JV or Family Trust?

Viewing 4 posts - 1 through 4 (of 4 total)

o0tegs0o
Participant
@o0tegs0o
Join Date: 2010
Post Count: 21
September 4, 2010 - 1:52 am
Hi All,
Theres a property im looking to buy, rent out for approx 5 years then knock down and build a duplex/ townhouse on top of.
Ive spoken to a bank and they are willing to lend me 270k but the property i want to buy is around $350k. My parents have equity of approx 1mil which i can use, and in order for the bank to loan me the extra 80k ill need for this property i was wondering if a joint venture or family trust arrangement between myslef and my parents where all our assets are pooled would work?
I would be paying the monthly loan, and with the little knowledge on JV and trust arrangements that i have I was thinking that with all of our incomes combined (approx 150k) as well as their equity, this may encourage the bank to allow us to borrow the full amount needed.
Does this sound like it could work? and which would be more effective JV or Family trust structure?
Anyones thoughts would be greatly appreciated
Greg Reid
Member
@greg-reid
Join Date: 2008
Post Count: 91
September 4, 2010 - 9:41 am
A simply solution would be to have your parents get a loan or line of credit established based on their own property and income and then just lend you the balance of the money you need, which you repay. Why go to a more complex structure?
Alternatively they could go guarantor, either equity or income or both.
Good luck
Greg
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 4, 2010 - 2:11 pm
you don't want to risk your parents personal assets as well as getting them on the loan. I would suggest the same as Greg. Just borrow as much as you can on your own and then the rest from your parents. i wouldn't suggest they guarantee the loan as it just adds added risk, probably unnecessarily.
You can still use a trust, but please beware as Centrelink have strict rules regarding trusts – they could deem the property held in trust as being your parents property and this could affect centrelink benefits.
Using the trust will create the greatest flexibility whether you distribute to your parents or not – circumstances may change in 5 years.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
o0tegs0o
Participant
@o0tegs0o
Join Date: 2010
Post Count: 21
September 5, 2010 - 1:01 am
So much more simple.. thanks guys!