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How PBS is Turning the Impossible Dream into Reality
he Holy Grail for experienced investors is finding ways to create
consistent capital growth on their portfolios of investments and
passive income within a tax efficient vehicle – all at the same
time.
Common sense and experience would tell us that ultimately this is an
impossible dream – but is it?
There has recently been a ground-breaking innovation in the field of
portfolio strategy and management.
Specifically, real estate consultants and managers, PBS – Portfolio
Building Services – have gone a long way towards turning this dream
into reality.
Investors can now own property-based assets without contributing
significant amounts of equity. At the same time there is the
potential for these assets to appreciate infinitely and produce
tax-free income.
How have they done this?
The mission of PBS is to acquire property portfolios on behalf of
clients without the investor having to contribute time, effort or
large amounts of capital to the process.
They have set up a scheme which allows the investor to obtain a
return directly linked to real estate. PBS facilitates all the hard
work on behalf of the investor, creating a truly ‘armchair’
experience.
In conjunction with PBS’s well developed ‘buying name’ in the market
with developers and other investors this means that PBS can add
considerable value to the portfolio building process.
There is also a consensus view in the market that property prices
have typically appreciated in the long run (sourced from the
Investment Property Database).
In 1973 the average price for a new UK property was around £11,000.
As at the end of 2003 this had risen to around £140,000 (statistics
sourced from www.nationwide.co.uk).
This kind of capital growth can be highly desirable for investors
even if they envisage property as being illiquid and somewhat
pedestrian. Further, PBS has found a way to gear-up real estate
using financing strategies that can provide a dramatically increased
rate of return for investors.
This makes property a suitable vehicle for mid to long term
investment, especially if investors can control large amounts of
real estate without having to commit significant amounts of their
own financial resources.
By purchasing bulk property portfolios PBS is typically able to
achieve discounts of up to 25% against open market value. This can
create equity for their clients on Day 1.
Clients are then offered the opportunity of purchasing this property
using only a relatively small proportion of the total portfolio
value. At the same time, through careful financial structuring, the
clients can benefit from increases in the value of the property,
extract cash flow and enjoy exceptional tax advantages.
PBS focuses on property strategies that enable its clients to
receive tax-free payments from real-estate portfolios on an ongoing
basis and for the duration of the portfolio ownership. In a scenario
where a client owns a £5m portfolio it can be possible for a
portfolio to produce a 100% plus return in 5-7 years on a tax-free
basis, under the right market conditions.
Typically the properties are occupied by tenants and this is used to
create positive inward cash flow to service any financing that is
secured on the portfolio. PBS provides this service by working with
property management companies on a nationwide basis. Clients do not
have to manage property portfolios once they are established.
Another major benefit to the client is that the portfolios that PBS
acquires are structured and held through limited liability
partnerships (LLPs). Simultaneously, the client is the beneficiary
of the LLP and enjoys limited liability. This can protect the client
from adverse market conditions.
This is one of the defining characteristics of the service that PBS
delivers. They are proud to be able to facilitate limited liability
for clients in this way.
In this way it is possible to establish substantial property
portfolios – potentially running into the MILLIONS – even for
clients with no previous property experience. PBS shows clients how
they can build passive income even without the usual high
entry-level barriers of time, effort and cash requirements. In
effect PBS has “lowered the bar”.
It is also important to note that PBS is building portfolios for
off-shore clients including companies, trusts and private investors.
In return for a procurement fee, PBS will take on the specialist
executive and management tasks of sourcing property, negotiating
deals and arranging finance. They also have access to specialised
legal and accounting teams and approved asset managers. Every
requirement of the client is dealt with as part of the property
service, relieving the client of the potentially onerous task of
managing these issues himself.
In this context PBS acts as a “one-stop shop” for property investors
looking to acquire UK real estate from anywhere in the world.
These same techniques and methods can also be offered to clients who
already own property. Experienced property investors have also been
pleasantly surprised by the innovative approaches used by PBS,
showing that you can, in fact, “teach an old dog new tricks”.
In terms of figures, a procurement fee of 4% of the total cost of
the portfolio is required. PBS manages the portfolio acquisition
process over a two year period to ensure that the client acquires
the full amount of real estate they require.
Portfolio Building Services can be contacted at:
Tel: 020 8 208 822 6668 – UK callers
00 44 208 822 6668 – if calling from outside the UK
E-mail:
info@portfoliobuildingservices.com
Website:
www.portfoliobuildingservices.com
Disclaimer
Please note that the information in this article is for illustrative
purposes only.
Prospective clients should acknowledge that PBS is not offering
financial advice nor acting in a fiduciary capacity in respect of
any proposed property portfolio acquisitions, including LLPs or
other obligations referred to herein, or any other transaction with
it unless otherwise expressly agreed by PBS in writing. Also no
representation is made concerning the tax implications in any
applicable transactions or acquisitions herein and PBS is not
advising clients in respect of any tax implications.
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