Client Case Study

Purpose

Our clients were just starting out and didn’t want to compromise on their lifestyle and wanted to build equity over the long term. They knew that with more accumulated equity, they would have more options in the future including the ability to buy their family home in their most desired location.

Situation

Our Discovery Session revealed that Lauren and Dan were a newly married couple, who had been saving up a deposit for several years and they were excited by the idea of buying their first home with a nice backyard and room to expand as a family. Little did they know their plans were just out of reach because they could only afford a small apartment in their desired location. They were also planning for Lauren to take time off work in a few years to start a family. We pointed out that if they waited to buy a property after Lauren took time off work, their borrowing capacity would be substantially lower, and their plans of home ownership would be dashed. They knew that if they wanted to get ahead financially, they couldn’t wait any longer to take the plunge.

Strategy

As part of our investment process, we sat down with our clients in a Strategy Session and showed them an alternative to buying a home located an hour’s drive from the suburb they wanted to live in. This one would delay their gratification for a bit longer but would eventually allow them to purchase the home of their dreams in the area that they loved. We ran the numbers on a ‘Rentvesting’ strategy that would allow them to purchase an investment property in a location they could afford, while they rented a home in their most desired location. We showed them how they could capture capital growth over the next few years by choosing the right property in the right location.

Solution

We presented a Traditional House and Land Property Solution for $420,000. The plan was to achieve their targeted increase in price, and then either refinance or sell the investment property (after paying any applicable capital gains tax) and use this equity towards the deposit on the home of their dreams. All this could be achieved while renting a house in the area that they wanted to eventually purchase in, without having to move far away from friends and family.

Outcome

Fast-forward five years and Lauren and Dan sold their investment property for $690,000 and have used their equity uplift towards buying their family home in the area that they loved. They are thrilled that they had a support network close by while starting their family. Our most recent Annual Review has revealed they are now planning for Lauren to head back to work part-time while their kids stay with their grandparents during the week to cut down on childcare fees. Their plan is to refinance against the equity uplift in their family home to buy another investment property, they plan to use this property to reduce their mortgage.