Title pretty much says it all. I'm trying to wrap my head around the practical side of financing a unit trust. Still lots of things I don't quite understand.
My understanding is that a unit trust gets its initial funding to purchase property by selling units. So a person would get a loan for $100k and purchase units in the trust. The trust will use this as a deposit and get a loan for the balance remaining to purchase the property.
Is this how it works?
What then happens when the trust wants to purchase another property? Does it issue out more units? Or are the units fixed meaning the current unit holders will have to chip in more funds proportional to their percentage ownership of units.
My understanding is that a unit trust gets its initial funding to purchase property by selling units. So a person would get a loan for $100k and purchase units in the trust. The trust will use this as a deposit and get a loan for the balance remaining to purchase the property.
Is this how it works?
What then happens when the trust wants to purchase another property? Does it issue out more units? Or are the units fixed meaning the current unit holders will have to chip in more funds proportional to their percentage ownership of units.