The Aggressive Story

The next story comes from Rachel Cole, who’s one of our Qualified Property Invested Advisors out of our Sydney office.

Now, I’ve “themed” this story simply as aggressive. We have an early 30s couple, currently no kids and very high income earners. So, they are absolutely smoking it — getting on with earning a very, very high income. Now they came to us with five existing properties before they wanted to build a Plan with us. Now the realization when we reviewed those properties is that three of those properties weren’t so great. These existing properties were, what we would call, “under-performing assets” — Off the Plan properties.

With this in mind, some difficult decisions need to be made. In this case, this couple are willing to just “wait and see” with these particular properties because of the income they’re currently generating. But, big rocks in the jar: we’re talking about a $2 million family home, which they’re going to buy and then potentially rent out while they spend some time overseas as part of their careers. Obviously, these clients are very career focused — they are super time-poor and, unfortunately, were misled with some of the investments in the past. Unfortunately, what you can find is that spruikers like to get into these channels of high income earners, by saying things like, “We can reduce your tax!” and “We’ll get you these properties. You won’t have to worry about them.” And when you’re earning such a high income, the level of tax deductions that they can get are somewhat enticing.

That said, if you don’t get the capital growth, or if the value doesn’t come in at purchase price, then ultimately losing money to save a little bit of tax is not very smart at all.

Ultimately, we want our properties to be outperforming properties. We don’t want them to be underperforming properties. So with this particular couple, it was very much a focus of “Go hard, retire early.” And we’re in a position where we can plan out their owner-occupied property, looking at the downturn in the Sydney market at the moment, to see where there’s an opportunity to strike on that property.And that’s the Plan! Then there’s two more investment properties after that to be purchased within the next seven years.  The overall result of that is we are looking at a retirement date of 2038, age 50. This obviously highlights what can happen when you have very high incomes, which is a means to accelerate your outcome and passive income. A very impressive passive income of a $150, 000 dollars a year. This is aggressive, but action without knowledge and getting misled with the advice they’ve received in the past, which is evident with their current portfolio, has meant that we really want to bed-down quality assets and get that big rock in the jar, in terms of that dream home, as quickly as possible.

For me, this is a story of focus, direction and goal-setting. They’re going to do that now. They’re going to listen to Rachel, in terms of how they execute, and they’re going to go and shop to find those outperforming properties. And I have every confidence in this couple being able to build out their story and retire as early as they’d hoped to — with some right, professional advice this time around.