How a Firefighter Created a Healthy New Income Stream from Property

‘You don’t have to be wealthy to invest…but you do have to invest
to be wealthy’ goes the wise old saying.

And it’s true!

You don’t have to start out with hundreds of thousands of dollars
in the bank.

And you don’t need to earn a huge income in order to sustain your
property investments.

In fact, for many people their property portfolio puts money in
their pocket each week…them enjoy lifestyle freedom NOW…

While their portfolio grows in wealth.

This is precisely the case for Priority Access Investor Club
member Matt, a firefighter from the South of Sydney.

He now lives in his home 100% mortgage free, and enjoys positive
cash flow of tens of thousands of dollars per year…

And it’s all thanks to a series of well-researched property
investments that have helped him and his family to get ahead.

Created a retirement income through property

Matt and his wife have been investing for some time now, having
first bought property off the plan in the 1990s.

“We sold that first property five or six years ago and almost
doubled our money, so we made a good profit, but looking back in
hindsight, we should have held onto it for longer,” Matt confides.

“We bought another unit off the plan in Brisbane 10 years ago, when
Brisbane was just starting to really get a lot of apartments.

It’s in Bowen Hills so it’s pretty close to the city and we’ve had
a modest gain on that. My intention is to continue to hold that
one, as we have about $130,000 equity in it, so it’s doing nicely.”

Matt also bought his own home several years ago, and he has been
focused on paying down the mortgage as quickly as possible.

As well as using profits from property deals to invest in further
real estate, he’s funneled as much spare cash as possible into his
on home mortgage.

This has allowed him to fast-track his mortgage pay down to the
point where today, his home is 100% unencumbered and mortgage-free.

“We’ve paid off our own house, so we’re pretty lucky that way. My
wife was a police officer, but she’s left the police force as we
were able to pay everything off,” he says.

Next on the agenda is a series of positive cash flow investments
that will generate tens of thousands of dollars each year.

“We did have a fair bit of cash sitting in a high-interest savings
account, but we’re now offsetting that cash against the loan on a
new investment property,” Matt adds.

It’s just one more smart move on Matt’s behalf, which is allowing
him to invest in further properties and solidify his financial
position as he marches towards early retirement.

The lower-risk way to build wealth with NRAS 

Recently, Matt and his wife bought a house and granny flat in
Roseberry, a suburb of Palmerston, just south of Darwin.

A four-bedroom house with a granny flat out the back, the property
boasts plenty of potential and a significant dual-income stream.

“Because it’s a pretty family-oriented area, with lots of schools,
the university nearby, lots of childcare and a shopping centre, our
intention is to hold that property for a fair period of time,” Matt
explains.

“There’s not much land in that area at the moment so it should have
good growth over the long term, and it will produce positive cash
flow in the realm of $18,000 to $20,000 per year.”

Part of the reason why Matt is able to access these supercharged
returns is the NRAS (National Rental Affordability Scheme), which
provides for around $10,000 in tax benefits and incentives per year.

“On a four bedroom house you can expect rent of $650 to $800 per
week of the open market. I’m being realistic and pricing it at $650
a week,” Matt explains.

“Meanwhile, the granny flat has been estimated to rent at $270 per
week. With the 20% discount you need to provide to qualify for
NRAS, it goes down to $216 a week. That means I will still earn
around $850 per week, between the two homes – and that’s
conservative, and it’s before I get the NRAS incentive.”

The property manager is also giving me advice that they can rent
the entire granny flat and house as one rental, and the market rent
would be $950. So with the 20% discount it comes down to $760, so
it’s may be worthwhile for Matt to do that.

As a result, Matt anticipates that his bank balance will enjoy
positive cash flow profits of between $350 and $400 per week.

“We expect to get strong capital growth going forward too, as these
is less land supply, which should put us in a good position for
growth,” he says.

“We paid $592,500 for the house and land in total, and now a
four-bedroom house in the suburb with similar features is asking
about $650,000, so we’ve built some equity in already.”

Buying in high-growth locations fueled by the LNG boom

Some people warn against investing in properties that are
advertised with a ‘rental guarantee’ in place, but Matt is not
dissuaded – especially when the guarantee lasts for half a decade.

“I’m just about to settle on a property in Chinchilla in
Queensland, with a rental guarantee in place for five years,” he
says.

Based on the amount of investment in infrastructure going into the
Surat Basin in the coming years, Matt is convinced that his
investment in a pair of duplexes in the energy powerhouse- will pay
rich dividends.

“I know Gladstone is what everyone is talking about because that’s
where the LNG port is, but they have to do all the drilling and get
all the gas from the Surat Basin – and they have to keep supplying
gas for the next 30 years to Gladstone, because the contracts are
already in place,” he says.

“Because Chinchilla is centrally located to all the projects around
there, and because OH&S regulations mean that staff have to be
living within 45 minutes drive of work, Chinchilla is perfectly
positioned.”

Describing the area as being the “hub” of the energy boom, Matt
says he has been able to negotiate instant equity on the property’s
purchase price, as well as locking in the rental guarantee.

“When this duplex opportunity became available I secured a price of
$695,000 for both, when one is valued at $385,000 alone, so there’s
almost $70,000 equity built in straight away,” he says.

“All of my research is showing that they believe the population in
that Western Downs region is going to expand over the next 10
years, and they’re going to expand the rail link.

They haven’t really explored it to its full extend due to the
infrastructure shortage, but once they get the railway completed,
even more opportunities will open up.

There’s the coal seam gas, the underground gas conversion, plus the
coal and the power stations, so there is a lot going on.”

The long-term lease lends the deal “security”, he adds, which makes
it an investment he can “set and forget” for the time being.

“People warn you to be careful of a rental guarantee as they say
it’s built into the price, but I know I can rent those duplexes for
at least $600 a week anyway,” he says.

“So if the developer wasn’t offering the rental guarantee, I’d be
fine. I’m going to put a fixed interest rate on my loan and set and
forget it, and it should be positively cash flowed to around
$15,000 to $20,000 per year.”

Matt also has a high cashflow property in the Pilbara region of W.A
-another great area for scooping up ultra-high yields.

The net result of this Matt’s savvy investing is he should be in a
position to retire by this time next year with about $90,000 in
passive income.  Not that he wants to. He loves being a fireman and
giving back to the community.  But it’s great to have options.

Next Best Step? 

If you want to replace your working income…with income from
property… then join the Priority Access Investors Club
because we’ll help you find scorching hot positive cashflow deals that
put money in your pocket each week.

You’ll join high net worth investors – along with those who are well
on their way- in this exclusive group of savvy, informed investors.

Find out more here

Warmly,

John