And even though the properties were initially forecast to be negatively geared, since rents have increased the properties are now cashflow neutral. They pay for themselves.
I recently sat down with these investors again to review their plan and see how the investments were progressing.
They both said: “Let’s buy another one”. After all, they still had a wealth gap to fill.
For this property they wanted to invest in Hamilton.
This is not an area we tend to recommend at Opes (at the time of writing), because the rents haven’t kept up with house prices, so the rental yields are low.
Based on the couple purchasing a $700,000 property – likely a 2-bedroom apartment – the couple would close their wealth gap to 96% of their $150k passive income goal.
However, we also considered investing in a an addition property in Auckland, priced at $1 million to further close the gap.
These 2 extra properties would require Steph and Bayley to contribute $300 per week towards the negatively geared cashflow. That’s because they weren’t using a cash deposit, and were borrowing all of the money from the bank.
Together, these two properties are expected to close their wealth gap, and hit 129% of their passive income goal.
This gives the couple more options.
Based on the projections, Steph can retire 2 years earlier and still meet 100% of their $150K a year passive income target. That’s a bit more time to spend on the beach in Greece.