Folks,
I'd like to float an idea for interest's sake and maybe a bit more. I have my eye on a commercial property in a high capital gains growth area, securely leased for the next 10 years. Only 2 problems:
1. They want too much - I wouldn't buy at the asking price but I reckon about $1.5 million would be fair.
2. As it's commercial, banks would indicatively lend around 2/3 of the value of the property and I don't have the remaining $500K.
Here's my basic plan. I set up a unit trust with a shelf company trustee. The unit trust has entities (companies, trusts or people) as its beneficiaries and has 10 'shares' or units. For each unit, $50,000 is lent to the trust so that a fund of $500k is there to buy the property. Each unit gets 10% of the income after interest and costs. Returns would be on the order of 3-4K per annum before tax. Once the property goes up 50% in capital value, we refinance and pay back everyone's $50K.
I'd appreciate either interest or feedback. Is there a better way to structure this? What would interest you? Is this proposal a total dog?
Let me hear what you think!
Bob
I'd like to float an idea for interest's sake and maybe a bit more. I have my eye on a commercial property in a high capital gains growth area, securely leased for the next 10 years. Only 2 problems:
1. They want too much - I wouldn't buy at the asking price but I reckon about $1.5 million would be fair.
2. As it's commercial, banks would indicatively lend around 2/3 of the value of the property and I don't have the remaining $500K.
Here's my basic plan. I set up a unit trust with a shelf company trustee. The unit trust has entities (companies, trusts or people) as its beneficiaries and has 10 'shares' or units. For each unit, $50,000 is lent to the trust so that a fund of $500k is there to buy the property. Each unit gets 10% of the income after interest and costs. Returns would be on the order of 3-4K per annum before tax. Once the property goes up 50% in capital value, we refinance and pay back everyone's $50K.
I'd appreciate either interest or feedback. Is there a better way to structure this? What would interest you? Is this proposal a total dog?
Let me hear what you think!
Bob