[] My area of expertise is mainly with property, and I agree with you on the small educational component in courses in regard to this. I should apolgise to Kamelon also[]for taking over his discussion site with our ‘banter’ on super
Bryce Inglis
[email protected]
http://www.ipal.com.auBryce,
Thanks for the info regarding self managed super, I will have to talk to my accountant for clarification.
Kind regards
Chandara
[Keep going, you’re nearly reach the end of financial freedom]Bryce,
Thanks for the info regarding self managed super, I will have to talk to my accountant for clarification.
Kind regards
Chandara
[Keep going, you’re nearly reach the end of financial freedom]Howdy,
Back on Brent & Richo’s concerns from what I have newly gleaned (ie no expert either!) trusts are a great way to borrow up to normal 80%+ levels where you have family members in the trust and directors of the trustee company, BUT the director who gives the directors guarantee on the loan does have their personal borrowing capability hindered, but the other parties to the loan don’t. Great for families where Mum & Dad throw in $50K and Jack and Jill Junior invest those funds at 80% asset lends into properties with the magical positive cash flow that doesn’t hinder anyone’s future borrowing capacity anyway ….. !!
That’s the theory I’m running with anyway, but as I said just a novice and learning lots, and keen to hear other people’s spin.
Happy investing!!
Mel
]
] My area of expertise is mainly with property, and I agree with you on the small educational component in courses in regard to this. I should apolgise to Kamelon also[
]for taking over his discussion site with our ‘banter’ on super
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