We’ve just been finalising a step by step road map for a client of ours! Wanted to give you a sneak peak into what Daniel’s set to achieve.
Daniel is in his early 40’s and when he reached out to us, he mentioned that he loves travelling! He works as a professional earning a decent wage for a single income earner without dependents, around $120,000 per annum.
Daniel told us he had purchased an investment property in 2010 and since life got in the way and he hasn’t done anything about it.
Where Daniel was and what he wanted to achieve:
His biggest pain point has been watching his elderly parents point out houses on their street and surrounds and say, “we could have bought that particular house for X dollars and now the house is worth X times by many fold.”
Worse he thinks if he took no action, Daniel will be like his parents. Looking at their bank account whenever it came to going for a holiday. They don’t have the security or the control. And they certainly are unable to maintain that life style in retirement that they were enjoying while working.
Daniel has been looking for someone to handhold him and give him a strategy to:
1. Restructure so he can save on the existing property (and in fact have the right structures which help him pay off his existing asset faster)
2. Maximise the borrowing so he can add another couple of properties which can allow him to see another TWO property cycles
3. Maintain correct loan splits and structures
4. Mapping out a road map to his next purchase and the one after
He also wanted help with implementing the step by step plan to not only maintain current finance set up for his existing property and accumulate the next investment property with the right structures.
Sneak peak into Daniel’s PAF Plan:
1. Restructure of finance for the existing investment property loan
2. Minimise cost by applying cash flow reduction strategies (so he can pay off the existing asset at a faster pace) – Daniel will save up $7,392 in the first year alone due to the restructure
3. Tailored strategy to purchase of the next investment property and the one after that
4. Ensuring risk buffers are in place with the equity pull
5. Ensuring Daniel held on to his $60k cash savings in offset accounts for other investments & personal use
Daniel can purchase 2 properties with funds available.
Funds available: $204,000
Purchase Price IP3: $450,000 at 80% Loan to Value Ratio (LVR)
Funds Used Up: $107,500 approx. ($27,700 equity remaining, held for risk buffers or investment in other asset classes as Daniel builds up his savings further)
Growth Projection: If the properties owned grow by a conservative 5% per annum, Daniel will be adding $84k to his wealth every year, compounding year on year. In 10 years, this will be more than $1,000,000 in net worth. At the same time Daniel’s property rental income will increase overtime.
Property doesn’t grow in a straight-line basis. Daniel portfolio may grow more in one year and less in another.
Daniel can now save up further and using the outstanding equity, either plan for investment property #4 or choose another asset class to diversify.
We are excited for Daniel!
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