Structures, Finance and Subdvision ideas

[alanimal]

Hi All,

I am slowly entering the property investment circle, I have converted my rumpus into a self contained unit which is now tenanted. Then recently I managed to purchase the neighbors property without having to go through the real estate agent route saving some money. I have since renovated the property next door and I have moved across to this house and rented out the old house - both the unit and the rest of the property.

I have the rental house under my company's name and the new house under my trustee company. The rental property is on interest only while the one I am living is P & I.

Both houses are in Browns Bay and have 830 and 870 sq m sections, which I want to subdivide into 3 properties.

I am looking at approx 80K for the subdivision costs (council, surveying, engineering etc) and another say 400k to build the house.

I plan to build this house to either move into myself and will be the new family home, or stay in the current house and rent the new one out.

My issue is financing the subdivision and the building of the new house as I am fairly maxed out at the moment.

My father has indicated he is happy to go 50/50 share in the cost to build etc. as I think he should start looking at investing his money somewhere.

How would you structure this? as I am providing the land to build on - what would be an even share? Or should I attempt to do this 100% on my own somehow?

I am interested in hearing your ideas, or from those of you that have already done something similar before

Thanks in advance - Alan

[Rosco]

Hi Alan,

You need to see a structure / property expert about this. There are a few options that can work really well, but need a great lawyer and accountant to work together on. The option I have in my mind isn't common knowledge, so I'm not going to share that IP on a public forum, sorry.

As you are Auckland based, we could help, but Mathew Gilligan from GRA is probably much closer and easier for this. They are well set up for one off structure advice like this.

Also bear in mind possible tax issues.

From a finance perspective, it is obviously better if you can do yourself. But better to do it with your father, than not do it at all.

Ross

[alanimal]

Thanks Ross,

I am also deciding whether or not to land-bank these two properties and focus on some rental properties to create some more cashflow then do the subdivision at a later stage when I can afford it.