When Kylie and Tim reached out to us, they just owned their home in Newcastle. Like many others their values were similar to most people – – security, control, life, living life on their own terms
About Kylie & Tim: Couple in early 30’s with two children. Kylie is a bookkeeper and Tim is a builder with a building business. Their family income from the business was $144,000.
Where they were and what they wanted to achieve:
Kylie & Tim wanted to build an investment property portfolio to have more control, choice in life and to build an asset base, as being self-employed meant they did not put aside for superannuation over the years.
Whilst Kylie & Tim had been thinking about investing in property for a long time, the biggest challenge for them was being overwhelmed and having insufficient information to start building their property portfolio with confidence. This lack of information lead to uncertainty due to them not having someone to show them step by step what they wanted was achievable. They also wanted help with implementing this step by step plan to accumulate investment properties.
Proposed Solution with a Tailored Plan:
- Correct structuring of their existing home loan of approx. $255k
- Maximise equity release from their home to fund future investment property deposits and buffers
- Recommendations on repayment types suited to their properties – based on what will help Kylie & Tim pay off their home sooner
- Funding of renovation / adding value to their existing home, so they may be able to tap into the equity further
- Mapping out purchase of investment property 1
- Funding Granny Flat Build
- Maximise cash flow, tax benefits and flexibility to pay off the home quicker
- Mapping out their plan for them to acquire investment property beyond Investment Property 1
Results: In less than 6 months, Kylie & Tim went from just owning their home to purchasing their first investment property
Home Equity Release: $269,000
Investment Property 1: House in a Newcastle, with Granny Flat Potential
Purchase Price: $425,000 at 80% Loan to Value Ratio (LVR)
Funds Used Up: $104,000 approx.
Total Property Ownership including Home: $1.1 million approx.
Remaining Equity use: $90,000 will be used toward adding value to their home, which is expected to enable them to draw down another $76,000 of equity
$75,000 will be used toward putting a granny flat at the back of their investment property 1, which is expected to add value to their investment property, and enable equity cash out of $44k
Total equity accessible: $76,000 + $44,000 = 120,000
This $120,000 will go toward funding investment property 2 worth $450,000. This will bring Kylie and Tim’s portfolio of $1,550,000
Growth Projection: Based on the existing real estate holding of $1.1m, if the properties owned grow by a conservative 5% per annum, Kylie & Tim will be adding $55k to their wealth every year, compounding year on year. In 10 years, this will be more than $750,000 in net assets. At the same time Kylie & Tim’s property rental income will increase overtime.
Once the value is added to their house, granny flat built, and 2nd investment property purchase, their total property holding will be $1.7m (Home: $700,000 + IP1 $550,000 + IP2 $450,000). A $1.7m portfolio growing at 5% will be adding $85,000 to their wealth per year. In 10 years, this will be $1.7m in equity in 10 years.
Whilst Kylie and Tim do not yet have their 2nd Investment Property, the key has been setting up finance correctly right from the start with a step by step strategy, which will enable them to not only add value to their existing properties, but also add a 2nd investment property to their property portfolio.
Property doesn’t grow in a straight-line basis. Kylie & Tim’s portfolio may grow more in one year and less in another.
What’s Next for Kylie & Tim?
Property Twins team will continue monitoring the value of Kylie & Tim’s portfolio to see opportunities around equity release, savings and purchase of further investment properties.
As you work through your own goals, dreams and aspirations, you can see that starting with your first investment property is possible for you. At the same time, you can have the potential to go beyond the first property whenever you are ready.
This is possible by having a ‘step by step’ plan tailored to your circumstances, established upfront by the Property Twins to enable you to keep moving forward.
If you let us have a chat with you about your investment property portfolio, how to get it started or the steps to take to start building wealth, we’d love to provide you with some ideas you’re free to take on a Finance Kickstart Call or simply reply to this email and we will call you.If you are a first home buyer, upgrader, looking to refinance or to buy an investment property Book a Finance Kickstart Call with the Property Twins Team
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