When it comes to investing in property everyone’s goals and drivers are different.
Some want control, others want security.
Many want to match their current quality of life in the old age. And yet others want to provide their children with all the opportunities available.
When Alan & Nikki reached out to us, they just owned their home in North West Sydney.
About Alan & Nikki: Couple in their late 30’s with four children. Alan is an Engineer and Nikki is an IT professional. Their family income was $294,000.
Where they were and what they wanted to achieve:
Alan & Nikki wanted to build an investment property portfolio to provide a better future to their children. They want their children to be well rounded individuals taking part in extracurricular activities and quality education rather than be constrained by having the resources.
The biggest challenge for Alan & Nikki was not knowing what was truly possible for them with property and how it all worked. They had no blueprint. They had a goal of buying $1 million of property assets. However, having no equity and sizable savings meant they needed to use the cash, their key strategy had to involve tax effectiveness (given their high incomes), maintaining saving buffers at the end of the acquisition.
They also wanted help with implementing the step by step plan to accumulate investment properties with the right structures.
Proposed Solution with a Tailored Plan:
1. Restructure finance for their existing home loan which will allow tax effective use of cash savings
2. Proposed debt recycle strategy to turn cash savings into tax effective funds
3. Maximise cash flow, tax benefits and flexibility to pay off the home quicker
4. Tailored strategy to purchase of 2 x investment properties with maximised tax deductibility
Results: Alan & Nikki are set to purchasing their two investment properties
Funds Available: $250,000
Investment Property (IP) 1 and 2:
Purchase Price IP1: $600,000 at 90% Loan to Value Ratio (LVR) including Lenders Mortgage Insurance (LMI)
Purchase Price IP2: $600,000 at 90% Loan to Value Ratio (LVR) including Lenders Mortgage Insurance (LMI)
Funds Used Up: $200,000 approx. ($50,000 savings remaining, held as buffers for emergencies and personal spend)
Total Property Ownership including Home: $1.875 million approx.
Growth Projection: If the properties owned grow by a conservative 5% per annum, Alan & Nikki will be adding $93k to their wealth every year, compounding year on year. In 9 years, this will be more than $1,000,000 in net worth. At the same time Alan & Nikki’s property rental income will increase overtime.
Property doesn’t grow in a straight-line basis. Alan & Nikki’s portfolio may grow more in one year and less in another.
Whilst the above will achieve Alan & Nikki’s goal of having $1 million in equity, they have the ability to go beyond two investment properties as they build up their savings, with assistance of the Property Twins team.
What’s Next for Alan & Nikki?
Property Twins team will continue monitoring the value of Alan & Nikki’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.
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