The Finance Bible

#89 Inspiring Client Success Stories

• Zeke Guenthroth and Oscar Don

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Can you imagine transforming your financial future with just one strategic investment? Tune in to this episode of the Finance Firewall podcast to discover how a self-employed couple turned their low superannuation balances and mounting medical expenses into a solid retirement plan. By working alongside financial advisors and mortgage brokers, they invested in a brand new unit in Queensland, which not only generated substantial rental income but also significantly boosted their retirement prospects. Their inspiring journey showcases the power of smart property investments in overcoming financial hurdles and securing a comfortable future.

We also unveil various success stories that highlight the importance of continuous financial evaluation and strategic planning. From a couple earning $40,000 a year in rent with a modest loan to another couple who shifted from a projected $60,000 retirement income to a more secure financial future, these narratives demonstrate the transformative impact of personalised financial advice. Through the lens of a client who leveraged their Self-Managed Super Fund (SMSF), we illustrate how strategic property acquisitions can dramatically improve financial standing. Learn how professional guidance turned underperforming assets into a portfolio that elevated annual income from $60,000 to $115,000 in just three years. Don't miss these compelling tales of financial growth and stability.

For any enquiries or to connect with Oscar, Zeke, or their company, Asset Road, listeners can visit the following links:

The advice shared on The Finance Bible is general in nature and does not consider your individual circumstances. The Finance Bible exists purely for educational / entertainment purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.

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Speaker 1:

Welcome back to another episode of the Finance Firewall podcast Zeke here, and your co-host Oscar.

Speaker 2:

But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice, of course, if that is what you are seeking reach out.

Speaker 1:

We'll get you in touch with the correct professionals to get the job done properly, Sit back, relax and enjoy the show.

Speaker 2:

Let's get into it.

Speaker 1:

Today we're just going to be talking about a couple of things and really just journeys that clients have gone on. We're not going to be very specific in terms of we will have to, for privacy reasons, make up some names, maybe have a bit of storytelling involved or something like that. Storytelling yes, nothing better. But we're going to just talk about a couple of different clients that have real life examples. They've come on board, they've done certain things just to show for people out there who are looking at investing in property and they've got that fear of is it the wrong time, is it too late? I should have done it last year, I should have done it the year before, just to show that you can always do it. All of these clients had those same fears. Everyone has them, it's completely normal.

Speaker 1:

But these are real-life Asset Road clients that have basically come on board and we're going to take you on a little journey Exactly right which is their journey, as I said, with some made-up details in terms of names and whatnot, but all the numbers and everything we'll try to keep as accurate as possible.

Speaker 3:

We call them success stories because at the end of the day, they are stories of success. Wow, and I'll touch on the first story that actually I think we're going to do two or three, pending the time. But the first couple who came to us were self-employed. They had issues of wanting to travel the world, look after their kids, put them into good schools in the area and also be able to pay off their home, but not feel the pinch. There's a few different factors of what they're actually ultimately wanting to achieve. In today's day and age, especially if you're living in Sydney, for example, or Melbourne, it's extremely hard in terms of cost of living basically ever in Australia, but those two in particular. So this couple came to us with slightly below average superannuation balances for their age Due to being self-employed.

Speaker 3:

Yeah, so when you're self-employed, sometimes you in the past you might not have been contributing to your super. So in this circumstance, that's what happened they hadn't been contributing to your super. So in this circumstance, that's what happened they hadn't been contributing to their super with their contributions.

Speaker 1:

And just to add on to that too, there was an immediate health issue with one of the children in this family where superannuation was actually access to pay for medical treatment. So they were really disadvantaged from the beginning in terms of where their projection was and where they were heading, and they were very, very uncomfortable and nervous about that due to the fact that they could recognize it, their balances weren't where they needed to be. They weren't paying themselves as much as they should for superannuation. They had accessed it for medical reasons, to basically keep their family together, and they were just not in a great situation.

Speaker 3:

And they approached us with. When we speak to clients, we generally want to get an idea of all right, let's say you retire tomorrow, what income would you be comfortable living off per year? And the number they gave us was around the $75,000 mark per year that they'd want to hit in retirement and after some calculations they were currently on track for $30,000 per year with what they were doing right now, if nothing changed.

Speaker 1:

Yeah, Now to calculate that. It's important to mention that we partner up with financial planners and we actually get that advice. We do the calculations professionally. So by no means is anything that we're going to talk about today financial advice or the calculations we're doing, real-life calculations that we're doing on the spot. These are things that have been done in the past with financial planners and we're just relaying that information Exactly right Love, a good old disclaimer. It's got to be done.

Speaker 3:

So the difference, the shortfall that they were facing, is around $45,000, which is a lot of money at the end of the day.

Speaker 1:

Per year, that's it.

Speaker 3:

Per year in retirement $45,000 is the difference from where they are to where they want to go. As property investment consultants is to figure out, how can we help this couple bridge that gap the safest and smartest way possible. Through the help of financial advisors and mortgage brokers, and with a couple months of research and analysis and going back and forth with the couple in different property options, we revised our strategy and came to a conclusion of purchasing a brand new unit up in Queensland for around $550,000 in their super fund.

Speaker 1:

Important to note on that, generally speaking, we don't often dabble in units, too often, in fact.

Speaker 3:

this is probably the only one.

Speaker 1:

We've actually done. That we've done probably ever. I think we might have done one more in a specific circumstance, but that was also yeah, we never.

Speaker 3:

Yeah, it was just a rare opportunity.

Speaker 1:

Yeah, this property was very, very underpriced. It was only 550 grand. It was in a great location in Southport and it was going to absolutely rent its head off. The strata fees were very low and it was everything about. It made sense.

Speaker 3:

It was actually better than what they could have done elsewhere at that point in time yeah, well, a year and a half later they already made 100 grand on the property and the rental income was coming at 770 per week.

Speaker 1:

So paying for itself and more yeah, that definitely worked out very well for them. They made more than 25%, basically within the next 24 months, on that property Unrealized capital gains disclaimer again but it's now renting for close to $800 a week. They bought it for $550,000. They did a 30% deposit on the property. Their repayments are extremely low considering the rent that they're getting and after re-meeting with the financial planners to go ahead and do some further calculations only 24 months later. By the way, this is now probably three years later, so we can update the numbers more again if we like, but not not really necessary in this example. They're now on track for an income exceeding eighty two thousand dollars per year. So just from that, one investment they've.

Speaker 3:

The difference between where they were and where they are now is around 50 grand 51. There'll be more now as well, when we revise the numbers, but it just shows one smart investment if it's personally or in your self-managed self-managed super fund can add a lot of money per year to your retirement outcome yeah, it's very important to talk about the actual scenario here in terms of they were in their 40s when they came to us, so they had a bit of time to let it work.

Speaker 1:

Their debt would be fully repaid by the time they retire. They did a high deposit on the property, meaning the repayments were low. The rent is absolutely outrageous in this example. And again, they've got 20-something years until they retire from the point of investment. So time's on their side in this case yeah, assuming the rent keeps going up. Time's on their side in this case yeah, assuming the rent keeps going up. The numbers are only going to get better. Assuming the property grows in value more, the numbers are only going to get better. But if we circle back to the very beginning of the story, they approached us with a retirement income goal of $75,000 per year. Within 24 months, they were on track for $81,298 per year From one investment, from one smart decision in their superannuation, which you don't feel the crunch of, you're not making the repayments out of your personal pocket. Your super contribution is going into the fund and then paying the mortgage, along with the rent coming into the fund.

Speaker 3:

We do have an episode strictly on why superannuation is your best friend. But one of the good things about this client is one investment. They're on track for $81,000, as Zeke mentioned, but because they're so young, they may be able to go again in two years, three years, four years, and then continue every five years to continue to add to their investment portfolio. So, yes, it might have $81,000 income per year now, but once they're actually retired, that $81,000 might look like $150,000, $200,000, depending on how far they continue to keep going on the investment journey. So it's a never-ending journey.

Speaker 1:

And if they're getting $40,000 a year, give or take in rent $770,000 a week and their loan initially on that was about $370,000 or $380,000, maybe within a 10K variance their repayments on that over the next 25-year period, which is how long the loan term was, aren't what the rent is. The rent is well and truly covering that, plus they're getting the capital gains, so win-win for that client. That is actually on the Asset Road website as well. If you go on there you scroll down to the bottom covering that, plus they're getting the capital gains, so win-win for that client. Uh, that is actually on the asset road website as well.

Speaker 1:

If you go on there, you scroll all the way down on the right, you click results and, I think, their client well, they're called self-employed couple.

Speaker 3:

Um, they, they don't actually have a number or a fake name and there's a full write-up as well on the actual scenario, as you can sit back in your in your bed.

Speaker 1:

Have a read of that yeah, the next one that we're going to talk about, um, and these are just a couple of examples, mind you. Like there's ample to go from. We've got um, we, we actually have. I love spreadsheets. We have a uh spreadsheet of every single client that we've ever done and we ongoing update every six months with rp data values to look at where their property is worth at the moment, and we get updated rent from the property managers. We throw it in there. We get updated loan amounts from the lender and all the statistics are on our Instagram as well, that is true.

Speaker 3:

So every few months we crunch the numbers, pop them up to the followers, to our clients. So, yeah, all the statistics like just, for example, in clients, self-managed super funds, in the last six month timeframe the average capital growth per client was sitting there at $93,000. When was that Per client at the start?

Speaker 1:

of last month, the start of last month. So in the six months prior to that, unrealized capital gains on our average SMSF client 93K Per client. That is I just have to keep throwing that in there?

Speaker 3:

Yes, that is-. For example, if you came to us six months ago and bought a property in a self-managed super fund Possible it was possible that you might have fallen in this category, that's highly possible.

Speaker 1:

The next client we're going to talk about, we call them Client X on our website. Again, can't put names on there and there's only so many letters in the alphabet or numbers that you want to use.

Speaker 3:

So Client X is what they are.

Speaker 1:

Now this is going back near the very beginning. Actually Good client, One of our favorites actually and they approached us basically looking to reduce their tax. So this was a complete different scenario. But while they were doing that, we obviously looked into a bit of everything and we're not tax advisors but sometimes we can provide a little bit of insight here and there. They had about 28 years remaining on their owner-occupier debt, which was absolutely crippling. Mind you, they have children in private schools. They had the higher owner-occupier debt. It was terrible, it was really bad.

Speaker 1:

Their retirement was about 17 years away and they wanted to retire on about 110 grand per year annually. So it's a couple living in sydney, they've got children, they had the debt. So 110 grand per year is not out of the ordinary. It's actually slightly lower than average with what we see. However, we found out with the work of our financial planners that they were only on track for about $60,000 per year, so they were falling $50,000 short per year. Common sense, $50,000 per year short that's not very friendly. So anyone out there that's on a wage of $50,000 per year, imagine just not receiving that. Or if you're on $80,000, imagine receiving $30,000. It's not ideal If you're on 300 and they're receiving 250, and then you go to the tax implications too. But additionally, they also had a problem in their fund, their super fund. They were getting absolutely destroyed. Good high-tree super funds yeah, they had a couple of different funds between the two of them. The fees were quite absurd. Their insurances were quite absurd.

Speaker 3:

I'll jump on the fees for a quick second. So, with industry super funds versus self-managed super funds. Generally, when the fees get expensive in your industry funds is when you have quite a substantial balance, generally speaking over like $180,000, $200,000. The reason being is industry super funds have a percentage-based fee, so the higher your balance grows, the higher your fee will be. And in this case that is what was happening to the client. They over the threshold of generally when the fees get a bit too expensive and it was chewing into his balance. So that's why, with the financial advisors, to address these concerns, proposed setting up a self-managed super fund and with that a $535,000 townhouse within that fund.

Speaker 1:

And what I like about this strategy is this isn't one that went perfect. There was like errors or not errors, but there was um underperformance in this, so it's actually a really good example, because not all the time does everything go perfect. Um, they had a little bit of up, a little bit of down, and we're still working with them today to correct that and help them make sure they get to where they're going. But yeah, we got a 535 grand townhouse within their SMSF and we also got a roughly 750K dual occupancy for them, built in Brisbane or greater Brisbane. These investments basically were to serve particular purposes, along with a refinance and that kind of thing. But the point of the SMSF one was that we were hoping to get some growth in that area and a decent rental income and basically help them fix and correct the issue of having the higher fees come out and build back up to where they should have been at that point in time through the use of leverage. The dual occupancy that we built brand new was extremely high on depreciation, which was going to help the tax burden, and with the way that we refinanced and restructured everything, the um the tax side of things was really beneficial for them, but down the track.

Speaker 1:

What happened was? But down the track. What happened was their SMSF property didn't really perform how we anticipated. It did all right, it covered itself mostly, but it didn't get anywhere near where we wanted to. So we actually ended up removing that property from their portfolio and getting into something else which is performing much better and actually getting an additional one in there as well. So they actually have two properties in their smsf now. One is a townhouse in uh sort of near southport, just in that area, and this was a couple years ago now. So we're not saying go and invest where where these clients have, because you want to do your own research and everything changes a little bit light.

Speaker 1:

Yeah, they ended up buying another smsf property worth about 580 000 585 000 and that's now worth about 800 000 and it's now renting for about 800 per week. And they got rid of the former smsf property, got a new one. Oh, that one's a bit harder to explain, but that's not far enough along that we can really talk about that at the moment, so we'll leave that out of this just for simplicity. And then they also ended up buying another personal property too. So their jewel that they bought and built is now worth roughly 1 million. It's now renting for approximately $1,000 per week nearly $1,100. And the SMSF property that they purchased the second one that is is now worth about $840,000, renting for roughly $800 per week.

Speaker 1:

And the other property they just built in their personal name as well, and the other property they just built in their personal name as well, which was extremely um. This one was like a major tax beneficial property, so it was a high cost um house. It was basically about 710 grand give or take four bedroom house. It's now worth close to a million as well, and that one rents for a bit less. It's only renting about 820 per week. But with the way that the three properties are working together, the SMSF one is paying itself well and truly. The debt on that is roughly 330 grand, if I'm not mistaken. Currently it's worth, as I said, about 880,000 and it's renting for about 800 a week, so that well and truly covers itself. They're in their mid-40s as well, so that will well and truly pay itself off before retirement.

Speaker 1:

The jewel is absurd. For retirement, the jewel is absurd. The way that repays itself doesn't even need to be mentioned. Plus, they're getting all the tax depreciation on it. They haven't had any periods of vacancy with that, but it's all been very well looked after. Then the standalone house that they bought personally has gone up, yeah, 300k give or take in the last 24 months, 12 months in between that timeframe, probably about 18 or 19 to be precise. But that just covers itself in terms of the rent versus repayments. But they get a major tax benefit with that one. They're now at a point where and again, we'll have to rerun numbers on this in the next six-month period that we do. But when we last checked they were on track for over $115,000, which is nearly double what they were on track for Within a three-year period, we were able to make that change.

Speaker 3:

It just shows the point of if you're in a position when you feel like you're not getting a hand and you don't think you can in terms of investing, it doesn't hurt to have a conversation with professionals like us financial planners, even mortgage brokers because a client like this, for example, fast forward. They've already got three or four properties coming through yeah well, this will when they didn't originally have any. So it can literally just transform like that Originally on 60 grand, now I'm track for 115 per year, and it's only the start yeah, this will be there to add to the portfolio.

Speaker 1:

It'll be their fifth investment property. They obviously sold that one that wasn't performing how he wanted to, but the other three well and truly paid up for that yeah, but you just never know.

Speaker 3:

It's always good to look at your options because if you've got a steady income, you've got some balance in your super. There's always an option out there and with new products, et cetera, these days, generally speaking, especially with your super, you don't really have to have as much in your super to invest than you used to one or two, three years ago. There's all these different products which are available.

Speaker 1:

That client. Actually I completely skipped over this part. So the jewel was obviously to help with a positive income from it weekly, that is on the interest of their loan. They were able to put money from that to their personal mortgage to help and prop them up with cash so they weren't feeling the squeeze of that mortgage anymore. Fast forward to three years later, give or take, they've actually moved houses now, got a new house, built a new house like their dream family home, and they don't have to deal with the crippling debt of it because their property is doing so well. So they're just a win-win.

Speaker 3:

And down the track as well, when they decide, oh, maybe one day, when they pass away, they've got assets for their kids. Yeah, which a lot of parents, families. That's one of the main things. They want to leave some legacy, some assets, some money behind for their children. And this client, for example, that's all set Like. If they stop right now, they're in a good position. Yeah, they're going to be so happy. Oh, I'm really happy. And that was just from a 30 minute introductory call it all started so it can happen to you.

Speaker 1:

It can happen to anyone and they had in the past as well they actually, um were talking to another company about it and that they didn't have a very good experience with that other company. Um, and that's actually how they came to us. They they were like, hey look, we've been talking to this other company, we're not entirely happy with them, like we're not, I don't know they're from. From their perspective, they're kind of like, look, we don't know if they're hopeless, we don't know if they're good, but like we're not happy, like can you help? So we did, but yeah, they still got 15 years nearly till they plan on retiring.

Speaker 1:

So imagine the changes that could be made in the next 15 years, literally, especially with the way the property market's going at the moment. But to wrap it up, firstly, all of those stories, both of them, and each property within them, the locations, all of that kind of thing, this is stuff we've done in the past. So do not, I repeat, so do not, I repeat, do not go out there and go oh, they bought a townhouse. Oh, no, they bought a unit, yeah, in southport for 550 grand and it went up 300 grand in 18 months, or whatever the time frame was, and go. I can do the exact same thing, because it's not the market we're in today. It probably won't be the same find that we found and you probably end up losing money, so do not listen to this and do that Financial circumstances are completely different.

Speaker 3:

Your age is different, your income is different, your super balance is different and when you want to retire that tire, mine is different. So just because these clients bought in the areas we've talked about, they could have a completely different scenario and trajectory than yourselves. So, yeah, do not just copy it and think, all right, well, they've done it, I'm going to do it now it's all good.

Speaker 1:

Yeah, and that is the specific reason. We're not going to disclose where that client has just bought their fifth investment, their fourth that they're currently holding, because we don't want you guys to go out there and go. Well, if they're buying here, I can buy here and make millions. It doesn't work like that. It's just not the case. But the second thing that I want to talk about is that if you're out there, you're thinking about investing in property and the interest rates are scaring you, or you know, uncle Bob has invested in property before and he had a horror story or whatever the reason.

Speaker 1:

Sure, property might not be for you, it might not be the right time for you, but book a 30-minute call with a professional. Whether it's us, someone else, I don't care, it doesn't matter. Book in, have a chat with someone to see if there is anything you can be doing, because at the end of the day, it's not going to hurt. Everyone wastes 30 minutes. I mean, my bloody screen time on my phone is outrageous. I can save 30 minutes a day. I'm sure everyone can. So get out there, do some research, chat to people, connect with professionals Better your future, hopefully. Yeah, better your future and, yeah, I hope this podcast actually helps you guys to do that. And, yeah, I hope this podcast actually helps you guys to do that. Yeah, we'll catch you all next time. Ciao, ciao, ciao. We hope you enjoyed the episode. As always, you know exactly what to do.

Speaker 2:

Hit that follow button, subscribe whatever platform you listen to this podcast on. Also share it to friends, family, co-workers, whoever you think may benefit from it. But unfortunately it's the end and we'll see you next week.

People on this episode

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Oscar Don

Co-host
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Zeke Guenthroth

Co-host