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, minimises taxes, separates and minimises 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: http://www.corp95.com/NEVADA%20SERIES%20LLC.htm
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.)