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My first development

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  • My first development

    Hi out there, I have a question about structuring the money if anybody has a suggestion.
    I've come across a section to purchase and develop, and this is my first investing project.

    I plan to subdivide it and build townhouses to onsell.
    I want to use as little money of my own ( as I'll be borrowing against a property) as possible and really make sure I'm thinking about everything clearly.

    Can anybody recommend some thoughts to consider?

    Any advice would be great!

    Thanks, hey this is a great site, I can't stop reading!
    - The early bird may get the worm, but the second mouse gets the cheese. -

  • #2
    Suggest you find a good broker who works in this area. If you were in Auckland I have a guy who could fund this 100% easy. There must be some good brokers in your neck of the woods.
    Basic info is that lenders will go to 80% of completed value. There's a few tricks with structuring yourself to keep the value high but it can be done virtually no money down.
    If you get real stuck email or ring me and I'll see if my broker will look at it for you

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    • #3
      Know of anybody in the Wellington/Kapiti area, Pooomba?
      Patience is a virtue.

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      • #4
        Sorry essence, only know Auckland. Someone here will know a good Wgtn broker

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        • #5
          If you get real stuck email or ring me and I'll see if my broker will look at it for you
          Hey thanks for your input and offer. I do know of a broker and I'll check with him on a few structuring options.

          I have now purchased the property under an 'as nominee' signing and am now investigating the options of personal name verses company..company seems to be the suggestion as there is a partner.
          I did however manage to secure the property on the first punt for $20-30,000 under its market value..so we're off to a good start!


          Al
          - The early bird may get the worm, but the second mouse gets the cheese. -

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          • #6
            make sure you get the entity correct. If you are not careful you can be tainted as a developer. Talk to your accountant.
            A corporate trading trust may be another entity option to ask about also

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            • #7
              Originally posted by whitt
              make sure you get the entity correct. If you are not careful you can be tainted as a developer. Talk to your accountant.
              A corporate trading trust may be another entity option to ask about also
              Entity? Ya I'm a newbie to the whole concept of companies but I'd love to get it right the first time....what are the significant differences I should consider or better yet what would everyone recommend given the goal to purchase firstly this property to be deveolped into a few sections and then to most likely purchase rental or developments again as they come.

              All thoughts greatly appreciated...

              Al
              - The early bird may get the worm, but the second mouse gets the cheese. -

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              • #8
                Definitely would normally suggest a trading trust with a corporate trustee. Get some professional advice. If you don't, and get your structures wrong, you could lose a lot of money in taxes and tainting of other properties

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