Our clients, Tanya & Chris are a hardworking couple. They were looking to buy their first home and had been speaking with several mortgage brokers in 2019.
And whilst they couldn’t see how they will build a portfolio of multiple properties, they wanted to take the first step to start their journey.
About Tanya & Chris: Couple in 30’s with no dependents. Tanya works as a teacher and Chris is a business analyst. Their combined family income is approx. $205,000.
Where they were and what they wanted to achieve:
Tanya & Chris wanted to take charge of their financial future. They had spoken to several mortgage brokers however they knew that they must set this up correctly so they can move on to the next property and the one after that.
They wanted someone to show them how they could maximise the equity in the mid to long term and be able to buy that first property with tax effective set up and minimised risk as well as have the door open for additional purchases.
Proposed Solution with a Tailored Plan:
- Set up the first home loan set up to maximise borrowing
- When there was equity increase determine lenders best suited for maximising the equity cash out for the first investment property. Tapped into approx. $120k in equity.
- Purchase the first investment property ~$480,000 (financed with a lower tier non-bank lender)
- Eight months later, re-visit the equity in the owner-occupied property to tap into another $130k in equity and refinance the first investment property to a more suitable bank lender for the longer term
- Be set up to purchase the second investment property with a bank lender where the borrowing can be maximised.
- Analysis of various repayment types that will help Tanya & Chris so they prioritise paying off their home before an investment property (which will have tax benefits subject to their tax accountant’s advice)
- Ensuring their existing home loan set up allows for future flexibility with debt recycling as they save up further
This process ensured they get a better interest rate so the reverse compounding effect of paying off their home loan is expedited.
Results: Tanya & Chris are set to purchase their second investment property
Home Equity Release approx.: $120,000 (in 2021) and $130k (in 2022)
Investment Property 1 Purchase Price: $480,000 at 80% Loan to Value Ratio (LVR), renting for at least $480 per week
Investment Property 2 Purchase Price (Proposed): $510,000 at 80% Loan to Value Ratio (LVR), renting for at least $450 per week
Total Property Ownership including Home: $2,190,000 million approx.
Growth Projection: If the properties owned grow by a conservative 5% per annum, Tanya & Chris will be adding on average $137k to their wealth per year, compounding year on year. In 10 years, this will be more than $1.3million in net assets due to the compounding affect.
Property doesn’t grow in a straight-line basis. Tanya & Chris’s portfolio may grow more in one year and less in another.
What’s Next for Tanya & Chris?
Property Twins team will continue monitoring the value of Tanya & Chris’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.
Tanya & Chris’s current home loan structure is strategically set up to allow them to pay off their home loan faster and maintaining tax effectiveness of their investment loans.
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.
If you are a first home buyer, upgrader, looking to refinance or to buy an investment property Book a Kickstart Call with the Property Twins Team
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