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 travelled 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 organise 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.)