[Case Study] Restructure to Maximise Equity On First Property & Purchase Next IP | Property Twins™
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In: Property Investors0

Our clients, Sam & James are a hardworking couple. They rent. They had done well with their first investment property however were not sure how to get started on the next purchase.

They just wanted to maximise their equity and not erode their savings. And whilst they couldn’t see how they will build a portfolio of multiple properties, they wanted to take the next step to build their property base.

About Sam & James: Couple in their late 40’s with two children. Sam runs a business and James works for the government. Their combined family income is approx. $260,000.

Where they were and what they wanted to achieve:

Sam & James wanted to take charge of their financial future. They want to build a passive income for their retirement. As they don’t have an owner-occupied property, they want to build an asset base and pay off their investment properties. They wanted assets working for them in parallel as they will transition to retirement within the next 15 to 20 years.

They wanted someone to show them how they could maximise the equity they can access and be able to buy that first property with tax effective set up and minimised risk. When they last did the purchase, they felt they didn’t have the guidance they needed to move forward and had no clarity on how they can expand the portfolio.

Proposed Solution with a Tailored Plan:

1. Maximise the equity they can extract from their first investment property which can be put towards the next property – $100,000 equity accessed (Property was bought for $500,000 and valued at $690,000, 12 months from purchase!)
2. Ensuring they get a better interest rate so the reverse compounding effect of paying off their investments is expedited.
3. Analysis of various repayment types that will help Sam & James so they prioritise paying off their investment properties as they transition to retirement
4. Strategise and mapping out the purchase of the 2nd investment property

Results: Sam & James are set to purchase their first investment property

Home Equity Release approx.: $100,000

Investment Property 2 Purchase Price: $380,000 at 80%, renting for $380 per week

Total Property Ownership including Home: $1.07 million approx.

Growth Projection: If the properties owned grow by a conservative 5% per annum, Sam & James will be adding on average $67k to their wealth per year, compounding year on year. In 10 years, this will be more than $670k in net assets due to the compounding affect.
Property doesn’t grow in a straight-line basis. Sam & James’s portfolio may grow more in one year and less in another.

What’s Next for Sam & James?

Property Twins team will continue monitoring the value of Sam & James’s portfolio to see opportunities around equity release and further investment properties which are possible for them, given the planned set up of their existing properties.

Sam & James already have a plan to purchase their 3rd investment property as well, as they save more and build equity in their home.

Sam & James’s current investment loan structure is strategically set up to allow them to pay off their investment loan fast.

As you work through your own goals, dreams and aspirations, you can see that acquiring one and more investment properties is about having a ‘step by step’ strategy laid out to enable you to keep moving forward.

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.


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