The Story Behind the Numbers

Hi. Ben Kingsley here. Managing director of Empower Wealth. We’re looking at the September real life investor Story Behind the Numbers. I’m delighted to be sharing with you several real live investor stories of some of the great outcomes that we believe we’re going to get for our clients moving forward.

Now, top line numbers for our Property Wealth Planning team — they had a very, very busy September, delivering 47 new plans. That’s new clients coming to us, who we’re going to take on their property investment journey. That’s in addition to reviewing, and servicing a lot of our existing clients; in terms of helping them buy their second, third, and fourth property, especially in this great market.

When others are fearful, it’s a great time to see great opportunity in this market.

In terms of our Buyers Agency side of our business, we did 25 purchases, in a lot of competition too — there was actually 14 properties that we actually missed out on. So the markets that we’re buying in at the moment are all around the country, and we’re buying in some areas under pretty fierce competition. We bought $14.5 million worth of property for our clients as they go on their journey. Let’s get into the details of just a handful of clients who our advisors helped over their month. Let’s share their stories….

 

Early 40s Couple with 2 Kids – Time Poor and Career Change

Our first story comes from Stuart Bartram, who’s one of our Qualified Property investment Advisors up in our Sydney office. I like this story for a couple of reasons. When we talk about doing strategies for clients, we often talk about the four levers to build wealth, which is income, expenditure, time, and target. The two that we’re about to talk about here are mostly around income and expenditure. How are we going to play those out? Let me explain, I’ll set the scene.

Our couple are in their early 40s. They have significant equity. Lots and lots of equity in their family home. They have no investment properties to speak of. They currently have two children with plans for one more, living in the greater Sydney metropolitan area. One of them is an Executive Chef. The challenge with that is, they’re never home. They’re working very hard, seven days a week, to maintain obviously a very high end restaurant. Also, the challenge you have with this is finding the time to see your family. Once they sat down and had a chat with Stuart, it was really important that they understand they couldn’t live like this any longer. The particular chef was burning himself out, working really, really hard. So we couldn’t leave it any further in terms of taking action to build a portfolio out. His partner was a teacher and she had stable income. But the challenge we had was, we were going from a really, really good income — an executive chef in a high end restaurant working so many hours came with a nice paycheck—  and this would become a new income and a new change of career.

A change in income is always challenging because effectively we go from high income down to what we would call an average income, until they build their skillsets up and move through that, as well as juggling, having the third child. This was very much a story around when do we do this, what’s the right decision and how this impacts the cash flow. Ultimately, it was also a story about getting back your time.

One thing in life, is that Money buys you time. It doesn’t buy you happiness, but it buys you time.

What I love about this story of Stuart was able to deliver is we focused in on those cash flows. Okay. We really looked at getting that timing right. We had to work with a good loan to value ratio, but we also needed to make sure that we were preparing for these lower incomes, as the gentleman was about to expand on his career and build this out over time. So, what have we got? No existing investment properties. So we buy the first investment property this year. We get really active, really quickly, before we have to pause, because of the change of job career and we also need to pause because we’ve got the third child coming along. We transition, get confident around that working environment, and when we do that, we then execute on that second property in 2025. You can see the importance that we don’t want to wait too long, because we’re going to miss the bus. If we go now, when we can afford to go now, we’ve got a good cash reserve, we’ve got a very, very low mortgage, and an incredible amount of equity there. We get that first property under way.

Understand we have a nice safe buffer, execute on the third child. Execute on making sure we’ve got that job security, and building up our skills, so we can get a higher income. Those two properties. Now, because we’ve done that and we’re in our early 40s, it also means that our retirement date is pushed out to around 65. Income, expenditure, time and target. We understand that. This couple were happy with that. The target that they’re also looking for is $120,000 dollars in passive income.

For me, the transition for these clients is really about getting back your time, and making sure you make every move the right move. It’s pretty clear that they’d never invested before. They went and sought professional advice to line up their ducks in a row, and make sure they execute sensibly, and if the job career doesn’t work out, he can always go back to being a chef, potentially on a higher income. It is about getting that balance right. We’re not going to execute on that second property because we don’t want to put too much pressure on too early, until we know we’ve got that income coming through. So, great job Stu! Excellent story there. I really look forward to seeing how this progresses for these two clients of ours.

 

Early 30s Couple with 2 Young Kids – The Best Time to Buy

The next story comes from Paul Thompson who’s a Qualified Property Investment Advisor out of our Melbourne office. This one is another interesting story. Understanding the motivations behind this, is really what’s probably triggered this couple to take action. Without getting into too much personal detail, let’s just say that one of individuals had seen their parents not necessarily do the right thing in terms of putting enough money aside for their future, for retirement, and they’ve got themselves into a bit of a financial pickle.

Now, based on that, they didn’t want to see themselves in that same situation. That is a fairly good motivator for them. We’re talking here about a couple in their late 20s, early 30s, already with two young children, living in Victoria. Professional careers. And I love this story. I love it whenever I get teachers, working in the education industry, because I know the great work that they do and they don’t get rewarded and paid well enough for the great work that they do. Also, the attention to detail, the engineers. They love the numbers as well!

In terms of the obstacle, for me, they’re in a good position. They wanted to make sure that they could maximise the current position that we’re in. They had a really nice principle place of residence, already one investment property in the local market that they were living in. Not expanding themselves and challenging themselves in terms of the best buying opportunities maybe there. They wanted to check in on that story. They did that. On target.

They also were focusing on the school fees for the kids. They wanted to make sure with whatever that they did, they were going to be in a position to have those school fees available, and retire to have plenty of family time. Good story.

What was our outcome? They worked with multiple teams inside of our business, so they’ve done the mortgages, they’ve also done the planning and their using the BA’s, the Buyers Agents to get the purchase done. Three properties is what we’re going to add to their existing one in the portfolio. They’ve got the classic target of $2,000 dollars a week. They want to retire at the age of 60. I think the motivation piece for me has been around seeing what can happen, when it’s not well managed, when you don’t get your affairs in order, and don’t think of the future. They’re not going to end up like one of the parents may have ended up. They’ve now got confidence. They’ve been able to validate themselves on that right path.

I think that’s an important message here — they’re motivated. This couple are goals-driven. Nothing better than having those goals in front of them. They like to work to achieve their goal. For me that’s the perfect recipe. When I see people who are motivated by goals, written plans and they want to go after those goals, I am super confident that this couple are going to be able to achieve those goals. Probably, all going well, sooner than anticipated. I can see this couple as being people who like to exceed their own expectations. Congratulations to them. Good work for Paul in terms of designing this plan for them. I can see that being a great outcome for them over the journey of their property story.

Late 20s couple – Currently Rentvesting

The next story I’m going to share with you, has been told to me by Joel Burton, who’s also one of our Qualified Property Investment Advisors here in our Melbourne office. This is a story about big rocks in the jar. Currently, if I set the scene for you, this couple are in their light 20s. One of them’s in the medical field and the one’s in the education and counseling area. Great people doing great things for humanity and society. Always love those stories. No kids at the moment. We plan to have a couple of children. They’re rent-vesting, in terms of some of, the work that this doctor does, takes him into regional Victoria, and also some work here in Melbourne as well.

The big rock in the jar for them was about getting a new family home.

They wanted to make sure that they could live a little bit closer to the amenities and lifestyle drivers that were important for them. That was one of the big rocks in the jar. They also wanted to make sure that they could get that balance right, between wealth creation as well as also making sure that they’re enjoying their life along that way. The best tip I can give for that is start early. If you start early, you’re going to be able to get to that end story. Obviously, the other most important thing in their lives are going to be their two children.

What triggered them to come and have a chat with us, was really around the sort of, getting some direction and that indecision. Lots of choices. I think Joel mentioned to me that, one of the takeaways that’s given them the confidence to move forward with their plan was to run multiple scenarios, and look at different stories and different possibilities before settling on the final decision around how we’re going to move forward. What that looks like, is we’re going to purchase a principle place of residence within the next 12 months. We get that big rock in the jar, and then we can start delivering in terms of property strategy around that. That’s a good news story.

We’re going to factor in the kids they’re planning for. Once we buy the principle place of residence, we’re going to put the two children in first, so that’s obviously going to impact cash flow. Then, after that, we’re going to be positioned to buy a couple more investment properties. Rentvesting, means that they’ve already got an investment property, but they’ve moved out of that to live somewhere else closer where they can get the better lifestyle amenity. Add two more investment properties to bring the total portfolio up to three solid properties, and combine that with a super in their earning potential, especially one as a doctor, means that they’re going to target $150,000 dollars as their passive income, by the age of 60 years, retirement.

I think there’s a good news story here in terms of getting the balance right. There’s going to be a bit of part-time work, while raising the children, while the main bread winner goes off and does their doctor’s work. They explored a couple of different options around scenarios. They worked out what their minimum requirements were, what their non-negotiables were, in terms of what was important to them. They set those priorities up. And then, finally they got clarity around their potential. They took that opportunity to move forward based on a really clear plan that sets out what they need to do at each of those milestone steps. Great result there for Joel and his clients. They now takeaway the confidence and some validation around the right pathway to travel. Well done.

 

Early 30s with 2 young kids —a $600,000 property with 5.5% growth and 5% yield

Now, let’s take a look at one of our Buyers Agents story. This one we’re going to focus in on one of Christa’s clients. Christa Batt works out of our Melbourne office, is one of our Buyers Agents down here. How’s this for a story. A couple are in their early 30s, they’ve got two young children under five. One works in administration and the other one is a, in the “old terms” we used to call them ambulance officers, but now they’re called paramedics. Again, doing some great work in the community, to look after us all. That’s the story we’ve got. Now, they’re located in Brisbane. They’ve also done some work with Paul, in our Property Wealth Planning Team as well. They’ve done the plan. This was their second purchase in their plan.

Where did we go shopping? Well, we went investing in South Australia. We’re all steps all around the Australian east coast and moving across to South Australia for this purchase. What was the brief?

The brief was a balanced asset — 5.5% growth, 5% yield.

We found ourselves a great little villa, in the area of Mitchell Park in South Australia. How much did we buy this asset for? We paid $402,000 dollars for this great little villa, three bedroom, two bathroom, two car spots, and just a little, bit of tidy up in the paint. There were some smells in the property. The best way to get rid of some of the smells in the property is a quick bit of paint and some furnishing around the windows, to take those smells out of the property.

Now, we had a rental price guide at the time of $360. Spending that little bit of money on painting and also doing those window furnishings, cheap cosmetic renovations you can consider, meant that we’ve got $400 a week. It was a great! We had a choice of applicants. It was obviously well presented. That meant that there was a buildup of demand for tenancy in that area. We got it really, really well. What happened here? Four years earlier, a similar property sold for $414,000. We’ve been able to pick this property up four years later for $402,000 dollars in the same market. Two on the block. There was also a Body Corporate Issue, when it came to the common driveway. There were repairs that needed to be done to this driveway once Christa had inspected the property.

What were we able to do? Though Christa’s incredible negotiating skills, we actually got the vendor to pay for those repairs. Our client didn’t have to pay for them. They were negotiated as part of the deal. Here we have a time poor couple, with two young kids, who want to be borderless investors, who come to us, get a property plan. We buy them their first property. They’re second property is part of their plan, and we’ve identify a growth market, where demand is exceeding supply at the moment in. We expect immediate growth in that area over the course of the next two to three years. That’s a good news story. Time poor, but no skills to also being able to pull this off and getting all of those negotiations done around the common driveway. That’s the only thing that the body corporate holds. We’ve got a win/win outcome. Our clients, outcome for them, the transformation with them, they realized they didn’t have the skillset to do this, they couldn’t, they didn’t have the time to go and buy into state. They referred back to a professional Buyer’s Agent to get the job done!

Congratulations to them. We love this couple. We actually met them in our Sydney office. They came down for a bit of a holiday into Sydney. If they’re watching this, you know who they are. Great to obviously get to meet them. Yeah. A really good couple. It’s another good example of where we’re helping clients outside of both Melbourne and Sydney and looking after their needs and servicing in our Melbourne or Sydney offices. Congratulations guys. We know that, that one’s been a great little pickup for you.

Early 30s with one young child – a $550,000 property with 6.5% growth and 4% yield

Matt’s story is the next story I’m going to tell. Matt Skehan is another one of our Buyers Agents out of our Melbourne office. His Story Behind The Numbers, relates to a couple who are in their early 30s, they’re based down in Geelong. They timed their owner-occupied purchase really well down in Geelong, where they’ve seen some incredible growth over the course of the last couple of years. What has that allowed them to do? It’s released a lot of equity for them. They have a young child, as well.

What happens when you start to have family, you start to think about all the important things. You start to get a little bit more serious about life. You want to start to think like a grown up does. What they do is think, How am I going to provide for my family over the future? They decided that property investment was going to be their thing. Matt had a brief of around $550,000 dollars. We were looking for growth targets around that 6.5% with a yield story of around 4%.

Where did we go shopping? We went shopping in this particular case, up in Brisbane, in a suburb called Aspley. Now, this is a very interesting story. I always love some of the unique sort of back stories of the vendors. A good Buyers Agent is always going to get a lot of the back story, the motivator of the vendor, why are they selling, what’s the story.

Here’s how this story plays out. The vendor is 96 years old. Her husband, who had passed, actually built this double story brick home himself. Beautifully built home, pristinely-presented property, but in original condition. We are talking about the bathrooms being sort of 70s bathrooms, kitchens, but spotless. Absolutely beautifully presented property, which when it came to market, considering the meeting in Aspley. Sitting in around $600,000 dollars, we bought this property under competition. How much competition are you thinking? Well, here it was…

There were 18 offers on this property. 18 offers!

We were able to secure it for our client with a view that we were going to do some little touch ups on the property. We set aside a budget of between, $15,000 – $17,000 dollars. We’re going to take up the old carpets because underneath are beautiful hardwood floors. We’re going to polish those floors up. We’re going to give a spruce up. We’re not going to change the bathroom. Everything was so well maintained, that instead of ripping up the old bathroom, we’re going to put that special coat of paint on it — that just freshens it up. It’s going to make the bathroom look nice, clean and white. It doesn’t necessarily mean ripping out the old tiles, the old bathtub.

Everything is in good working order. Couple of new taps, and we’re away. That is a really, really good story. How did we win the property? It’s always down to great negotiating and best terms. We think we got in there because we had a cash offer. No clauses. We’d lined up our lending through Sarah King in our Mortgage Broking team. That allowed us to strike when other people might have said, subject to finance, or some other conditions around that. That property settles this month. We’re doing those renovation works, and we’ll get a tenant into that property. That property, given when it was built, will be standing well beyond my years, and will allow the couple to be able to get some great tenants into that property. Beautiful, good sized block of land, a fantastic property sitting on that.

Check it out in the photos below. You can see what I mean about original condition. Just look at how spotless it was! Just an incredible property. Well done Matt! Great buy. I’m sure those clients will be thrilled to put that property into their property portfolio.

 

 

 

 

 

 

 

There’s obviously a lot more activity that’s happening. We bought 25 properties this month. We did 47 plans. There’s a lot more buying that’s going to go on in marketplaces when other people are fearful. If this is of interest to you, and you want to learn more about the services that we offer here, please feel free. We do an initial free consultation with no obligation at all. You can learn about our services and how we can help you get on the property ladder, but most importantly make sure that you retire wealthier tomorrow.

Thanks for watching.