Client Portfolio | Perth, WA
First time investor couple from Sydney supercharges their Self-Managed-Superannuation Fund (SMSF) with successful property purchase in Perth. Focusing on capital growth and cash flow with lifestyle location, 10 mins from local beaches, major employment hubs, quality schools and amenities.
Property Snapshot
This property is a freestanding house with 3 bedrooms and 2 bathroom on a generous, 577m2 block.
Location Snapshot
Capital city location with a strong and diverse economy that offers affordability and lifestyle.
Strategy Overview
The following strategies applied to the purchase: High Cash Flow, Buy & Hold, SMSF, Low Risk.
Investment Numbers
Purchase price in 2024: $650,000
Estimated value in 2024: $650,000
Weekly rent: $600
Cash flow: $-7,765/year
Client Profile
Our client is a professional couple from Sydney, both working in corporate roles. They own their primary place of residence (PPOR) and have two teenage kids in high school. With $250,000 in superannuation savings, they were first-time investors seeking to enhance their financial future.
The Challenge
As first-time investors, our client engaged with start2invest to boost their retirement savings through property investing. They realised that relying solely on their standard super contribution was insufficient for securing a comfortable retirement. With this in mind, they sought to explore opportunities for greater financial security and growth.
The Strategy
Leveraging their SMSF balance of $250,000, our client purchased a $650,000 investment property in Perth. This strategic move more than doubled their market exposure and potential for equity growth. By using leverage, the clients were able to amplify their investment power. Here’s why a leveraged property investment can offer higher growth than a non-leveraged investment in a standard industry fund:
Increased Investment Size: Leveraging allows investors to control a larger asset with a smaller initial investment. In this case, our client was able to invest in a $650,000 property with only $250,000 in SMSF savings, significantly increasing their market exposure.
Amplified Returns: When property values appreciate, the returns are based on the total property value rather than just the initial investment. For instance, a 10% increase in a $650,000 property equates to a $65,000 gain, which is substantially higher than what would be earned on a non-leveraged $250,000 investment.
Equity Growth: Over time, as the property value increases and the loan is paid down, equity in the property grows, further enhancing the investment’s return potential.
By more than doubling their market exposure through leverage, the clients positioned themselves for higher potential returns, all while diversifying their investment portfolio.
Key Considerations
For our client, risk mitigation was paramount. They understood the importance of thorough research to identify the right location. They also identified the key risks including lack of growth, selecting the wrong property type that tenants might avoid, low cash flow impacting affordability, and the potential of paying too much.
Start2invest played a critical role in helping our client mitigate these risks by:
Conducting detailed market research to identify high-demand locations.
Analyzing property types and amenities that attract reliable tenants.
Assessing cash flow projections to ensure affordability and sustainability.
Advising on property valuation to avoid overpaying and ensure value for money.
By addressing these considerations, start2invest helped our client make informed decisions and significantly reduce potential investment risks.
Why Perth?
Our client chose Perth for its strong economy, robust public and private investment pipeline, and a shortage of available property, which supported a favorable growth forecast. High construction costs also limited new supply, positioning the existing property market for significant potential gains.
Conclusion
Through careful planning and strategic investment, our client successfully leveraged their superannuation savings to secure a property investment that promises long-term financial growth. They secured a quality home in a desirable Perth location, close to major employment hubs and lifestyle amenities, and just 10 minutes from local beaches. The property is now managed by a professional property manager, and a quality tenant was secured within two weeks after settlement. By partnering with start2invest, they took decisive action to ensure a comfortable retirement and a prosperous future.
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