eSignature Lawfulness for Real Estate in Australia

How to eSign a document: eSignature lawfulness for Real Estate in Australia

hi everyone my name is PK and here I'm very grateful to have Venit danir who is a mortgage broker he's got a lot of experience I'll introduce them in a second but I'm really excited to do this episode because we're going to be covering five essential ways every property investor should improve their borrowing capacity okay it's interest rates are higher than what they used to be 2 or 3 years ago although not really super high compared to long-term averages but for those of you are in the market now you're really wanting to expand your portfolio start your portfolio but you're like PK like how do all your clients get all these properties how do all these other people get all these properties I can't even borrow one or I can't even borrow two like I'm a normal person but how's everyone else doing it well this is the episode for you because we'll go through five ways and these aren't like these aren't like silly ways I shouldn't use the word silly because a lot of times when you go to a mortgage broker and you ask can I improve my boring capacity they're like oh PK try to earn more income and it's like come on like thanks for that advice but I appreciate it but you know like I'm already working two jobs or whatever the case may be so this is not that kind of episode we're we're very fortunate to have venite because he is a chared accountant by profession but he's been 20 years mortgage brokers company that he works with bluehive they're really experience they know the lending ecosystem inside out in Australia and we're going to be going into technical things not the sort of stuff that you just can Google and find out so this will be really interesting I don't want to spoil it but the five things that we'll go through very very quickly is how to set up the right entity structure to maximize your borrowing capacity how to recalibrate your existing loans how to use household expenditure measures um to for existing loans the HM how to find the best lending policy for your situation interest only versus principal interest loans and then if we get time at the end Venit might go into even some more Curious things like for your principal place of residence should you buy in a trust which I think no one basically no one considers anyway I'm hogging the mic and I'm not the expert on the subject Venit is so thank you so much Venit for for making time and coming on thanks thanks P thanks for having us here and we will try and explain as much as we know around the ecosystem how best you leverage that for the clients especially those who are on the investment journey and like you said there are five very critical ways where if correctly deployed can significantly improve the borrowing capacity for the investors and it's pretty much like the analogy of Health it's like if you prevent Health you live longer you live healthy but if you've exhausted yourself it's very difficult to retain that health and that Viger again so I think that's that's where this particular episode and my my kind of trying to drive value for your client is really really helpful so I think the first point first like you said what's what should be the ideal structure and and what should be the timing around it right so I think one thing with absolute responsibility we would say is these are answers to difficult problems but these have to be specific to every family situation so what we are talking is more IST but different family income groups would have different outcomes and that's where the unique lens would come in when we have but a good structure for a mid income family group it's pretty much like working on your health on a for a long-term basis if you are in the right structure and right structure very responsibly has to be right from setting up so for example a lot of people use trust as as a jargon but then there are hundred ways you can set up a trust but Banks only like a fair few so you need to know what's the specific structure that flies within the lending ecosystem as a start so getting the right structure is your first start and the more you are in that mid inome and low income group The more critical it is the industry try to talk you the other way around the trust off for the riches it's actually not because riches arew they want to use negative gearing to to offset the taxes it's the mid income group like us the most of the Australian Community we are getting into the right structure right at this start of the game helps you preserve your borrowing because it's very easy for most families to exhaust their borrowing just after two or three purchases and and just so people can resonate with this and relate to it when you say mid income bracket or mid inome group what are we talking here what's the range in terms of household income I think household income husband wife working with two dependents we are talking 250k to about 400k is the mid-income group anything lower than that is also kind of covered here because it becomes super critical for them okay anything upwards of half a m is where they are high income earners their borrowing capacity is immense you can actually afford to buy few in your name and still not exhaust your borrowing mhm so the on the the low more you are on the lower side of the spectrum the more critical is to be in this structure right right so when when you say mid you know people might think that's 150 but your definition of mid is actually 250 to 500 but it's very interesting you're saying actually the lower your income the more critical it becomes which is yeah I don't want to ruin your your stream of thought but just as my thought process it's like well trusts are expensive to set up there's compliance fees audit fees tax fees so it's like oh if I'm only earning 100K like this is whole burden but you're saying that's where it's even more imperative to go towards a trust structure it's actually counterintuitive but it is and if I just go into the level of the cost versus the benefits right because we're talking very critical stuff here like setting up a trust could cost you in that range of $2,000 it's a onetime cost and then the annual maintenance cost of a trust is about $1,000 roughly with one property and it kind of goes up with every subsequent buy now imagine there's $2,000 setup cost one time for about three to four properties that you can buy in one single trust and that's the complexity we'll talk about but if you are able to preserve your borrowing and instead of just being able to max out at three this structure is able to help you buy six or nine properties of course subject to a lot of income generating abilities that cost in absolute terms is insignificant to the wealth creation opportunities the right structure will open up so it's absolute cost versus the potential of wealth creation in the right structure so so costs are actually insignificant if you are in the right ecosystem yeah sure all right please please go ahead how does it how do we actually expand our borrowing capacity within trust yep so I think with the trust you expand in the sense you preserve your boring capacity so everything so think like this everything that you buy in your name or in your family name as husband wife couple it consumes your borrowing and Banks cannot ignore what's appearing on your credit reports however in the legal pollin trust is a separate entity to individuals so when you borrow in a trust it is seen you are seen as a guarantor and not as a principal borrower now here's where the ecosystem and the complexity starts opening up and that's where the game starts now a lot of lenders who would see a corporate entity distinct to individuals would say hey do we know this particular entity is self-sufficient that's where your accountant based on the numbers of the trust and a macro view of your financial income should be able to support you as long as your properties are neutral to positive and even if they're negative to that extent there are ways and mechanisms to feed into the trust so that they become neutral so there are legal ways to be very legit in the process and still be able to go back to the bank and say hey man yes we have this entity but this is self-sufficient and ignore this for your calculations right right CU I mean I don't think it's a New Concept um this this concept and maybe you're going to expand upon it in in a minute or two it's not alien to some investors that you know you you buy one property um in a separate trust every time and as long as it pays for itself then you know it doesn't or it preserves your borrowing capacity for each subsequent property you can um you set up a separate trust and keep going like that but generally you know it needs to be self-sufficient like you said that each trust needs to pay for itself this concept that you're talking about where even if it's costing you money there are some legal ways by which you can still have Banks disregard that debt um I think it's a very important point if you don't mind just uh expanding upon it uh for a second because with the current level of interest rates even at let's say 80% lvr or 80% um you know deposit level it is quite difficult right to get properties that pay for themselves certainly in Melbourne Sydney Brisbane can't really do it um so you know if they're costing I don't know few thousand a year 5,000 a year whatever the case is let's say in Regional Australia other Capital Cities how is it and and feel free to let me know if you if you don't if you can't talk about it or whatever but how do we tell the banks or how do we allow the banks to realize that it is still self-sufficient yep yep so I think I think first thing first P you don't have to have one property per trust you can actually have multiple properties so that actually helps you optimize now that multiple wood is driven by the income and the bank policies like it's it's a complex subject so most lenders who are very Pro trust can allow you up to four or five properties in a trust subject to your income so as long as your family income is able to sustain service the for four properties you can have one so you actually optimize your admin cost you optimize your setting up cost now imagine you are about $10,000 short or negative in your a particular trust portfolio on an annual basis as guarantors you are able to fund that trust with that deficit and that trust by taking your contribution from the guarantors becomes self-sufficient to neutral from an accountant's point of view as long as trust has enough funds to pay for its liabilities it becomes a self-sufficient entity in itself in its own right and that's where accountant can certify that trust is able to look after its liabilities it's self-sufficient and able to service its debt on time or as in V ises different lenders have different languages but common understanding is yes yes if it is self- sustainable we don't have to worry about it and more so it becomes more critical if we are not relying on the income of the trust and which is typically not the case in this current scenario in the pre under two kind per kind of scenarios we were able to use the income from the trust to boost up your borrowing but right now it's the other way around investing properties is actually consuming your borrowing so this structure with a with a loan or a deficit being supported by the G would help you take it off from the calculations for your next borrowing right however when I talk about this as long as you are in the same structure every borrowing has to be considered so if you're buying three properties in that trust everything will be calculated for that particular trust when you go to trust B we can ignore trust so for from A bank's point of view you just have one PP in your name and this is a new entity entity B so entity a is kind of completely ignored from the calculations right makes sense and does it is it important or is it vital to set up these trusts whether it's one trust for a number of properties or then another trust for a number of properties before you do any investing at all um or for folks who are listening and maybe they've already got two properties and their personal names or their wife or whatever maybe they have a kind of a sneaky trust which they don't really know how to use properly and they're kind of maxed out and they're like well structuring is is a bit messy like what do you do in that situation yeah so so our recommendation is you should be in the structure right from your first investment properties but most investors don't realize the importance of this structure and they think let's take couple and then we'll think about the structures but structure is the structure is about preserving your borrowing it does not open up anything new so if you have exhausted yourself then no matter what you set up no structure is going to help you so a prudent advice is to think about this structure right at the start of your investment journey and it's a it's a it's a topic of conversation because like I said based on the family income we can time the structures if you are on that high income family then you don't have to worry about the structure for a couple and depends on what are you buying if you're buying something in Brighton for 3 mil 4 mil you would consume yourself [Music] again makes sense makes sense and so for someone who hasn't considered this from the start and they're like well I have actually maxed out my my boring capacity based on my income is the only way to reset or or to take the next step to undergo the sort of costly exercise of perhaps selling um those properties into a new trust that they set up you get pinged with the stamp Duty and then and then being able to continue like have you seen your clients do that is that something you recommend no so I think for all our clients selling anything of the portfolio has to be the something solution of a last resort or if we realize the property itself is not performing MH however there are number of ways that you can especially someone who has been in the investment Journey for a while for example there are clients who come to us whove been in the investment Journey for 10 15 years so we'll take a holistic view of their existing portfolio and we realize some of their debts have been set up 10 15 years back so the remaining term is all about 12 years for example in those cases we actually help them reset again so we reset new loans for next 30 Years so that helps us you know in very critical ways for example it helps us one use the current valuation of the property to optimize the borrowing we also extend the term of the loan which again optimizes your borrowing so you actually and if you are almost 10 12 years in your PP Journey we actually able to convert that debt into an investment debt so it actually gives you the negative gearing Advantage also like I'm telling you a lot of magic WS that goes in the ecosystem but people don't realize but yes recalibrating your portfolio especially if you have been in the journey for 10 OD years is a very good way to reset and it will open up it it does open up for we have clients who come to us with kind of almost exhausted with few million dollars kind of portfolio and just by resetting and looking the getting it to the right lenders opens up about another million dollar kind of boring capacity and people don't realize that ecosystem lending ecosystem kind of continuously evolves so the policies that were relevant 10 years back have changed significantly so Banks take a very different view of you based on your income group age group the asset value and we can use the best policies for you at this point in time to reset so recalibrate can open up so yeah right so what what were the and this is point two we've kind of gone to point two I do want to come back to point one I just have one or two questions more but what were the main items that you just mentioned that people should consider you know go to their broker or whoever they deal with in terms of this second point of how to improve borrowing capacity recalibrate your existing loans so you mentioned one which is where let's say you've got 12 years left on your loan you stretch it out um back to 30 years what the technical name for that is but what what were the other ones that you just mentioned you could convert your PP debt into investment debt and the reason is because you can actually explain my PP is kind of paid off I'm using that property as a as a security to use for investment purposes and that could help you maximize or optimize is the white word for boring because how the banks calculate investment debt versus PP debt the calculators give you a different outcome so are you talking about debt recycling here are you talking about some way where you justify to the bank that my entire PPR loan is actually you know funding as a security it's funding my investments I think you explain to them you you tell them the logic of what you're trying to set up for the client and how the funds are going to be used but like I said debt recycling is kind of a comp is a is a topic that is part of this whole conversation and it's nothing out of this it's not a it's not a different strategy it's kind of part of this whole thing we are trying to do is use your existing portfolio and the current valuations and the lending ecosystem to boost your borrowing overall so it's a holistic view of doing things right so under the banner of recalibrating existing loans they're stretching out the loan term and of course because you amortize those you know the principal repayments over a longer period of time therefore the cash flow position improves service ility calculators are benefited there's the debt recycling or converting PPR debt into investment debt making it deductible and because the banks perceive investment debt with a different light that you know perhaps increases your borrowing capacity what the items fall under this Banner of um of recalibrating existing loans I think this would be the this would be the two key once and then you have things like p&i versus interest only you would have heard a lot of people but again that's that's depending on every family situation like p&i is a is is one of our most recommended approach because because it helps you pay your debt with every installment MH however if you are in a situation where you pretty much have no savings left and you want to accumulate cash over next 12 months or 24 months then we recommend you go IO path interest only but interest only does consume your borrowing more than the principle and interest and it's not in an Investor's favor for a long-term basis because your debt kind of stays constant it's not reducing on a consistent basis with every installment you pay so it's a shortterm strategy to boost your cash savings for your subsequent buy so again reset again after two years once you have enough cash for the next deposit you use it but more often than not because we recalibrate and we use the valuations you're able to use the equity out of your current portfolio itself to fund your next one and it's actually we take you to almost 100 or 105 kind of borrowing because we using the debt for the deposit and we using 80 or 90% And as a matter of fact because you use the technique to recalibrate it actually helps you bring down the pricing so you don't have to worry about going to tier two tier three when you can stay within the tier one with better pricing right right and I guess obviously this depends on a person's real household cash flow uh budgeting as well because if you're going to 100% 105% debt then obviously your your loan is larger your interest repayments are larger and then if you couple that with you know let's say three properties on principle and interest then all of a sudden you know people are like well I can't afford that right let alone one on principle and interest so I think these are all very valid points and people should think about them in the context of their own unique Financial uh situation because I know myself like if I um if I did principal and interest from the start I just wouldn't be where I am today because I wouldn't have been able to afford all those properties whereas I did IO the whole time and rolled them over and back when I started you know you could call Commonwealth bank and they would roll over the interest only period like with a phone call now you have to refinance it but I've refinanced it multiple times and that just preserved my household budget cash flow and then I you could use those Sur plus funds to fund like you said um subsequent deposits and like I think it's interest only as a strategy as a general generalization for those who are aggressively wanting to build their portfolio because they're bought in they're they're sort of you know doubling down on property as the vehicle for their wealth creation which is what what I did and everyone um should do what they're comfortable with but I think that's a really good point I know we're jumping around a bit here uh Venit but back to the first boring capacity topic we talked about which was trust yes um I just want to solidify this in in people's minds is there like a client example I mean you can rename them Joe blog um but could could you take us through like a real life example of of where uh a client um you know was maxed would have been maxed out if they had not bought under trust but they went on to buy I don't know four five six seven eight nine properties yep so I actually have a Cent and we have a few clients not one but I have a client from your community also and he came to me when they only had a PP and they wanted to start on the investment journey and he said how much can I borrow I said you can borrow 1.2 mil and he's like but I want 10 properties I come from PK I want 10 properties I said you can't M just divide 1.2 by 10 and it's 1.2 can you buy something in 1.2 he's like no I said what's your average purchase price he said somewhere between four to 5 I said let's start conservative you are able to buy something at 400k all that you can buy is 1.2 mil so three properties and you max out and this is some a family income of 250k kind of a number that we're talking about so I'm not talking about high income ear or a very low income earner mid segment 250k husband wife when and then we kind of negotiated and discussed how a structure could help you and we went through the whole education process the modeling we did the modeling for them and we actually help them set up the structure so at this point they have three properties plus a p and the three investment properties are bought in a structure and coming next financial year we can again buy three more so from maxing out to three for your life we are using the next financial year July onwards to buy three more so the the the I think the premise or the base assumption here is you're able to preserve your income generation ability so as long as you are on the same family income we will have this structure in place we have the ecosystem around you and we let you keep buying as long as the cash flow of the family is there so we're very conscious of responsible lending so we are not trying to maximize and throw people under the debt so we are very very conscious so hence the advice is has to be specific to every family situation but this is a classic example where we actually help a client not just max out at three but create the ability to continue to use the structures for your subsequent purchases right so they had their principal place before if they just bought under their own names they would have been able to buy up to 1.2 million so that's like three properties at 400k each they went off and got $1.2 Million worth of property under a trust three property at 400k but now because they bought it under trust that entire 1.2 is preserved still and so then next year they can buy another three let's say at 400 each um in a different trust and then I know there's responsible lending and all that but where's the cap to this like in the subsequent year could they go off and set up a third trust and buy another three another three like where does it end so as long as your your family income is supports the cash deficit like you said so we know in this High interest rate environment every property is negatively geared so as long as you are able to create enough savings to fund right your deficits you are able to use this process right so the cap is when your family income plus your rental income is not able to support you for subsequent funding of deficits right but that's a long way drawn in comparison to if you start buying everything under your name I understand I understand and so like what I'm seeing I with my clients and I'm sure lots of people who are buying well are seeing this where you know right now you buy a property um let's say two years ago 2022 end of 2022 let's say you bought in Perth somewhere you know interest rates had gone up however many times in in the year 2022 and that property was maybe like 2 to three to four to $5,000 negative the gear negative cash flow fast for two years now we're in 2024 the rents have gone up like 20 30% um and so even though interest rates have gone up rents have gone up so much as well let's say on 80% lvr 88% lvr that now those properties they're not so heavily negative the geared and then fast forward another 12 months even though right now they're neutral or just a bit Negative they become positive so once again I'm trying to because I think these are the questions that will be on in everyone's mind as they listen or watch this in two years time when all those properties become positive and you know like you said the real tangible material cash flows for the household in this client's example is now neutral or positive again from their portfolio does that mean they can now create a fourth trust and buy another three and a fifth trust and then another three so you got like five trust times three 15 property like do you know I'm trying to get it it seems like too good to be true and of course you have to be responsible and and everything like that but is there any cap to this or is there no cap there is no cap the cap is remember you have to play in The Lending ecosystem and what lenders see they cannot unsee so you have to be really protective about your structures so you cannot shop around with a structure to the lenders and that's where we come in we preserve the conversation we tell what they need to know you tell everything and that's it so like I said It's a combination of the right structure right lender and what you tell them right and that's where that's where it becomes a complex subject you can have n number of do documents called trust but if they're not the right structure you won't fly with the banks you may have the right structure but you go to a wrong lender you would still max out because they hit your borrowing or credit score so it has to be a combination of all the right lending polic has to support and like I said absolutely responsibly not every lender is pro trust and they have a they take a different view so you have to pick up and find the lender who is pro investment Pro lender at that point in time so lender a for example is aggressive today does not necessarily mean 12 months later he would have they would have the same aggression towards investment properties so what happens then in at 12 months time from now V if you've you know you've doubled down with lender a and then 12 months time their Bank policies change their net interest margins change and now they're not so favorable towards investors does that mean you need to refinance everything to a different lender actually not so because your current portfolio is stays neutral to positive like we've discussed so you find the new lender for the new structure that's how it is so you don't take the whole setup to the new lender you don't that's that's the biggest mistake you would do you need to preserve your conversation with the lenders they need to know and we are absolutely responsible in this conversation it's not required to tell them more than what they need to know as for their policies right right I think it's an important Point like this is nothing that you're saying is like dodgy stuff this is not sketchy business this is all straight and narrow down the line all very legit and legal but it's a case of understanding how you can play the game you know we're not we're not going around the Border or the perimeter of the game but we're just playing the game in the way that it's intended to be played and I don't know if it's a trade secret or whatever of any and you don't have to tell me but like what are the lenders right now that are quite favorable towards this approach you want me to name the lenders if you if you want yeah I I would not I would just because not because of the community but because of the lenders themselves you okay okay but these are like tier one lenders right you're talking about tier one tier two yep yep yep all right all right cool now this is this is very very interesting and I think um I think a lot of people would have will be listening right now or watching thinking I wish I knew this before I bought my first property before I bought my second property cuz now I'm already capped out for people like that what should they be doing right now I think what's what's missed is missed but you still have a lot that can be done around recalibrating and if you are able to open up something for you at least preserve that bit by getting into the right structures so it's never too late you might still have 600k or a million dollars left despite all your previous mistakes but you can actually preserve that bit and use that fast forward and as you kind of optimize your property portfolio some properties have come to F fion because they have done the Capital Growth and you have to drop them so as in when you drop your existing portfolio the new acquisitions then come in the right structures so you keep correcting over the years and then eventually you would have a very calibrated portfolio under the right structures right right and look I I'm the same as you I think the transaction costs of buying and selling property in Australia are very cost prohibitive in terms of you know just whimsically selling you know selling is something that should be thought about twice three times four times before you pull the trigger but maybe there are folks out there that truly do have quote unquote dud Properties or properties that have run run their Journey run their course and if they're in that situation and they're currently maxed out then perhaps with the right team around you with the right data with the right mentors you could consider selling and then embedding yourself in this what you know this is like a you trying to get out of the atmospheric pressure of Lending of the current lending environment try to escape that the atmos the Earth's atmosphere and then you can really build your portfolio um is a way that I think about it is there anything else that you want to say around like uh lending policies or different or best lending policies in in 2024 I think lending policy is a very very crucial subject like I said right from and we have been talking about lending policies in some shape and form for last 30 minutes if you realize like I said the structure could be right but if the lender is not right you are still stuck so lending policy would come into play at every bit right from who is happy to accept the structure that you are proposing that's where it is but then after that lending policies could be specific to your circumstances so you could be a professional and there could be a lender who is giving you a high lvr and waving of lmis or you could be an essential Services operator or a doctor or a nurse or some and there are lenders who are giving you 100% benefit of all your income including allowances and bonuses and whatnot so different lenders have different views but one thing that we find quite fascinating is even the negative gearing which is more of a tax subject different lenders could have a different outcome everything Remains the Same two different lenders could have absolutely different outcomes and we have a classic example we have been working this morning family of two trying to buy invest property lender a tier one major lender says you can only borrow up to 300K another lender says I'll give you about 580 same income same hem everything so lending policies how they do their calculations in the backdrop actually reflects the bank's appetite or aggression towards those kind of Acquisitions so you have to be really conscious of what lending policies and they start from specific to your profession specific to your family income how do they treat private tutions private Health etc etc and what do they need to see to assess your file and that data requirement also changes based on the lvr we are talking all lenders typically become absolutely conscious when the lending starts to go upwards or north of 90% they want to see everything however because we have the magical W of recalibrating the portfolio where possible you can actually bring the LV to a lower level which means I don't have to tell the lender but I don't want to mhm so I tell them what they need to know of course no doist of responsible lending but I don't need to tell them or I need to tell them what they should be asking me rather than giving them the whole transactions and leave them to scrutinize and Order every bit of coffee and breakfast and lunch and dinner that I have been having outside because that makes a mass difference to your outcomes right and this is this is all around hem which is household expenditure measures if I'm not um if I'm not mistaken and is is you know let let's say someone's about to get a pre-approval someone's about to get a loan they want to get their next loan are there any really big ticket items or big rocks in the jar that perhaps like expenses is what I'm talking about that they should perhaps just postpone a month or two or you know get a friend to buy for them or something like that just so they don't the banks don't see it I think we see a lot of customers who like to hold a lot of credit cards for example for this I think it's more the privilege that you have with your previous lenders you don't necessarily use them and often they don't realize how it consumes the borrowing second is discretionary versus essential spend a lot of us do a lot of discretionary spent for example buying a new car or anything of afterpays zip pays we happy to use flip those cards at Targets and whatnot everything like that goes against you similar to that though it's very important to maintain Private health and private tutions but you could do transactions differently like I said and as long as you are within the 80% lvr mostly banks are not interested to see your bank statements I think one of the key thing that we recommend keep your transactional Banks different to your lending Banks this is one of the most critical if anything could pick up because what like I said what they know they can't unsee right if you have your savings account or transaction account even if I do application for you and tell them we only spend $4,000 a month they have absolute privilege and access to your transactions makes sense it's always better to keep a whale between the lenders and your transactions and people might be thinking like hey this like a lot of hassle a lot there's really intricate a lot of technical things that I need to consider like is it even worth it but I really encourage people just to zoom out and take stock and see the forest from the trees you know you know if you can just even borrow one more property you know let's say 400 500k property fast forward I don't know whatever 7 10 years or whatever it is and that thing doubles then you know that's another half a million dollars that you've made just because of yes understanding some technicalities you know maybe going through the hassle of having a separate transaction Bank to your lending Bank all the things that you're talking about Venit but you know education is power there's no nothing that can replace this knowledge and then the long term you know it's like why wouldn't you do that so I think it's well worth the the time effort and sacrifice to set all this up properly and uh we alluded to at the start around the structure in which people should buy their principal place of residence normally you just think oh yeah it's in my own home just buy it under my wife's name or my name or joint or whatever the case may be what's the case for buying it under a trust uh when you say what's the case what do you mean sorry what's the like why should people consider buying a principal place of residence under a trust that's that's one of the very counterintuitive conversation that I start with my clients and that's all about preserving your borrowing so imagine a family that comes to me we have we are currently renting we are confused whether we buy a PP or an investment do we buy under my name or under a structure all of that I think the underlying theme is everything that you buy in your name consumed so depending on your end goal if you happy to have only one PP and property is not for you uh more than happy for you to go ahead and buy in your name because it has its own tax implications but if you are someone who is again in that mid-income family group you have limited borrowing and you are in a way trying to build an Investment Portfolio that kind of serves you well for your retirement then sacrificing a bit of capital gain to open up your borrowing in the right structure is kind of a no-brainer if you do the maths yeah and to most of my clients I say just think about you are talking about PP which you are never going to sell in your life because that's your dream home you're going to stay in your family all you are either downsized when you retire or you are dead and it becomes a for your inheritors to execute the will so it's kind of a notional gain that you're talking about or you're worrying about and consuming your borrowing so it's about it's a very strategic call that you have to take but if you are in that somewhere in that mid- income group and you have limited borrowing ability and you're starting your journey this could be a food for thought it's not for everyone P yeah and I think you get the if I'm not mistaken I mean you're the ched accountant here not me but I think you get the capital gains tax the 50% discount in AUST tax you still get 50 so all you lose is just about 50 yeah exactly um so yeah you you do have to pay capital gains tax then if you buy it under a trust so that might that's important for people to know but you do get that 50% discount on the capital gains tax and of course none of anything we're talking about today is really um Financial advice because we don't know people's individual circumstances and then I I suppose LX is also something that would be a consideration then to buy in a trust structure because now you have your principal Place residence it's exempt from land tax especially in a place like Victoria you know it could add up quite a lot with the recent changes but once again you know there's pros and cons of any decision you make and if like you're saying if you're buying a principal Place residence of I don't know1 two3 million and you know you're buying it under your personal name versus a trust well you're giving up1 two3 million of borrowing capacity whereas if you bought in a trust then you could buy that many more properties and then if they go up double or whatever the case is then what's the cost benefit versus the land tax versus the capital gains tax so these are all the things that people like no one you can't you can't trust these types of decisions to anyone else you need to take control and it's fantastic people like Venit who can provide you the right information at the right steps but I think people need to educate themselves to to manage their team and make their own decisions at the end of the day um it's a it's a like just hearing this from you Venita it's a it's a lot of work I think that mortgage brokers do I always say that brokers work the hardest out of any um property related professional including me you guys are you know very hardworking very diligent how many hours like for someone who wants to set up this trust structure they go on to buy 2 3 4 5 6 seven eight properties like you're probably spending like days worth of your time on their account right yes so I think we are as invested in a client's success as the client themselves and like I always tell to my clients it's not the application writing process which is critical it's this thinking and knowledge which is super powerful and that's where we spend lots and lots of time with banks and bdms and whatnot to get to the right outcome for the client so yes it's a lot of effort but I think the fruit is in the success of the clients and we take we try and do things very responsibly for every client so yes it's an effort but effort wealth put in kind of thing got it got it and I think I just want to say as well you know there's this um it's really easy to to go broker shopping like like window shopping you talk to One broker and you you take 2 hours of their time and then you talk to another broker and you do that five times and from a consumer perspective I understand why you do that cuz you know like when you go to buy a car or whatever you want to test drive it you want to shop around but at the same time I just want to make the point that we should as investors we should be very respectful of mortgage brokers especially like very strategic mortgage brokers this not loans.com right this not you know Aussie or whatever these are like genuine experts in the E ecosystem of lending like venitas and so I think we need to be very respectful of their time um knowing how much they give back and knowing that they only really get paid you know as and when you purchase property so I think um there's something to be said about the ethical side of things um Venita I really appreciate your time and and perhaps we should you know do another session um but you know any any last advice or any pointers from your breadth and depth of experience working with so many investors including my clients any advice that you want to give lastly I think the advice is specific to everyone but if you can definitely think through the structures and don't make that critical mistake that we have been making in the past because we have not been knowing what right structures is that's that's absolutely powerful to make it a big success of more like the data is very clear P you know you are the data people and all your students are are data driven like 90% of the Aussie families do not own more than two properties or three properties and you can't go beyond that number if you are not in the structure so if you really are clear on your goals and you really want property investing to work for you you have to give a serious thought to this structure because that is super powerful in my view right brilliant well thank you so much for your time and I have to confess like I I've got a very messy structure myself I wasn't strategic when I started off I didn't have someone like ven in my corner um so like I haven't actually done this strategy myself so I just want to say that because I don't want to be a hypocrite but I I got to 12 properties um through other means and you know through doing developments and other things like that so there's Different Strokes for different folks consider everyone what's right for you and understand the risks because everything comes with risks and it's all about managing those where the upside risk is lower than the downside risk that's generally where you should take action but everything comes with the risks and um guys as well anyone who's watching or listening if you want me to invite more mortgage brokers on this platform so that we can go into other dimensions of lending borrowing how to improve that because property is just as much a lending or Finance game as suburb selection um then leave a yes below you a Les a yes in the comments if you want me to invite more and more brokers um onto the channel to discuss these topics where you can lend more make more money uh leave a yes below but I just want to say thank you so much Venit I'm glad that I selected you from the Facebook group and uh it's a real pleasure to meet you here in in well not in person but but over video thank you thank you and likewise I reciprocate the feelings p and would love to serve your community as it when possible thank you thanks fita and thanks everyone hit the Subscribe button give it a like and and leave a yes like I said if you want more of these conversations my name is PK and thank you so much for being part of this community