Just starting out...

Hey everyone,

Newbie to this site and property investing. Can anyone suggest any great books to read to get me going? Thinking I need to know....do I need a trust? Is negative gear good for me? etc...

 

Im not much of a book person - so my recommendation would be to start off understanding how much you can borrow or what you need to do do borrow a certain amount. This will dictate your budget and obviously what areas you can purchase. This seems simple but will lead to clarifying a lot of things. E.g you may be a specific type of professional which will allow you to borrow 90% no LMI and thus only need to use a smaller amount of deposit. You may have restrictions which will require you to wait a certain period of time.

Then speak to an Accountant about different entities you can purchase and the tax implications and also with your banker or broker about the Accountant's recommendations and the impact of those recommendations for finance purposes.

Spend some time on the forums and try and filter through the facts (rather than opinions).

My other recommendation would be to get to know other investors - learn from their mistakes and their wins.

I think books are good but personally I find that this approach will get you to understand the playing field much quicker.

Finally ask questions. There are heaps of people on the forum providing valuable nuggets of information.

 

Thanks The Y-Man....yip total novice, all help is greatly appreciated!

 

Unless you have a high chance of getting sued, I'd suggest think twice before using a trust. It makes lending way more complex, it cost you every year to hold, and kills servicing capacity.

Much simpler for most people to just buy in own names.

 

So having each property in a separate trust to avoid land tax is not something I need to think about? Did not want to buy under my name then get told, you got the first step wrong. Also my income is fairly high and pay way too much tax, so was thinking negative gearing to offset it would be important from the start.

 

You can't negative gear inside a family trust, so if that's a priority best to not. Land tax can become an issue, but buying in different states can help as can buying in trusts down the track if necessary.

You can neg gear with a unit trust but it's a pain when it comes to lenders - many (most) don't like the structure any more so personally I'd avoid this as you can trip yourself up when limited by lender selection.

 

Thanks Jess, seems I have a lot to learn.....but looking forward to it.

 

It really comes down to personal circumstance.
The best is to talk to your 'team'. Lawyer, accountant, mortgage broker, etc.
Helps to have an idea of where you are heading career wise.

A lot of educational courses will spout the benefits of a trust, however the advice is a little biased. It is targeted at the masses / covering their own butts, and that's how they make an income / take a cut of the 'sale'.

Reality is, for the typical person, a trust is completely unnecessary at the start, and is likely a hindrance to building a portfolio.

Eg.
At the start the tax deductions, savings in land-tax (all my property is in NSW), gave me the ability to buy multiple properties in quick succession.

I may not have been able to do that if I had to fork out all the extra cash back when $1k was a lot of money.

Now fast forward 7 years where $1k is relatively negligible, I have maxed out my land-tax threshold, and I have a business which could lead to a civil law-suit. All my future purchases will be under trusts.

"Damn, I wish I had purchased all my old properties under trusts".
Sure, but I wouldn't be where I am today if I hadn't been able to purchase those extra couple of properties at the start by taking advantage of the tax breaks.

It's not a straight forward answer without knowing all the facts.

Keep it simple.
Surround yourself with a strong team.