Portfolio accelerator program
Intelligent Property Investment
Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
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portfolio accelerator Using our Portfolio Accelerator Program, you can build a $6.3m positively geared investment portfolio over 10 years, all from an upfront investment of $125,000 and an annual contribution of $10,000 for 10 years. In this eBook we will show you how Future Estate’s exclusive Manufactured Equity Product (MEP) can assist you to “manufacture” equity upfront in your next investment and accelerate the growth of your investment portfolio.
MEP AT A GLANCE Key Term What is it?
Target Returns
Investment Term
Details Property managed fund (equity)
n
Private property ownership on building completion
n
Typically return circa 15% of the property aquired e.g. $75,000 on a $500,000 property
n
During development of the project
n
Generally around 2 years
n
Investment Amount
n
Property Price
n
Geographical Focus
Market Focus
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Typically $100,000 – $150,000 equity
Generally $400,000 – $600,000 Australian capital cities
n
Key infrastructure and employment hubs of mining regions
n
Affordable high quality investment property
n
High yields, low rental vacancy and broadly accessible price point
n
Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
ASSUMPTIONS Conservative Case Assumptions Terms Investor contribution
Details $125, 000
Investment term Property value
10 years $500, 000
Stamp duty MEP investment amount
4% $125 ,000
Comments Initial contribution. $10,000 p.a. thereafter Suitable for investors Generally $400,000 – $600,000, 4% capital growth Percentage of property value Returned to the investor at project completion
MEP investment term
2 years
Typical length of an MEP project
Tax rate on MEP return
16.5%
Based on SMSF tax rate
Rental income
$600
Ownership costs
$7,000
Depreciation tax shield Initial loan amount
$10, 000 $375, 000
Implied LVR
75%
Loan term
30 years
Loan interest rate
6.5%
Per week. Assumed to grow at 4% p.a. Including maintenance, body corporate and other costs. Assumed to increase at 5% p.a. Tax benefits of depreciation expense Property value minus MEP investment amount Loan amount divided by property value Principal and Interest repayments Annual rate based on current lending market condition
In this example, we illustrate how an investor can build a substantial positively geared portfolio over a 10-year period. The investor makes an initial contribution of $125,000 and a further annual contribution of $10,000 for 10 years. Under the MEP Portfolio Accelerator Program, it is assumed that any end-of-year cash surplus is reinvested into as many MEPs as permitted by the cash balance.
Variation Assumptions Low Case
Conservative Case
Target Case
MEP Return
5%
10%
15%
Capital Gain
2%
4%
6%
Rental Growth
2%
4%
6%
Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
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PORTFOLIO GROWTH MEP Portfolio Growth (Year 1-10)
MEP under construction Completed property
1
2
Source: Future Estate
3
4
5
6
7
8
9
10
Years
Property portfolio comprising 12 properties over a 10-year period.
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Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
PORTFOLIO VALUE Portfolio Value $7,000,000
$6,000,000
Portfolio Value
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
1
2
3
4
5
6
7
8
9
10
Years Conservative
Low
Source: Future Estate
Target
Assuming Target MEP returns are achieved and each MEP takes 2 years to complete, an investor can build a $6.3m portfolio over 10 years.
Portfolio Implied Equity $4,000,000 $3,500,000
Implied Equity
$3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000
$0
1
2
3
4
5
6
7
8
9
10
Years Source: Future Estate
Low
Conservative
Target
Our MEP Portfolio Accelerator Program can assist investors in building substantial equity within 10 years.
Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
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net CASH FLOW Portfolio Net Cash Flow $35,000
$30,000
Net Cash Flow
$25,000
$20,000
$15,000
$10,000
$5,000
$0
1
2
3
4
5
6
7
8
9
10
Years Source: Future Estate
Low
Conservative
Target
Our MEP Portfolio Accelerator Program can assist in generating positive cash flow for investors during the transition to retirement.
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Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM
If you would like more information about us and our advisory services, investment properties and products, simply call, email or visit.
(03) 9988 2900 info@futureestate.com.au www.futureestate.com.au @futureestate future.estate future estate
Copyright Š Future Estate Group Pty Ltd 2014
This document contains general information and does not contain personal advice or financial product advice. This information has been prepared without taking account of your objectives, financial situation or needs. Accordingly, before acting on this information and making financial decisions, you should consider whether this information is appropriate for you and are recommended to seek independent financial, investment, tax and/or legal advice having regard to your own objectives, financial situation and needs. This information may contain material provided to Future Estate Group Pty Ltd by third parties. While such material is published with necessary permission, Future Estate Group Pty Ltd and its related entities accept no responsibility for the accuracy or completeness of this information, nor endorses it. To the maximum extent permitted by law, Future Estate Group Pty and its related entities disclaim all liability for any loss, costs or damage which arises in connection with the use or reliance on the information and material contained in this document. Any forward looking statements and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Furthermore, past performance is not a true indicator of future performance. Any past performance information in this document has been given for illustrative purposes only and should not be relied upon as an indication of future performance.
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Future Estate eBooks Series: PORTFOLIO ACCELERATOR PROGRAM