What is the typical property investing structure?

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Schplak
Participant
@schplak
Join Date: 2014
Post Count: 5
March 4, 2014 - 1:47 pm
Hi guys,
I've been considering investing in property in the near future, and would like some information about what the typical property investing structure is. Obviously there are a lot of considerations in terms of my individual circumstances, but from what I've read, a popular structure is that of a trust structure, with a company as the trustee (due to the ease of dismissing the trustee and appointing another if necessary in litigation). I've been reading about the advantages and disadvantages of different trusts also, with some people recommending discretionary trusts, other people recommending hybrid unit trusts, where the investor personally borrows money and uses it to buy units in the trust, etc etc
Its all a lot to get my head around, so I was interested in what you guys think and/or do.
regards,
Peter
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
March 4, 2014 - 2:02 pm
The typical structure is Mum and Dad. Dad buys in his name for short term tax benefits. No thought given to anything else. Cross collateralised with the home. Mum on there as a guarantor – just to add to the worsening asset protection issues.
But, do you want to be typical? Prob not!
If you are serious you will be looking at trusts, whether now or future, and whether to own the property or to act as lender or mortgagee.
But you really have to consider the land tax issues first.
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
Freckle
Blocked
@freckle
Join Date: 2012
Post Count: 1,680
March 4, 2014 - 7:53 pm
Schplak wrote:
what the typical property investing structure is.
One negatively geared property is the typical property portfolio of the average (60%) Australian. The next 20% don't fair much better with only marginal profit at best. CG tends to be poor (around trend) in the 0-80% range.
The next 10 -15% tend to have multiple properties (3-10) buy well and manage fairly aggressively. The top 5% of which 1-3% constitute the Guru class are the multi million portfolio's and participate within the industry on a high profile professional basis.