My Brother, Father and I are going to use the equity in an IP to borrow a further $350,000. Problem is…we want to use $100k to start a business, $100k for a dev. site 80mins from Perth CBD near coast(14 unit site), and the remaining $150k 2 b invested into an income generating portfolio(shares etc).
The plan is set the business up first, whilst at the same time doing sub-division(1 yr max). This should create a further $200k equity. The $150k portfolio should easily cover I/O loan repayments in the meantime. Once sub.div is done, we can then use the equity 2 build the 14 houses, in stages if nessacary, creating more equity.
I would appreciate any advice on the feasability of my plan. And also, on how to structure the loan(unit trust, pty etc), keeping in mind there are 3 people involved(2 sole traders and 1 unemployed), 3 equal shares.
Thanks 4 your time [biggrin]Jim
Sounds like a Huge Plan.
What are your level of experiences in the areas you are borrowing money to do?
For the business, you need a business plan, a marketing plan and an exit strategy and also, at least ONE person on the team that is EXPERIENCED
in starting up businesses. I don’t mean having experience in the thing you are trying to sell, but the business as a whole. Most businessess in Australia fail because they ARE too successfull and not set up right to begin with.
I would recomend you read the E-Myth Revisited By Michael Gerber.The second big thing you are trying to do is a development. Before you start you need a full feasability study and again someone with EXPERIENCE!
I don’t know your specific circumstances or level of experience, those are great plans and they could work well, but they could also backfire very easily if you don’t have some serious plans and exit strategies in place!
We buy properties in Adelaide. Immediate Cash Settlements, No Agent Fees.
[email protected]
phone 0412 437 582Jim
Xenia is right. Why not take things one step at a time.
One of your goals is to buy a development site and i assume develop it. You mention that you intend to put $100K into the project.
I have to say that unless you have experience in this field you will struggle to find a lender advance funds on a furst project of this size.
Secondly you mention that you are going to draw on equity in an IP to then invest in the stock market. You mention that the income will sufficient to cover the I/O payments.
I am at a loss why you would borrow funds merely to generate an income to service the interest unless you though that the dividends and imputation credits would be greater than the rate of interest you are being charged. Alternatively you felt that the economic cycle still had further upside in the stock market and where relying on the capital growth.
Thirdly you mention that you are intending to start a new business. Is this business established and does it generate an income. Who is going to be running it.
I think you should carefully review your financial position with a mortgage broker and perhaps stagger these ventures.
The entity used to move forward is only one consideration.
Cheers Richard
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
