Case Study 3 - Mark and Mary

They love the extra profit of JV and view past club JV developments.  Read the true testimonials.

They look at what the club is intending to use the JV club for.  The opportunity sounds exciting.  They decide to apply to join the JV club.  Submit a JV EOI (*) they get this from reading the JV prospectus on the website.

The JV EOI is accepted and they are given the address to send their cheque to be deposited into a trust account approved by ASIC.

A JV opportunity is presented to M & M. They approve and send in a JV right (*) on the opportunity.

M & M will receive 1st of each month an update of this development – and all others that come to light.

M & M property is finished, titled issued and their $400K buys 1/3 (in property equity) more - $533K – at original off-plan disclosure prices.

They establish they can write a cheque for $400K via Club Loans Line of Credit (LOC).

Next, Mark & Mary view the prospectus on the TIC website and like the idea of taking the developers profit.  It is good logic to combine with fellow members to gain big rewards.

1. Buying big mortgagees in possession opportunities
2. Buying development sites and building
3. Buying office blocks and subdividing into a title I can own – with greater returns, depreciation and growth.

Mark & Mary then successfully submit and JV EOI and view the club’s past JV developments.  On receipt of their cheque they receive all past JC investors contact details for confirmation of the JV success.  Once funds are received and ‘pooled’ in trust, the JV Club can then begin researching an appropriate development.  M & M confirm they want to invest in this development by sending in a JV right.

Now Mark & Mary become a “developer” – without the work.  This is done by TIC.  We have the track record of success over 10 years.  You take all the developers profit on your property.  The proceeds on the remaining go to the club to pay for the developers work and running the JV club.  A win-win JV money maker!  At developers and ‘big end of town’ costs!!

Mark & Mary choose a unit with 180 degree views of water – never to be built out.  Their $400K rises by 1/3 equity (JV profit) to buy $533K of off-plan development.  M & M know property values will probably also rise during construction past the $533K.

But let’s say a shopping centre becomes a great buy at $100M forced sale and TIC can buy and subdivide off individual sites and offices.  Does this appeal more to M & M?  If it does, no problem! – They move their JV right from the sea unit to a shop – no penalty, no extra fees.

Now let’s say Mark & Mary decide to pack up and move to Hong Kong and want their cheque back.  No problem.  90 days later they get their money back – (no fees, no penalties, no management costs – this to be confirmed)

 Q.   Mark & Mary put $400K in JV.  Do they get interest paid on this? Do they have to pay interest on the $400K?

A.      No.  Interest is not paid on the $400K this saves them paying say 30% of interest     received in tax.  Having to borrow more with the interest paid is naturally increasing the cost of their property. The non-payment of interest contributes to        reducing building costs.

Q.      The interest they pay on borrowing this $400K – is this a tax deduction?

A.      Yes.                                                                    

Q.        What amount can be invested?

A.       Any amount over $50K.  Your return is tied to this amount.  You receive 1/3 of      your original investment (personally guaranteed by Kevin Young) as a reduction     in price of the finished property (Market value).

Q.      Say I invest $100K but want an off-plan unit that has an ‘early-bird’ off-plan priced of $500K.  What is the maths?

A.      At completion, the value may be (say) $550K with capital growth.  You borrow $100K and receive a 1/3 credit ($33K).  Take the combined amount ($100K $33K) of $133K away from the purchase price of $500K leaves you to borrow the remaining about of $397K ($367K plus stamp duty of $30K). That is if you decided to sell. The property immediately upon completion at $550K, after you pay out both loans ($100K $397) this leaves you with an immediate profit of $53K.

Q.     So every $100K I invest receives a credit (or reduction in price) of $33K?

A.      Yes.