Hi all, It is finally getting near the time for my fiance and I to purchase our very first property – well i think it is. I have read Steve’s book (0-130 properties..) and am very interested in setting up a positive cashflow property portfolio. A colleague has told me to buy my first house under a ‘trust’ and then rent the house from that ‘trust’. Apparently this will assist me in buying further properties sooner. I’m not so sure on how this works and even if it is completely legal in Victoria. My original idea was to build equity through buying and renovating, is this such a wise move given my ultimate goal?
Being a first timer i feel there are many angles to consider…any advice on any part of this would be greatly appreciated.[?]Hey First Timer, [
]Welcome on board!! I am only a semi-newbie myself, but I shall have a go at answering some of your questions….
I believe that setting up a trust can be rather expensive, and you also might need to get it audited. It might depend how many properties you are planning on buying as to whether it’s worth the effort… Myself, I’m planning on putting our first property just in our names to start with. But you should check with an accountant in relation to your own situation.
Your question on “buying and renovating” — I don’t think you explained exactly what your ultimate goal actually was, other than setting up a portfolio. Nothing wrong with buying, renovating to increase value, and then renting out. It just depends if that’s your area of expertise. My hubby and I are NOT handy-people, so renovating would not be suitable for us… it would just take too long!! But some people know exactly what to do and how to do it cheap.
I don’t know how many other property books you’ve read, but check out Margaret Lomas’ books on positive cashflow property if you haven’t already. They are quite good.
Steve has a seminar on next month which may also be worth your while. There are also other property “gurus” who do seminars on renovations, etc. Do a search on the forum and I’m sure you’ll find something that appeals.
Good luck!! And keep on reading and asking questions!! [
][]Lozza
Thanx Lozza – sorry for not being very specific – this is all very new and exciting (like a moth in a light shop). I guess my main query related to ‘trusts’. I am interested in what they are, how they work, what they cost etc.. maybe there’s a website i should contact
Hey First Timer, []Welcome on board!! I am only a semi-newbie myself, but I shall have a go at answering some of your questions….
I believe that setting up a trust can be rather expensive, and you also might need to get it audited. It might depend how many properties you are planning on buying as to whether it’s worth the effort… Myself, I’m planning on putting our first property just in our names to start with. But you should check with an accountant in relation to your own situation.
Your question on “buying and renovating” — I don’t think you explained exactly what your ultimate goal actually was, other than setting up a portfolio. Nothing wrong with buying, renovating to increase value, and then renting out. It just depends if that’s your area of expertise. My hubby and I are NOT handy-people, so renovating would not be suitable for us… it would just take too long!! But some people know exactly what to do and how to do it cheap.
I don’t know how many other property books you’ve read, but check out Margaret Lomas’ books on positive cashflow property if you haven’t already. They are quite good.
Steve has a seminar on next month which may also be worth your while. There are also other property “gurus” who do seminars on renovations, etc. Do a search on the forum and I’m sure you’ll find something that appeals.
Good luck!! And keep on reading and asking questions!! [
][]Lozza
Hey first timer, there are many websites that have been mentioned re learning about trusts. I can’t remember any off hand, so might be best to do a search through the forums.
The other thing I would recommend, and how I learnt (initially, then with solicitor and accountant) is to read books. There is one by Dale Gatherum-Goss (www.gatherumgoss.com) called Trust Magic – I haven’t read this one though. There are others by N.E. Renton – Family Trusts, More about Trusts (I think), and Wills and Estate Planning. I would recommend all of these.
Cheers
MelHey there all,
I share the same concern with First Timer and would like to know what the best vehicle is for investment purposes. I’ve read books that say that investing via a company/trust/corporate trustee structure is best. This is usually for the fact that liability is limited as well as some tax benefits. However other books have mentioned that investing in your own name is best as it is the simplest and there is really no point venturing into “unchartered waters” with corporate/trust structures that are unfamiliar. I understand that the decision depends on each individual circumstance. Can anyone recommend an accountant/lawyer/other professional to speak to who can assist or know of any resources that deal with business structure issue comparing the advantages and disdvantages of them all.
Hi first timer and Pocah
Mel is right about reading to learn, the thing I found when I started trying to learn about trusts is that my eyes would roll back in my head or I would fall asleep trying to get my head around it.
Then Steve brought out the Wealth Guardian and this was a completely simplified explaination of all the different types of investing structures. Which lead me to have a simple basic understanding of trusts.
I then read Trust Magic by Dale GG as mentioned by Mel and this blew my mind, for one the issue of renting your own home was very exciting. So I highly reccommend reading both those books in that order to get you up to speed.
The cost of setting up our trust was about $1700 just off the top of my head.
Cheers
Leigh K[]Carve your own path and lead the way …
First Timer
I think the figure Leigh may have given as the cost of setting up a Trust may have been a little high.
You are looking at around $450 for the setup costs for a Trust however maybe another $1000 if you are going to use a Company vehicle as the Trustee.
Feel free to email if you want any other quesions answered.
Cheers Richard
[email protected]
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Thanks Richard
Yes you are right we do have a corporate trustee, as this was the safest entity for our investments.
Also the setup was about 2-3 days, not long at all.
Cheers
Leigh KCarve your own path and lead the way …
I am a newbie as well, and very confused whether to trust or not to trust…
If I put an IP under a trust, will it also carry the loan for the IP?
I’ve asked a couple of people, and their response is negative when it comes to administration … Is this correct, to all you who’s done it and/or still doing it???
The more I research the more I get confused about this trust thing…
hi all
just a quick question does any one know of a good website for qld to star investigating potential properties to buy
thanks
simonHi Simon
Don’t know if there is anything that is QLD specific, but try realestate.com.au, and individual agencies websites.
Locate an area, and search google – that should come up with agents in the area, and has been known to give good info on the streets or even houses that you are looking at as well.
Cheers
MelHi First timer,
When doing your reno’s you might consider living in them at the time of doing the reno. Although if your doimg a full paint job then give your self a day or 2 for the fumes to clear. If you plan a long term reno then rent out your current place at the same time. There are some REA’s that keep short term tenants on their books. Normally their contractors that do work in rural areas and then return every 2-3 months for 1-4 weeks.
C2
“Is it true the more you owe the more you grow until the bank steps in?”To all you newbies out there (especially in
Sydney) I’m organising a get together next Saturday here in Sydney for all of us that have way more questions than answers. We all have a lot to learn but none more so than those of us starting out. I don’t have many answers but I do believe that pooling what we do know will enrich us all – which is why we get on these forums eh[]The other aspect is precisely the title of this topic ‘Where to start?’ I have my own ideas but I haven’t got all of the basics in place, so in the next few weeks I want to be in the situation where a group of us are organised enough to have our budgets done our finances available and then get stuck in.
If you can, come along and meet up with a group of like-minded individuals, start your network!
I’ve started a topic called ‘Group for Newbies’ which is also under General Investing. I’ve ranted on a bit further in my various posts so you can see where I’m coming from
Cheers, Tom
mailto: [email protected]
Thanks for the help mel
your a champion
simon
hey mel
another question for you. in steves book he says about his 11 second rule for finding positively geared properties. is this a rule that must be adheared to in most cases?
Simon
Hi Simon
The 11 sec rule that Steve outlines in his book is used as a filter to determine the likelihood of a property being cashflow positive. It is not, and wasn’t meant to be, all things to all people.
Basically it will tell you if a property you are looking at returns a rental of 10.4%. With rising rates, this may not be enough of a rental when you factor in Body Corp, rates etc.
If you are prepared to run all the numbers more accurately, you might find that in some properties, a more or less rental will provide positive cashflow – it all depends on the expenses.
It also depends if you want them to stand on their own, or you have some tax that you’d like to offset by claiming some depreciation etc.
Also there are some people (some on this forum even) who think that that return is too low, and need a higher rental for them to be interested. It all comes down to your individual strategy and needs.
Cheers
Mel
]
]
]The topic ‘Where to start’ is closed to new replies.
