Hi all,
New at this forum so pardon asking obvious questions.
We have a PTY LTD as trustee for a holding trust and Fam trust. We work via the fam trust and buy properties via the holding trust. (Both trust are discretionary trusts)
Every year our combined income is distributed over the beneficiaries and the Pty Ltd. This seems to work OK to save some tax. However every time we want to buy a new property in the holding trust name we have to sign guarantees stating that we as directors are ultimately responsible for the loan. This is costing us a fair bit every time we buy in legal costs. Is there a way we can still buy in the trust name but not sign guarantees?
Also I read in the property-investing magazine that some investors start a new trust after so many properties. Why do they do that?
Any help would be greatly appreciated.How much are you paying in legal costs for these documents??
Shouldn’t be much I’d think?
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator$175 for independent legal advice to explain the stuff (mandatory by bank) plus the 110 for a guarantee and 330 professional legal fees
so up to 615 per purchase.Hi LFA,
We set up a different co and different trust for each title of land purchased. That way there is supposedly reduced risk of legal exposure if something goes wrong with a prop in the trust. The rest are isolated from the problem….or so they say…I’ve never had to test the lawyer’s advice in a vicious court battle. Anshallah !!! That doesn’t relieve our responsibility of ensuring the debt is covered and by George the Bank fully let’s us know it.
In terms of guarantees, I reckon you’ll be pushing fertiliser up hill to receive a substantial loan from an institution via $2 co setup without standing behind the debt.
Sometimes putting on Mr Bank’s hat can help alot “Oh, here’s another customer who wants our money, but not prepared to give us any security.” Says the boss…”No worries, just chuck his application straight in the bin.”
If you think this is reasonable in not giving guarantees, I sure could do with a loan…as much as you can give me actually, as long as you were prepared to fork it all over with just my $2 co as security.
If you are happy with that…I’ll very much look forward to the free money, if you’re not happy and wouldn’t be willing to give me the money, then I think you’ve pretty much answered your own question.
— By the way, I changed the title of your thread to something more appropriate —
Cheers,
Darryl Moore
“No point having a cake if you can’t eat it.”
Thank you Darryl,
I agree with what you wrote, however I’m still trying to understand why the existing equity in the trust is not enough security to purchase a new property in the same trust. As you are using a new trust for every property you must be afraid that a liability of one property in a trust can be shared over other properties in the same trust. So why should existing equity in the trust not be enough to garantee a loan?
LFAI am not sure whether I understand your situation is correctly but have you ever considered to go into a solicitor drawing up a small business consumer guarantee & Indemnity for a large amount (like $10Million?) to save on the legal costs??
This is my personal opinion but I strongly recommend you talking to a competeant lawyer (not conveyancer) who have lots of practical experiences dealing with big BANKS.
Cheers
JohnWanting financial freedom is not enough. Take some action TODAY. I have successfully built my own PART TIME business whilst still working in a Bank. If you want to know more, PM or email ME.
leapfrog, about the cost issue. Find out if it’s just okay to have the docs explained by a solicitor, rather than having to obtain a certificate of independant legal advice (which in some States are almost impossible to get), etc. I did this with the NAB and they were quite happy (so it cost me only $110).
Hellman
hi all
just one for you dazzling
I use the same system as you but I also set the companies up in different states to the one I’m investing in.
Have a chat with your accountant flavour of the month is vichere to help
What’s the diff when the snarling dogs are snapping at your heals ??
Hi LFA
Cost me about $140 for solicitors certificate for the loan, explanation of documents etc..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi LFA,
One of the reason that I know of for holding properties in diff Trusts setup (other than asset protection) is land tax consideration.
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