Sydneysiders Roy and Rowena understood early on that their superannuation wasn’t going to be enough to see them through retirement and they decided to do something about it.
But the first property that Rowena bought not only lost her money when she sold it, it was also negatively geared for the seven years she owned it – meaning more money drained out of her back pocket.
But Roy, 32, and Rowena, 35, didn’t give up – even if they were somewhat scarred by their experience.
Thinking outside the box
Instead of making another property investment mistake, the couple decided to seek out experts to help them with their goal of creating alternative income streams.
Using the team at Binvested, they were soon learning how they could turn their savings of $60,000 into a sizeable portfolio – all within one year.
“I like to have a vision of a three- to five-year plan and that involves a vision of how that can possibly stack up. Daniel provided some very sound reasons for why building granny flats and renovating to sell was not really a great strategy for us,” Rowena says.
The Parramatta-based couple were soon considering property recommendations in locations they probably previously would not have.
They purchased their first property on the NSW Central Coast in early 2015, with $30,000 in savings.
That property was a two-bedroom unit purchased at $255,000 with a market value of $275,000. They renovated the house for $7,000 in order to increase the rent and market value.
At the same time, they purchased a two-bedroom unit in Western Sydney for $289,000, which had a market value of $309,000 at the time. Three months after initial purchase it was revalued at $330,000 and they were able to withdraw $69,864 in equity to fund their next purchase.
Roy and Rowena bought four properties within the first six months and were soon the recipients of some significant equity.
“We’ve achieved about $100,000 in equity growth in one year and we have been able to leverage that equity into purchasing more properties,” the couple says.
A rentvesting life
Roy and Rowena decided a number of years ago that they didn’t want to live an ordinary life that resulted in them working for someone else for the majority of their lives.
Rowena’s experience working in the superannuation sector also meant that she knew better than most that retirement could be an unattractive financial struggle.
“We didn’t really want to be working for the rest of our lives. We wanted to have money work for us instead of us working for money,” the couple says.
“We looked at a number of options and have always been interested in exploring different income streams, so we looked at shares and options and those kinds of things and came to the conclusion that property was the most stable market and had the least inherent risk of all these options.”
The couple’s property goals saw them buy five properties within two years with one more in development – but they don’t live in any of them.
For them, rentvesting makes financial and lifestyle sense, even when some of their properties are similar to the one that they are renting in Parramatta.
“Rentvesting makes sense. It lets us get ahead financially and create options in life. It’s cheaper to rent, than to pay a mortgage plus other property ownership costs,” they say.
“At the moment we are living in a rental unit in Parramatta, even though we own similar units ourselves. However, we rent these out to others and the rental income we receive covers our property expenses and gives us extra cash on the side.
“We will buy our own home eventually, but it will be our dream home, and it will be on our own terms.”
Peter MastroianniPeter Mastroianni is a property finance expert and the co-founder of Loans Only, specialising in investment lending. He is the author of two top-selling real estate books and host of The Rentvesting Podcast. Peter is passionate about supporting the next generation of investors rethink the traditional home ownership model. He does this by championing the ‘Rentvesting’ strategy through www.rentvesting.com.au.
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