Time to buy an investment property but what strategy ?

hello everyone,

After buying my first investment property 4 years , everything went well, I rented it out and was negative gearing. Interest only Loan with a 100% offset account and rent was good.

Recently I got married and due to substantial weddings and honey moon costs (don’t ask) I decided we kick the tenants out and live in this house I originally bought as an investment property.

It’s going to be almost a year and it’s time to invest again.

The townhouse we live in is now worth close to 650,000 and I have 300,000 left on the loan (there’s 100k in the 100% offset account) so there is “equity”

I have 1-2 properties in mind , both of which I will buy, demolish , build 3 units on (already come with approval) and decide from there what to sell or keep .

Here’s my drama / question

I keep getting mixed advice . Some say I should change my house name under my wives for asset protection and go ahead and buy this development property under my name whilst borrowing equity on the house and use the savings we have with it .

Another advice I received was to start a company with me being the sole director and purchasing the new property as a company , apparently that gives me some asset protection as well.

The new property will cost 700,000 and another 700k to build so looking at 1.5 mil in total Over a 12 month period from the info I got

I need your honest advice based on expertise and experience.

What should I do ? How should I do it ?
In summary

300,000 loan left on the house we live in, worth around 650,000
There is 100,000 in the offset account / redraw
House under my name
Wife has 50k saved
Wanting to buy another house , demolish and build on.
Risky as it will cost 700,000 to buy and 700,000 to build in 12 months
Should I use a company ? How does it work ? Should I just buy it under my name ? Maybe buy it under wife name as she has no expenses and clean record.

Point me in the right direction please , this is a lot of money and I don’t want to get screwed .

I’m relatively new and a novice at this so I’m sorry if something’s I’ve said are wrong

Thank you in advance

 

Bet those advising were not qualified to do so.

You should probably see a lawyer for the legal advice - ownership structure and asset protection.

What you would want to do will depend on a number of factors.

 

Have you built/developed before?

 

Negative
I’m being mentored by someone who does it regularly but I don’t want to be a blind sheep following every command without understanding what’s going on

Hence why I want to understand what possible strategies I can implement to protect my house and be able to go ahead with this

 

Hence why I’m here to see what people who’ve done this before advice

Different lawyers will have different legal advice .

You seem to be one or work in the industry , what’s your suggestion instead of just wasting time saying “go see a lawyer”

 

Forgetting everything else, your taking on a big project and a lot of debt, with little buffer and no experience. You really think you can handle this? You dont know enough to evaluate advice.

 

The question is too broad to answer.

What are you seeking asset protection against?

 

You have maybe 300k available. With a 1.4m project. Thats really really thin. Any delay or cost blowout..... if you can even get 80%.

 

Before engaging even with lawyer, speak to a financier/broker. Development loans are difficult now to obtain and the level of savings may not be enough for funding to be appeoved and released for construction.

 

You have to ask, if all your doing is following, whats your ‘mentor’ getting out of this?

 

The property comes with plans and permits for 3 town houses which will easily be worth 600,000 each

So 1.4-1.5 mil investment can comfortably make 1.8 mil return if all 3 are sold And if everything goes smooth

My mentor is also a builder / project manager and he has suggested getting 3 quotes for the building expenses included his but he estimates around 700,000. Once contract is signed , I shouldn’t pay anymore from my understanding

It’s a big investment but also a worthwhile one

 

Everyone has something to gain and I’m assuming He’s hoping I choose him as the project manager / builder because I don’t know anything about that ,

But he has advised to get 3 seperate quotes to be fair

 

Broker comes back from holidays soon.
In the meantime I’m more interested about how I will structure it

I plan to do this continuously and grow my portfolio year after year

Hence I want to see what others are doing ? Others similar to me ... I’ve heard it’s possible to start a company per development ... sounds logical

 

Interest and selling costs, maybe 100k? Where did you source the property from?

 

Mortgage yes , legal help now . They’ve advised me to get a lawyer but I thought there’s legal advisors here and can shed a light on what strategy or strategies similar to me have taken.

Offcourse many won’t because they’re just here to promote their business and own interests

 

Mentor has contacts .. hence why I’m calling him a mentor because he knows people and contacts and is advising me and helping .
It’s better than those on here saying “go see a lawyer”

 

And if things go even slightly wrong? How much buffer will you have?

Which city is this in?

 

It’s not broad, it’s simple brother
I work and my wife works
House we live in under my name

Wanna borrow a loan and use equity on house to purchase a 700k property and another 700-800k construction loan
I want to protect my assets yes , don’t want to lose the house and end up living with the in-laws

Company ? Family trust ? Put the house under her Name ? Put the director of company as my wife alone and act through her on the development ?

Not broad , just simple .

 

Well the buffer thing has been mentioned , need a whole 12 months buffer in the sense that if **** gets delayed , we can afford to service the Loan for another 12 months . That’s the advice I’ve been given

 

Townhouse 650k. Loan 300k. Plus offset 100k. How much do you think you have for this?in dollars.