Steps to take before investing which can save you money later on

Hendrick

Before you rush in and spend your money have you obtain some specialised advice in relation to buying in a Company / Trust name as whilst it can be a ideal structure it is nor for everyone and there are a few disadvantages.

We have financed 101 forum clients in a variety of entities over the years but say to all of them make sure you understand both sides of the arguement before parting with your hard earned dollars.

In saying that if it is the way you want to go then no real issues.

Many lenders dont offer interest rate discounts or allow the structure to fall under their packages however in saying that there are some excellent products out there for Company/Trust lending at the moment.

These are things that I found helpful when I first went to buy a property. I am a bit confused whether you want to know steps for things to do before starting up a company, or steps of things to do before buying a property.

The structure I use is a discretionary trust with a NON trading company as the trustee. This is because the directors of a company can in some cases be liable for the actions of the company if the company is trading insolvently. If you company doesn’t trade then it cannot be trading insolvently and thus you cannot be liable.

I saw an accountant to set up my company and trust. When it comes to trusts they need to be worded correctly and thus I wasn’t comfortable doing it myself. I was happier to pay the $500-$600 in accountancy fees to make sure I got it right. A friend of mine set up a company by himself (not for property investing but for business), but he is great at researching and understanding legal jargon. I am not, and thus I realise my limitations and pay for someone to fill them.

Have pre-approval ready. The problem I came across was that we had pre-approval to buy it in our own names. But in the end we ended up wanting to purchase in a trust/company structure and were therefore passed onto the business section and our pre-approval didn’t carry over so we had to get it all over again. Having pre-approval for your trust would save you time.

I also agree with Richard that there are advantages and disadvantages to buying in a trust. It is important to do your research before deciding.