I wanted to tell you about a story about one of my clients. The typical Mum and Dad investors – a working couple who wanted to get ahead and did not know where to start. Both husband and wife have been working hard all their lives and have just about paid off their current house. They are in their mid 40’s, have excellent job stability making a moderate income and their kids have left home.
They came to Blue Wave and asked…. “Chris we want to start to invest but don’t know where to start, can you help us?” I said “Sure, let’s sit down and work out your goals and what you are trying to achieve and from there we will devise a plan to get you there – how does that sound?” “Chris that would be great.” Was their response.
So their plans were; to build some assets to provide cash flow into their retirement. They wanted to travel more and have planned to have an overseas trip every year and enjoy life a little more. There was also a 5-year plan to sell their house and open a bed and breakfast / cabins, to again allow for some more cash flow but slow down and be able to leave their jobs and move to a new area where they will have a small business that they own outright. Sounded sweet – so we had the goals and now we needed the plan.
I told them a little about what I do and what I specialise in. My passion is really advanced strategy property deals, such as duplexes, dual occupancies, splitter blocks and high renting properties. I also like to team up with a financial planner to see if the clients can look at a self-managed super fund property. (I don’t give the advice around this, the financial planners provide this and then I help with sourcing the right property).
So instead of the Mum and Dad investors just settling for buying a unit or a standard house, (where traditionally you look for the growth areas, buy the property and receive a 5% yield and then have to sit on their hands and wait for the capital growth), we showed them a way to be able to own 2 properties and buy them and construct them at wholesale prices. This way we have been able to access the instant equity / profit at the end of the build once the strata titling has happened. Now this is not rocket science, it’s just being smart about where you decide to do your investing. This was done through the construction of a duplex and the rental yield was up at nearly 7%, far greater than the traditional 5% on a house & land or unit. Some of the current yields in Sydney are only showing 3%, which does not allow for the investors to keep growing their portfolio.
The clients had existing equity in their owner occupied property to be able to release for the deposit and then they signed contracts for the purchase – no additional savings or money needed!
So on completion of the duplex and the strata titling, the bank valuer valued the property an extra $120k more than what the client paid to construct them – not bad for just restructuring their finance and 8 months from start to finish. Now instead of selling the property, they have released the equity and are going again, purchasing another property. Show me another way where you can earn $120k within 8 months – it is about a 75% return on their initial deposit, again a great advance strategy deal.
They are now well on to their way to a second property, advanced strategy again and are likely to make a similar uplift on that one too. The properties are providing about $6,00 per annum positive cash flow as well as the equity uplift.
So we are well on the way to meeting their goals to retire early, and buy their dream bed and breakfast in 5 years where we will have equity in the properties to potentially tap or sell down a portion to buy their dream. With the properties being so positively geared this allows them to save the surplus and book their next overseas trip.
This is not a fabricated story – this is one of my clients, there are many more similar, some of my clients are onto their 3rd duplex build as well as having a property being paid off in their Self Managed Super Fund. So if your looking to leave the rate race and secure your future and live life having some fun then it’s time to call Blue Wave Property Strategies and book your Free 30 minute Goal setting session.
It all starts from here – financial freedom – it’s not that hard – let me help you ride the wave to wealth!!
Cheers Chris 0434 499 455 firstname.lastname@example.org