Hi Older Investor
Wow, that's a big ask!
I took a look at what sort of returns I give my investors currently (I do wraps) to see how it would look after 3 years, starting with $288,000.
For a straight 3 year investment of funds only, I would pay 15%.
So the figures year by year:
Start Year 1 $288,000 + 15% = $43,200
Start Year 2 $331,200 + 15% = $49,680
Start Year 3 $380,880 + 15% = $57,132
End year 3 - $438,012
Still at a return of 15%, this gives an income of $65,700 pa
However this doesn't allow for tax, so taking out 50% of the profit for tax, you end up with around $407k, and a potential income of $61k gross at 15%.
This is fun! I've never sat down and worked this stuff out before....
Anyway, I have other investors who become "money partners" (this is only my terminology) and in that scenario the return is around 20%pa and a share in the capital gain profit when the wrap buyer refinances. That's a bit tough to put a price on, because it depends on the number of deals done in the timeframe and the size of the backend, which varies. But let's be really conservative and say you can do 6 deals with backends of around $10,000 each (nice round numbers!).
Also, in this setup you are in for the life of the deal, which may be anything from 1-25 years, although will usually be 1-5 years. However, you may not be able to pull the lump sum at the end of 3 years. But I'll assume that all the deals are finished by then.
So the figures year by year:
Start Year 1 $288,000 + 20% = $57,600
Start Year 2 $345,600 + 20% = $69,120
Start Year 3 $414,720 + 20% = $82,944
End year 3 - $497,664 + 6 x $10k = $527,664
Invested at a return of 15%, this gives an annual income of $79,149.60
Again, this is without tax, so I'll take out 50% tax each year. This leaves a final total of $413,328 (includes $30k capital profit). At 15% this returns $62kpa income, at 20% it returns $82kpa income.
I only did this for a 3 year time frame, obviously you can extrapolate it out further to get exactly what you want from it. And naturally you can replace investing with a wrapper with other investments that return similar percentages.
Yes, it's broad, but hopefully it's given you some indication of what can be achieved fairly quickly.
Plus it's obvious that the less tax you pay, the quicker the results happen! This means it may be worth spending a couple of thousand dollars on a trust structure so that you can split the profits in a tax effective way.
Oops! Just realised - you will also need to deduct the cost of borrowing the money from your LOC, although this should then be claimed as a tax deduction, so will balance out... I think... it's early!!!