Beginning new development with inlaws - how to structure?

Discussion in 'Legal Issues' started by KB_, 5th Apr, 2019.

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  1. KB_

    KB_ Active Member

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    Perth
    Hi All,

    My wife and I would like to purchase property with her parents to develop and sell, and my question is where to start from a structuring point of view. We currently have 1 investment property, they have sold all of theirs.

    We have not yet purchased anything and what to get off on the right foot. In what order should we be getting advise? Do we start with a structuring lawyer? or accountant? We assume that all together we will have no loan serviceability issues, so I guess a broker is not the required first step.

    Does anyone have any recommendations for someone in Perth we can see t get the ball rolling, or an interstate resource we can get advise from?

    Any tips would be greatly appreciated, and please let me know if any further information would be helpful.

    Thanks
     
  2. Brady

    Brady Well-Known Member

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    I would be speaking with all parties together, whilst not required at once - they should all be on the same page.
    Lawyer might suggest a method which gives you best protection, but not idea for tax and the bank might not even lend you the money that way.
    Each plan will vary pending the site, plans etc.
    Many people just in and think development is all fun and games - heaps of mum & dads get into it, not all of them are making money.
    Good luck do a lot of research - this forum should help.

    Do yourself a favour and speak with @Westminster that would be my first stop.

    Any good specific advise you will need to pay in some way.
     
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I would make sure that the development is rigidly going to be highly profitable or I wouldnt touch it. Its going to kill two relationships. If neither of you has experience - Dont.

    If any of the concepts in our developer toolkit dont sound like you already know them and are not reflected in your financial / tax plan for the project - Dont.

    Then see a lawyer.
     

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  4. Sackie

    Sackie Well-Known Member

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    Before worrying about any of that I'd want to be sure the profit margins are worth it for the risks involved .
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I would start with reading my legal tips on structuring then work out roughly what you want to do. Then seek finance advice from a broker, work out who you will need to borrow or guarantee the loan and then see a structuring lawyer - most of who will be able to advise on tax too.

    No point in paying for legal advice if you can't find it.
     
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    bloody auto correct
    No point in paying for legal advice if you can't find it. should be
    No point in paying for legal advice if you can't finance it.
     
  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Thanks Brady.

    Judging by the username initials I met these guys last week for coffee to give them some hints, tips and traps about developing before they posted this up.
     
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  8. KB_

    KB_ Active Member

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    Perth
    Thanks all for the advise.

    We did meet with Westminster last week and will be getting all of the appropriate advise before embarking on a project. I have had a read through all of the structure legal tips and also the developers toolkit from Paul (thanks so much to all for providing such useful resources).

    As mentioned above we are not anticipating any financing issues, and have not yet decided on a project, so will seek specific structuring advise from a lawyer.

    Thanks again.
     
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  9. Brady

    Brady Well-Known Member

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    Sounds like you're on the right path.

    @KB_ are you self funding? This can work well, each party brings together lump sums, borrow for the land @ 80% self fund from equity the build. Repeat.
     

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