[Case Study] Maximise Equity from Home to Purchase 1st Investment Property | Property Twins™
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In: Property Investors0

Our clients, Caroline & Taylor are a hardworking couple. They had a paid off home in Melbourne. They knew they had plenty of equity to get started with investing, however they weren’t sure how much and what it could do.

They had been considering property investment for some time, and they saw it as one of the ways to secure their financial future. Their goal ideally would be to be able to retire in 15 years’ time with assets that would allow them to be financially independent.

If they were going to take this journey, then it made sense to seek guidance and advice from those who have done it before and can show them the path.

About Caroline & Taylor: Couple in their 40’s with one child. Caroline works in people management and accounts and Taylor is a corporate manager. Their combined family income is approx. $175,000.

Where they were and what they wanted to achieve:

Caroline & Taylor wanted to take charge of their financial future.

Analysis Paralysis & inaction had stopped them in the past. They had been speaking about how they should secure our financial future for some time, but typically they got wrapped up in the day to day working, looking after their family, and not dealing with the important financial planning issues they knew they should.

Having already paid off their home already, they were in a good place to get started with property investing. It gave them access to ample equity.

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.

Proposed Solution with a Tailored Plan:

  1. Tap into sufficient equity for at least 2 to 3 investment properties
  2. Strategise and mapping out the purchase of the 1st, 2nd and 3rd investment properties
  3. Ensuring they are able to maximise the borrowing and tax effectiveness of their loans

Results: Caroline & Taylor purchased their first investment property

Home Equity Release approx.: $500,000

Investment Property 1 Purchase Price: $670,000 at 80% Loan to Value Ratio (LVR) plus Lenders Mortgage Insurance, renting for at least $400 per week

Total Property Ownership EXCLUDING Home: $670,000 approx. (with them due to purchase an additional property)

Growth Projection: If the properties owned grow by a conservative 5% per annum, Caroline & Taylor will be adding on average $42k to their wealth per year, compounding year on year. In 9 years, this will be more than $400k in net assets due to the compounding affect. Note that much of it is about buying a few solid properties and letting the markets do their thing.

Property doesn’t grow in a straight-line basis. Caroline & Taylor’s portfolio may grow more in one year and less in another.

What’s Next for Caroline & Taylor?

Property Twins team will continue monitoring the value of Caroline & Taylor’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.

Caroline & Taylor’s current home loan structure is strategically set up to allow them to purchase their 2nd and 3rd investment properties, whilst maintaining tax effectiveness of their investment loans and minimising risk.

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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