Q1. Would you be able to comment on the question put forward by our Accountant please.

My only comment here is that it would appear there may be two lots of tax being paid on the same income, ie once by the investment company itself and then again by you (with no credit for tax paid by the investment company). You may wish to pose this question to them.

Regards, David & Cindy

A1. The money you have put into the prospectus receives no interest so therefore there is no tax to be paid.

You will have the ability to buy a property at a discount as a consequence of your investment. Usually, we suggest people buy a property in their own name and that a Trust generally is expensive to maintain and limits your ability to use the Kevin Young Retirement Plan. Is there any particular need for you to put your property into a Trust? I usually find this is just there to reward solicitors and accountants annually, with no benefit back to the investor.

I am happy to look at this one for you. You could check with your accountant as to whether buying at a discount causes you to be liable for tax. People often buy properties at discounts and don’t volunteer the discount as taxable income, you might point out to your accountant.

Our JV Club previously was a huge success and made a lot of people a lot of money. I think this will be the single biggest benefit we can ever possibly give our investors. This is the benefit to you but there is a huge benefit to the community in that you will be helping to locate great properties, in the right location, to alleviate the tenant stress from the shortage of supply.

Thanks for your enthusiasm and support. Please don’t hesitate to email me direct if you have any questions.

Regards, Kevin.

Q2. Say I have $100,000 available from a LOC on which I'm paying 9% p.a. interest.

I put this with CDFL and it gives me the option to purchase $170,000 worth of property off-the-plan at a fixed price. The property completes in say two years and at that time I get a 20% discount on the $170,000 purchase price ($34,000) so have to come up with the difference of $36,000 plus buying costs. In this example, the interest on my LOC has cost me $18,810 (assuming I compound it over the two years) but have received a $34,000 discount, so I am $15,190 ahead and have the benefit of a fixed price, which could save me say another 15% in escalated costs. I can also claim the $18,810 as a tax deduction of course which, at say a 30% tax rate, could save me $5,643 in tax.

Assuming the 20% discount is a fixed amount, if the property completes in a year I am even further ahead. However, if the property takes 5 years to complete (unlikely but possible), then it's not so attractive as the LOC interest would amount to $53,862, less say 30% tax saving = $16,158, net cost = $37,704 or $3,704 more than the discount. I appreciate there would be 5 years of escalated cost savings of maybe 40%, but there could have been other opportunities that I've had to let go, one of the problems with off-the-plan and H & L packages.

Look forward to your comments.

Regards, Barry

A2. Good question Barry. We will never take two years.

Each opportunity will have its own close estimate. Shore Street is about to start so 12mths should see completion. An added bonus is you get to take two properties at today's price. Club Development price applies to one purchase.

Regards, Kevin

Q3. Why does the prospectus pay no interest?

A3. The prospectus was set up to enable more developments to be done in a short time frame by the club.

It was decided to pay the member no interest on this money . When we were initially drafting the prospectus, we had a interest component involved. ASIC had issues with this, so we elected to pay no interest to minimise costs on projects, we would then be able to pass these savings on by way of a discounted product to the contributing member .