Michael and Sarah
Michael and Sarah’s goal was to go from 7 investment properties to 15 within 5 years
Background.
I met Michael and his wife Sarah in 2004. Their first goal had been to purchase 1 investment property per year for 5 years.
At the time I met them they had smashed this first goal out of the park, reaching 7 properties within 4 years.
They now had a new goal of going from 7 investment properties to 15 within a further 5 years, and they needed my help to achieve it.
The problem was they were struggling to find a way to fund this next goal.
Plan.
Michael and Sarah had an impressive investment portfolio, but in order to build this portfolio they had borrowed consistently from various lenders, and so they found themselves hitting what is known as a funding wall.
This is the maximum amount you can afford to borrow, given your incomes from work and the rents from investment properties. Although their maximum was a high amount (due to their portfolio/assets), they had eventually reached it.
So, we had to sit down and come up with a plan and strategise where to find the money and lenders that would suit.
To their advantage, they owned their personal home with only a small mortgage, so they were able to get massive lines of credit against it.
The couple also had a small business on the side of their normal day jobs, so we were able to use this income and work with lenders that did ‘low doc’ or ‘no doc’ loans.
For this latest property purchase we secured Michael and Sarah a low doc loan for 80% of the purchase price. We then used the balance of the line of credit secured against their home to cover the 20% deposit plus costs such as stamp duty and solicitor fees.
Outcome.
Michael and Sarah’s portfolio of investment properties, which is currently 11 properties and counting, is now valued at around $5 million with loans (liabilities) of around $2 million, meaning their net assets are $3 million.
