Hey everyone, new to the forums, love it so far.
I am in a predicament that i don't think any of you would have heard before, but hopefully you have.
I am very interested in property and read up on many books, magazines, been to a couple of seminars, etc. but i am unsure of how to go about the purchase of my first IP.
The problem is i am 16 years old soon.
I know you can't legally own a property until you turn 18, but i'm pretty sure i could use a trust to buy it for me.
I was looking at a property that was CF+ a month ago and i am sure i could have maintanined it if i have purchased it.
What i am asking from everyone is how i could possible aquire an IP, given that i am only employed part-time earning less than $9,000 a year. Banks will want me to show an income large enough to support the loan (it was $250k include costs, approx.), even though it is CF+.Any help will be appreciated.
Thanks,
AshAsh
Love your enthusiam and well done for wanting to start so young but regretfully you are bang on in saying that youare unable to purchase a property or enter into a mortgage before the age of 18. The same goes if you look to buy in Trust.
Remember even when you are old enough lenders will want to see sufficient income to service the loan as they only take a percentage of the rent into consideration and will be looking to rely on your income. The fact that the property is CF+ makes no difference at all at $9000 pa you would not even be able to show sufficient income to cover your living expenses (Under the Henderson Poverty Index a single person allowance is around $800 – $1000 / month).
Also away from the deposit 10% with most lenders you will need to cover your acqusition costs which could easily be another 6-8% so my suggestion would be to save as much as you can so that when you are legally able to enter into a Contract you have a good sized deposit.
Read, learn and talk to as many property investors as you can as 2 years will fly by.
Richard Taylor | Australia's leading private lender
You will not be able to borrow large sums of money without a steady larger income stream.
You will also need a deposit. Maybe you could save your income to put towards a deposit at a future time when you have a higher paying job.Thanks heaps for the early replies.
Would it be possible to get my parents to put the property in their name under a trust for me? If i could convince them to help with the deposit, is there any other way?
And out of interest what, roughly, is the percentage of rent genereally taken into account?Ash
Hi Ash,
It would be possible for your parents to buy the property in trust for you – they would have to trustees of the trust and go guarantors of the loan. Effecitvely, they will be the ones responsible for the property and the loan – the trust structure just ensures that the benefits may be passed onto you rather than your parents. There are many structuring ideas that may be relevant, but you are best off receiving property legal and financial advice – I can't advise you on here obviously. Additionally, there are taxation elements for you to consider as well being a minor. Again, proper advice is necessary.
Well done on taking control of your financial future so early – it always puts a spring in my step to help people out at the start of their journey.
Yes, i agree. You could set up a trust. Discretionary or bare trust, depending on what you want to do in the future – but the trustee would be on the loan and to take the risk. You can change trustees later on with only nominal stamp duty -when you reach 18 and qualify for a loan.
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
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