Case Studies

Effective tax structure
 
The tax implications of any property investment need to be carefully managed to ensure tax liabilities are not excessive and consequently do not unnecessarily erode the returns from the venture.
 
Greg Biggin & Associates was involved in a consortium that bought an industrial property in a Melbourne bayside suburb. The group drew up plans for redevelopment of the site, which was expected to take a couple of years.
 
Given that the project was expected to straddle two or three financial years, it became evident during the feasibility study that development costs would create significant tax losses during the early phase of the project. There was clearly a financial benefit to be derived if those early losses became available to the consortium members rather than being accumulated in a development vehicle.
 
Greg Biggin & Associates recommended that the best way to access the losses might be establishment of a unit partnership. Legal advice indicated that the structure was perfectly legitimate and would result in the losses becoming immediately and progressively available to consortium members during the construction phase.
 
A unit partnership was established and duly delivered significant cash flow benefits to consortium members.
 

 
Good commercial tenants pay off
 
Three years ago, Greg Biggin & Associates bought for a client a two-storey commercial property in Mackay, Queensland. The intention was to hold the property as a long-term investment.
 
Greg Biggin & Associates was involved in a consortium that bought an industrial property in a Melbourne bayside suburb. The group drew up plans for redevelopment of the site, which was expected to take a couple of years.
 
At the time of purchase, the property had a small business as a tenant on the top floor and a building company on the ground floor.
 
The tenant on the top floor quickly ran into financial difficulties and quit the building. Greg Biggin & Associates was able to attract another company as a replacement tenant in the top floor and this has proved to be a most successful tenancy.
 
The building was bought for $670,000. This has now climbed to $1.8 million.
 
Meanwhile, the building company continues to occupy the ground floor and is very happy with the location.
 
Because of the steady increases in rent, the underlying capital value of the building has escalated sharply.
 

 
Building a property portfolio takes time
 
Building a portfolio of investment properties should be seen as a long-term project. Patience brings rewards.
 
Greg Biggin & Associates was advising a young couple a few years ago. Both were working and therefore had some disposable income to invest.
 
The first investment was a small flat in Elsternwick. Over a period of several years, the couple added to the portfolio and ended up with no fewer than five residential investment properties.
 
There came a day when the couple needed capital for another project. Greg Biggin & Associates evaluated the portfolio and advised the couple to sell their first purchase, the flat in Elsternwick. By this time, the flat had almost trebled in value to more that $400,000.
 
Meanwhile, the couple have retained the other four properties, some of which have already become cash-positive.