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Case Study: Rob

Rob is a fun but responsible single in his mid 20’s. He has a full time job and has already
purchased a Balanced Return type property as his primary residence. His goal is flexibility of
life choices while ensuring financial security.

His plan was simple; use the mortgage qualifying power of his current job to secure his first
cash flow property to free him financially to travel or change careers as opportunities present
themselves. The profits of this new Cash Flow property can be put towards paying down his
new cash flow property, his residence or saving for his next investment.

Rob has a 30 year, fixed rate mortgage @ 5.5% with a monthly PITI of $393.78 with
no prepayment penalties.
A rental CMA of similar properties in the area puts monthly rent at $950.
His profit is $556.22 per month or $6,600 per year!

The ‘For Rent’ sign went up outside the house two days after he closed, he had two
genuine enquirers from teachers in the local area the same day and completed a lease
agreement with one of them for $950 a month. Because he is saving time and money
on repairs he is offering a rental discount of $50 a month if the rent is paid on the first.

Rob’s PITI on his primary residence is $1,345 per month. A rental CMA puts rent on his home
at $1750 per month, a $400 surplus.

The investment of $12,000 into a Cash Flow property at this stage of his life generates
additional income of $550 per month or $6,600 per year. This represents almost a 50% Cash
on Cash return even after factoring in all costs.

Should Rob rent his own residence, he will have an additional $950 per month. This will
assist to free himself financially for whatever opportunities come his way. A second cash flow
property can only further expand his horizons!

(For privacy purposes, client’s names have been changed, but all case study
examples are real people with real property plans referencing real transactions.)

Case Study: Alan & Amy
Alan & Amy are a youngish couple in their late twenties and early thirties.  They both have good jobs and saved well for the home of their dreams for a number of years. They decided to accept a transfer to Las Vegas this year so as to start a family. They decided to look for their dream home in late 2011 and early 2012 in the middle of winter when home buying competition is typically at its least.
Plans were accelerated when Amy discovered she was pregnant in March and their dream home search began in earnest. They were looking for a home for the next twenty plus years with space to raise a large family in.
While this property may drop a further 5% – 10% in value over the next year or two their long term outlook made this more than acceptable to them.
Financially, their monthly situation looks something like this:
Purchase Price $249,100
20% down $  48,820
Loan $200,280
They have a 30 year fixed rate mortgage @ 5% with a monthly PITI of $1,349.06. After closing costs of $6,695 their adjusted purchase price was $255,795.
A rental CMA of similar properties in the area puts monthly rent at $2120.
So if they are ever transferred or end up with an even larger family they will have a Capital Gain focused investment property with a positive income of $770 per month!  Not bad for their first home!
(For privacy purposes, client’s names have been changed, but all case study examples are real people with real property plans and reference real transactions.)

Case Study: Anne
Anne is a single mum with two kids, in her early 50’s, working a full time managerial job. She has limited time but a keen interest in property and stocks. She has a lovely home in Brisbane with a small mortgage, another Australian investment property with a larger mortgage, a substantial superannuation account and decent stock portfolio. In short she has done well for herself despite some financial set-backs from life circumstances.
Her plan was to invest a fixed amount of money, AUS $36,000, towards a 25% deposit, on a cash flow neutral property that would realize a capital gain upon sale, roughly fifteen years later, when she would be approaching retirement.
Safety of investment and ‘guaranteed’ monthly rental income to offset mortgage costs were essential in this situation. Anne was committed to paying many high expenses for a few years such as school fees, extra curricula activities, school trips plus the cost of feeding two teenage boys on top of her mortgage!
San Antonio represented the perfect opportunity. It is an extremely safe property market within Texas, in the expanding south of the US and is expected to have superior economic growth in the coming years.  Anne’s desire for good capital growth without risk of monthly expenditure led to a Move-Up type Balanced Return property investment in a prime area of the city at Stone Oaks. For five years, her vacancy rate has been nil and she has enjoyed a $200 monthly rental increase on this property.
San Antonio is a center for three major industries. It is home to a thriving specialist medical community, two military bases and domestic tourism focused on the Alamo.  San Antonio enjoys the largest conglomeration of specialist medical facilities in the United States. The US has an aging population (most noticeably in the north)...this is not rocket science! What you may not know is that doctors and nurses from all over the states come to San Antonio to complete a three year internship and gain their specialist certifications.  They then leave to start their new careers in other cities across the US. These are my perfect tenants.
Two newer military bases in the east and west of the city may be set to further expand if older US installations are closed because of US budget cuts.  It’s happened before.  Federal spending cuts do not mean universal cuts.  Indeed, cuts or closures to older facilities may result in increased spending at newer facilities especially those focused on health and modern technologies.
Lastly, San Antonio is a thriving center of domestic tourism and convention trade.
Before selecting the right property in San Antonio, Anne being a financially cautious type, spent a lot of time researching San Antonio districts and Texas and US property in general from her lounge room in Brisbane using the many tools that are now available. Google Earth provided a great view of her selected property and the surrounding facilities, while sites such as provide historical and current information on house sales and rental values.
Anne has adapted her plan and has listed her Brisbane investment property for sale. She wants to focus on Las Vegas Cash Flow properties in the $50,000 range to accelerate the pay off of her San Antonio property and thereafter provide regular retirement income. Removing the heavy monthly debt associated with the Brisbane capital gain focused property will allow her to take a number of smaller ‘risks’ on cash flow properties in the US with a greatly increased surety of outcome.
(For privacy purposes, client’s names have been changed, but all case study examples are real people with real property plans and reference real transactions.)

Case Study: Mat & Dianne
Mat and Dianne are a married couple, early 40’s with two young children. They are both professionals on good fixed incomes who love to travel. They have had a number of trips to the states over the years and bought their first US investment property six years ago in San Antonio securing a great Balanced Return type property with a foreign national loan that is cash flow neutral.
They have had their US system in place a number of years, like it and had a scouting trip late last year to Vegas, Florida and Texas and decided to purchase additional properties in Vegas.
They live in Sydney, Australia and their home there has increased substantially in value. Their plan is to use some of the equity in their own home to buy two additional properties in Vegas, one a Move Up Balanced Return property and the other a Cash Flow property. Total investment for the two new purchases is not to exceed AUS$235,000.
Because they had their Ozforex foreign exchange account established in advance, they immediately made a large transfer when the Aus dollar hit parody.  They made an additional transfer when the dollar went above 1.05.
They plan to keep their monthly profit in the states and use it to pay off the existing San Antonio mortgage. Their regular Aus savings plan will focus on paying off their Australian home. Ten years from now or less, the positive cash flow from their US properties will result in their owning three USA properties free and clear as well as having their Australian home mortgage largely paid off.
Their Australian borrowings for the US purchases are tax deductible in Australia. Their US income will be quarantined when their Australian accountant says the time is right. This is achieved literally within days by establishing a Nevada Series LLC and Trust that the US properties will be individually transferred into. This saves money, minimizes taxes, separates and minimizes liability, increases privacy and is quite simply, fantastic! Cost to establish these entities and complete all property transfers is under US$2,000. This includes set up costs, state filings, all taxes and fees! That’s right; welcome to the USA?  There are no tens of thousands of dollars in Stamp Duty or Land Tax bills to be paid! Have a read at:
The great thing about this plan is that they are invested on two different continents, in two different national economies, and in three different local economies and property markets.  They will be able to take advantage of fluctuating currency exchange rates. They will be able to transfer money one way or the other from monthly profits or savings while still retaining the option to sell one or more of their US properties when the market rebounds and/or when the exchange rate with Australia drops!
The point here is that they have LOTS OF OPTIONS. Many more than if they were invested in just one country. Because they do not HAVE to send money back to Australia to cover their borrowing costs they do not expose themselves to the risk of fluctuating property markets or exchange rates but instead can take advantage of them.
(For privacy purposes, client’s names have been changed, but all case study examples are real people with real property plans and reference real transactions.)

Case Study: James & Sarah
James & Sarah are a successful Australian couple approaching retirement. They have a substantial stock portfolio and have completed a number of investment property transactions during their time together. They became interested in the US property market due to the increased media spot light of the past few years.
Their stock investments have done well for them but they have concerns about relying on inconsistent dividend returns in retirement.  Their plan is to sell a vacant block of land (a non-income producing asset with heavy annual Land Taxes), which has provided a very significant capital gain, take the after tax profit from this and purchase a number of USA Balanced Return properties in Las Vegas and San Antonio. Because they have traveled to Europe frequently, they are also investigating a rural purchase in the south of France.
Their financial goal is to have secure regular income now, solid capital growth in the medium to long term, and to leave an inheritance to their family.  A Nevada Series LLC and Trust structure will separate liability, decrease taxation, increase allowable expenses, and accomplish their estate planning wishes. There are many ways in which to organize this sort of situation. There are no right or wrong answers, just different opinions so please consult specialists in both taxation and structure planning early on.
James and Sarah will easily manage a secure 12% + gross return on four $150,000 Balanced Return move up type properties, three in Las Vegas and one in San Antonio. That’s gross income of over $6,500 per month or $78,000 per annum! All from one block of land that can now be turned into secure annual income. Plus, they still have their superannuation, stock investments and the future capital gain potential of these properties for them and their family.
Check back every so often to see their purchases?
(For privacy purposes, client’s names have been changed, but all case study examples are real people with real property plans and reference real transactions.)

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