Understanding the Fundamentals of Investment Structures

Asset 3@4x

Understanding the Fundamentals of Investment Structures

You always want to do three basic things:

  • Make money
  • Preserve it
  • Protect your personal property

To achieve efficiency when growing a property portfolio, planning becomes necessary as does adopting a viable property investment strategy, or a combination of these. Examples of the primary strategies to consider include 'capital flipping', 'buy-to-ley', 'student accommodation', 'multi-let', and 'new developments', amongst others.

Depending on your needs, assets and investment objective, there are various considerations in and around investment structures.

Structure associated with individual - Combination of different vehicles making up a whole Investment Structure - goal of a structure is to find the perfect ongoing between asset protection, tax efficiency and financing efficiency.

Different vehicles may include trusts and companies, even individual capacity. Random combination of these vehicles doesn't make an investment structure - it's only when strategically integrated and aligned that this equilibrium will be reached.

Tax Planning

One of the primary foundations of wealth preservation is the efficient and strategic handling of tax affairs.

Short-term tax savings arising from efficient structuring can assist property investors with some much-needed cash flow.

Long-term tax planning is one of the primary elements of proper estate planning. The tax liability (estate duty, capital gains, etc.) and costs (executor's fees, transfer costs, etc.) associated with one's passing away can be substantial if not dealt with properly. To compound this, if there is no money in the estate to pay these liabilities the assets in your estate will be sold to cover theses, potentially in distressed circumstances.

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Asset Protection

Ensure that your property wealth is safeguarded and preserved for the generation to come. Manage your risk by isolating your business ventures from each other thereby limiting exposure to creditors.

Put your wealth to the use for which it was intended by planning for the well-being of your family not only after your passing but also during your lifetime. Prevent the family instability that comes with your passing by managing family relationships by way of a sound financial plan.

A legacy means different things for different people. What is yours and how are you taking care of it?

Protect your wealth from falling into the wrong hands by housing your investments in suitable investment vehicles and having a well-thought out Last Will and Testament.

Financing

Housing your investments in the appropriate vehicles can assist in leveraging your personal affordability. Although your personal affordability will be assessed when financing through a company or a trust, the debt lies in the name of the company or trust and will not adversely affect your affordability.

A consistent track record of investments in a company may lead to a company being assessed independently of its directors and shareholders, on some occasions, without the need for personal suretyship. Both trusts and companies, if structured correctly, can be excluded from the ambit of the National Credit Act thus making it easier to access financing.

Through our specialized consultants, strategic partners and other alliances and networks, we assist clients in financing investments in property across South Africa.