Hi all,
I have been approached by a few people interested in giving me money to use in property investing. They are not interested in the day to day. Just a return on their money of x%
How does using private financiers work?
I assume there is a contract between us?
Do I need to spend $$$ to create a custom contract?
How do I manage the funds they give me?
How do I pay dividends?
Is there a book/s I can read on using private financiers to fund my projects?
Mario
http://www.lawcentral.com.au/CreateDoc/createlink.asp?DocId=28
Does your private lender have a credit provider license as lodging this above type of contract will flag ASIC to check if the lender is licensed.
http://www.asic.gov.au/asic/asic.nsf/byheadline/Credit+homepage?openDocument
Not sure on books as the new Credit regime / Laws changes the way credit can be lent out so it has all changed and books will be giving you information based on an unregulated credit market which does not exist in this country anymore.
Hi Mario
If you were to use a loan agreement, you can get around the new National Credit Code by ensuring that both parties to the loan agreement are Companies.
Another, possibly more comprehensive, way to structure the arrangement you mention would be a Joint Venture. This should remove any Australian Credit Licence requirement and would be a JV between you and the other parties, to under take a specific project. The JV would outline you Initial and Ongoing JV Contributions, i.e. the full outline of what each party is contributing, who has to do what, the term of the JV and how the funds remaining, at the end of the JV, are distributed.
I suggest you get a good property lawyer, who does a lot of JV agreements, to get it drawn up for you.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
A JV sounds like the type of arrangement I would look at.
Essentially, there are a few people I know who have money but are not interested in doing the actual work. They just want the opportunity to get a return on their cash investment.
I appreciate that each project would sit under its own structure. I am assuming the vested parties would all be named in some way in that structure.
As a company they would be named as directors. As a trust they would be beneficeries. Could it be a simple "Memorandum of Understanding"?
Also, what would I expect to pay for a JV agreement?
Are there any standard proformas available like a will kit?
Mario
Hi Mario
I'd suggest you have a JV Agreement for each project. As a number of people are putting great faith in you by putting up the funds, I think the last thing you need to do is try to draw up the JV Agreement yourself.
The first JV we got drawn up by a solicitor cost us $450. It would cost a bit more now but, with the right solicitor, you'll learn a lot about JV Agreements.
Considering your current uncertainty about an appropriate structure, i.e. loan, JV, company, trust and MOU, maybe let the forum know what State you're in and we can recommend a good solicitor.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
Thanks for the prompt and helpful reply.
I am in Perth WA.
Any recommendations are appreciated.
Mario
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