Without wishing to actually advise you on whether a property trust is right for you, it is a fact that this form of investment appeals to some but not to others. Some investors are turned off by the fact that investment in a property trust does not result in ownership of an individual building which can be touched and felt. It results in shared ownership of a portfolio of properties together with other investors. But some people are equally turned on by the prospect of not having the responsibility of personally owning a property and the risks of bad tenants, rent droughts and management worries.
A property trust also allows the investor to buy into certain classes of property – such as prime commercial property. Property trust investors receive an income distribution from the rental flow generated by the properties. The property trust investor may participate in a capital gain if the properties in the portfolio lift in value.
Where the income from the trust is assessable income, the interest payments on your borrowings will be tax deductible in the same way as the interest paid on borrowings for the purchase of an individual investment property.
Borrowing for investment in a property trust may take place in a similar way as borrowing for an investment property. That is, a portion of the loan can be secured by a mortgage against your existing property and the lender takes security over your investment units in the trust.
Investors who may not wish to borrow the large amounts of money required to fund an investment property may find it appealing to borrow smaller amounts of money to invest in a property trust.
In other articles we have touched on the value Ryan Home Loans can bring to a long term financial relationship due to the fact that people’s borrowing needs are many and varied. Borrowing to invest in a property trust is certainly one of these many and varied options.
If you are one of those who has decided to invest in a property trust with geared borrowings, please discuss the funding options with us.