kids investing

[Jeffrey White]

My 16 Year old daughter wants to invest in her first property when she's 18. I want to be able to help her now instead of wasting the next 2 years of growth while she reaches the legal age.
Any thoughts on the best way to go about this? ie, transer one of our properties into her name, buy one in her name, etc.

 

[Kevmeister]

Transfering title from one person to another (except *possibly* a husband-wife transfer) will incur substantial stamp-duty, so you want to avoid this if you can.

You therefore want to purchase the property in the correct name to start with.

Not sure of the minimum legal age to purchase property, but I see two options:

1. In your daughter's name.
2. In the name of a trust with your daughter as beneficiary.

The choice you make will also be determined by whether the property is positively or negatively geared, since negatively geared property held in a regular discretionary trust cannot pass on losses to the beneficiaries (a hybrid trust can).

 

[Jeffrey White]

Kids

Thanks Kevin... Given my daughters limited wages at the moment, perhaps a cash flow positive property is best. 18 is the minimum legal age for property purchase so as you suggested, I'll check out purchasing a property in 'trust' with Kylie as the beneficiary. Thanks very much for your help Kevin.

 

[asy]

There is no minimum legal age at which someone can own property.

You can 'technically' buy a house in the name of a one year old.

BUT!

They can't sell it until they are either 18 or can prove that they understand the ramifications of the sale.

That means, you can register a property in the name of a child, but THEY determine when it is sold.

The problem you will have is getting a loan. A child, under 18, can't get a loan. You can go guarantor for a loan and some banks may allow this, Rolf will know...

hope this helps...

asy

 

[Kevmeister]

Oh, and good on your daughter for wanting to do something to kickstart her financial well-being so early in her life.

16-year olds, let me see - most are thinking of: boys, shoes, CD's, rock/pop-stars, pimples, clothes, and shopping. Your daughter is therefore definitely thinking outside the square!

 

[asy]

Yeah!!

I agree with Kev there!!!

Tell her to get onto the forum!

Oh, by the way, Where is Killarney Vale?

asy

 

[Jeffrey White]

Thanks, she's a great kid, pretty and smart, not like me at all really. Killarney Vale is on the Central Coast of NSW. just near the beach.
We already have about $1.3m in loans from the National bank, perhaps they would be sympathetic to the guarantor situation. They've really helped us out so far, allowing us to buy 9 properties worth over $2m in 5 years.
It's a great feeling to be able to pass on this info to your kids (even better when they listen).
And to think, it all started with a book by Jan Sommers....Is this "full circle" or what?

Thanks for your feedback folks, I'll try to get Kylie to post some messages.

 

[phm]

Hi Jeffery

It's wonderful to see you wanting to help your daughter into the world of IP.

To continue on from your thread, I have a 16yo son and have been teaching him about investing. Part of this journey has been to learn about "budgeting." I feel that this is probably the most important step in wealth creation.

I will always be there to help him with info, if requested, but it has been a pleasure in seeing how he has managed to budget his earnings to save up for the things that are important to him, (including his long term goals of investments.) He has learnt that, if you want something you have to budget for it.

I'm hoping that this stays with him as this is probably the main reason that alot of investors fall in a heap. Failure to budget!

 

[Jeffrey White]

How refreshing! The usual thoughts about 16 year olds is sex, drink & drugs... We don't hear enough about the ones who make it their challenge to rise above the mediocre and strive to succeed from such an early age.
I wish you and your son, success at every turn.
Jeff.

 

[BKH]

It appears that 16 years is the age when some kids (not all) are starting to think like adults. Maybe we parents are not aways 'Stupid'. My own 16 yo son is also keen to buy his own investment property but is getting impatient because he is too young to purchase a property.

Maybe he has seen what his parents properties are returning both capital wise and rental wise and has seen the increase in property prices over the last several years in the Western suburbs, Melbourne. (and there is still pockets of good buying for the astute)

He has already started to put money away into an account that is not easy to touch, ie not like an atm easy iwthdraw.

I am curious. what are the pro's and cons, in general terms, if both parents and son collectively purchased an investment property and he paid back over time his proportion of the deposit.
Sorry we 're uncomfortable about borrowing 100%.
Just returned from being redundant for 6 monhs and that makes you just that bit more cautious.

 

[Jeffrey White]

16 yo kids

Having discussed the answers I've received in this forum with Kylies mother, we are starting to investigate the possibility of a positive geared property for Kylie. Of course they are hard to find but, we have been looking into various pensioner units (we already own a couple), they're fairly cheap to buy and although they are not expected to grow in value a great deal, they do offer a cash flow advantage (in some cases) and they may be 'just the shot' for the younger ones to get started.
Can you imagine where we would all be now if we started at 16?
I'm 38...I could have retired 10 years ago.
Each person has different levels of investment security. If you prefer to save the deposit instead of using your equity in your own home & borrowing the 106% (including legals) to buy, that's fine, but just remember that fear stops most people investing, overcome the fear with sound knowledge. Jan Somers books are a great way to gain knowledge & eliminate fear.

Thanks for replying BKH, it's great to hear from other people who have similar questions and concerns about our kids.

 

[younginvestor]

Jeff,

At your least your daughter has already taken the first step, and has even begun to think about investing.

My parents tried to talk me into property when I was 18, and I
didnt listen, I kept telling them I didnt want to be "tied down" Oh well it only took me 3 years to come back to them for help on my first property.