strategies (buying and renovating through a company structure ?)

strategies

hi everyone...
just thought i'd put a forward an idea for some opinions...


in about 12 months myself, my parnter, mother and brother will be ready to begin investing in property - we have a combined income of about 100k a year. My thoughts are to invest through a company, and to start out by buying two properties - one to rent out, and the other to renovate for profit, which will then go towards paying off the other property. The plan, then, will be to buy another renovator, and repeat the process till the initial property is completely paid for, then start all over again.

Anyone got any thoughts on the practicalities or technicalities of investing with this strategy?
 
Re: strategies

Hi

Originally posted by JustAGirl
The plan, then, will be to buy another renovator, and repeat the process till the initial property is completely paid for, then start all over again.

A few thoughts. Not sure about this but mayb buying the properties in a trust would work better than in a company. Dales the man to find this out from...;)

You also might consider not completely paying the first property off as this effectively reduces your tax deductions. Instead you could get a loan with an offset account and pay the money from the reno into this. That way you are reducing your interest payments in the short term whilst still having easy access to this money for more deposits on more property.

Cheers
Chris
 
Re: Re: strategies

Originally posted by Chris G
Hi



A few thoughts. Not sure about this but mayb buying the properties in a trust would work better than in a company. Dales the man to find this out from...;)

You also might consider not completely paying the first property off as this effectively reduces your tax deductions. Instead you could get a loan with an offset account and pay the money from the reno into this. That way you are reducing your interest payments in the short term whilst still having easy access to this money for more deposits on more property.

Cheers
Chris
My understanding is that you cannot have IO loan (which will be a fixed loan) and %100 offset account combined, at lease that's what my banker told me two days ago, or can you?
 
Hi Jerry

The Interest Only part is not the problem - its the fixed rate.

But then you cant have an offset with that lender on P&I fixed rate either.

Nor can you repay significant extra into the loan and redraw the advanace payments ( with Heritage you can).

Ta

Rolf
 
Hi

Good on you for planning this investment and good luck with it all. I have no doubts that you CAN make this happen just as you want.

To be honest, no serious investor uses a company as the vehicle to do what we do. It is inflexible and the asset protection is not quite as good. And, as for the tax issues . . . Ouch!!!!!!!!!

Say a company sells an IP and makes a Capital Gain. The company pays tax at 30% whereas through a trust the very top rate would be 25%.

OK, good, but what is so important about this?

If the company wants to get the money out to the individuals at a later date then you will pay tax again on that same profit. Yes, it is effectively taxed twice. A trust does not have this problem.

Please, if you plan to do this properly, use a trust.

Dale
 
For those interested in the Pros and Cons of Trusts, there is a couple of useful articles in today's(Saturday 26th Oct) Financial Review.



:)
 
Top