Dominique Grubisa – 3 Items That Property Investors Need To Control




Stuart Zadel :: Napoleon Hill » Podcast Feed show

Summary: Dominique Grubisa, Australia’s Top Debt Expert, shares with you three major items that property investors need to control with each purchase, and how it can be a major balancing act. Dominique gives us some pointers on how we can balance these three areas… Hi, as property investors, we have various things that we have to control and it’s a real balancing act. Whether you’re just sticking a toe in the water for the first time or whether you’re a seasoned veteran, you need to know that there are three things as property entrepreneurs that we’re interested in. First of all, we’re interested in tax, is great tax benefits involved in property and we want to maximise that, and minimise our tax liability. Secondly, there’s borrowing capacity. What entity do we borrow in? It will depend on who’s borrowing the property, is it a company? Is it a trust? Or an individual? Either way, the bank would want to know and banks lend easily to certain entities…. and they have a lot of red tape involved in borrowing in other entities. Finally, we are worried about asset protection. Traditionally, if we own in our own way or some entities that are exposed, then we are sitting ducks. And that’s really important, because most of us store or hoard most of our wealth in property. And our net worth, the bulk of our net worth is made up in property holdings.  Let’s face it, property is a great vehicle for wealth and we hold a lot of wealth there. So it’s got to be right, how do we do it right? How do we balance up those three interests? Well, up until now most of us do it by risk reward ratio; I’ll either expose myself and not be properly protected because it costs too much to protect myself, in my own properties in my own name. And I’m sure a lot of you ask if I can transfer it to something safer but you have to pay stamp duty and it is just not worth it. Or else you are paying maximum tax and you are losing a lot of money by having all these complex structuring. That’s unnecessary and doesn’t leave any better protected at the end of the day. So, I’ve seen a lot of people have about 10 structures earning every trust and company for every different property they buy, there’s this entire crisscross structuring, and they have to file ten tax returns each year. And it is a massive, massive expense – they are losing tax benefits and it is really hard for them to borrow because the bank requires all sorts of hoops of fire to be dealt through to be lent the money for all the different entities. So how do we do it quickly and easily and simply to maximise tax, maximise our borrowing capacity and still stay protected, to not have to do the balancing act? I’ve devised a way, it is easy, and it’s quick and cheap. It can work for future properties but it can also fix up your existing properties that are exposed. The way we do it, is we set up a separate trust. Now don’t worry, there’s no tax involved or anything like that; this trust is just a holding trust. It doesn’t earn anything, it doesn’t borrow anything. All it does is sit there and hold your wealth or interest in company as it grows. As the equity grows over time and the property goes up in value, it remains protected and that’s what we’re interested in. Ownership stays the same, or for your properties, you buy any which way you want. You have ultimate flexibility for tax and borrowing requirements. So it is perfect; it’s a win-win situation, it ticks all three boxes, three areas of concern that we have as property investors. Now it is easy to understand when it is broken down, it a trust with a caveat registered on the title of your property. So next time I’m going to break that down for you and I am going to show you with my own little flow chart diagram how it works. The mechanics of it and why it is of interest to you and how you can quickly and easily take control as a property entrepreneur and not have to rely on your lawyers, and your accountants and your other expert team. You will get [...]