Before their IAN UGARTE experience, Melbourne couple Janet and Roger were not confident property investors. “We knew next to nothing about property investing to be honest!” Janet says. But now, with a positive cash flow investment property in Brisbane earning them $3000 clear a month, they plan to do it again as soon as they can.
A teacher and school chaplain, Janet says she was “scrolling mindlessly on Facebook” when she came across an ad for a weekend information session with Ian Ugarte. That was in 2018. She attended the session with her husband Roger, who works as a civil engineer in local government. They learned about fire risks, safety, insurance – all the things you need to tick off to do HI-RES co-living conversions legally and safely.
For both of them, the idea of converting large, under-utilised spaces in homes into micro-apartments made a lot of sense.
The big question: where to buy an investment property?
That initial training set Janet and Roger on a mission to find the right property. They researched best cities and best suburbs for investors; they did additional training and pored over property reports.
“In the end we thought: we’ll be researching forever and never actually buy anything, because we don’t know what we’re doing,” Janet says. They were very aware of how many things can go wrong if you pick the wrong property, and how much time and expertise goes into choosing the right property for a HI-RES strategy.
So they decided to put their trust in the Do It For You (DIFY) team, now part of Ian Ugarte’s INVIDA, to source a property for them. By 2020 they had Queensland in their sights as a location where they could achieve some capital growth.
The INVIDA team made the choice easy by identifying suitable properties and providing all of the financial information for each on an easy-to-read feasibility sheet – the “feaso”. The whole process was done remotely.
SCROLL DOWN to find out how the INVIDA process worked and just how much positive cash flow they are now raking in.
Leading off the entryway, the former living room with its large picture windows became Micro-apartment 1.
Getting the property, doing the conversion
Even with the help of INVIDA, the pair had a few false starts when properties were snapped up before their eyes. “The competition was savage,” Roger says. But in November 2020 they settled on a three-bedroom/two-bathroom home in a northern suburb of Brisbane. It was bought through a trust and company structure that the couple set up for the purpose.
The plan was to convert the house into five micro-apartments. Within two months of settlement, they had plans approved, a certifier appointed on INVIDA’s recommendation, and their tenants had moved out. They were ready to roll.
“The renovation was completed in around a month, which is quite remarkable,” says Janet. “The INVIDA team made it all so easy; we just paid the invoices!”
The former garage and laundry area made way for micro-apartment 2, complete with sitting area, kitchenette and ensuite bathroom.
Kicking off their positive cash flow investment property
Another useful recommendation from INVIDA was the Queensland-based styling team of multiple-occupancy specialists, who helped Janet and Roger furnish the apartments – again remotely, and then came on board as their property managers. It was a completely seamless process conducted via phone and email, according to Janet.
Again, the property owners were happy to leave it to the experts. The styling team and INVIDA worked together on some outstanding internet and other small issues, attending at the property as necessary, and the couple were thrilled with the service. As Roger says, “Time is money. It can be a false economy to do it yourself, especially if you’re remote.”
In the most recent quarter, they have earned $1350 per week gross. “We have been making around $3000 a month of positive cashflow (clear) on the property,” Janet says.
“That’s taking out costs associated with interest, insurance, bills, rates, maintenance and agent fees. It’s a considerably better return than if we had cash sitting in the bank,” she says.
SCROLL DOWN TO SEE THE FULL FINANCIAL BREAKDOWN FOR THEIR PROJECT
In the former dining room, a hall was created with an entrance into micro-apartment 3. The glass paneled door allows light from the hall and adjacent kitchen into the room.
The couple has also had at least $100,000 of capital gain on the property since it was purchased in November 2020. That puts them in a good position to do it all again with another property, a process they’ve already started with a lender. When they retire, they’ll live on income from their positive cash flow investment properties, supplemented by their superannuation.
PURCHASE PRICE: $478,000
RENOVATION COST: $116,000 inc furnishings
RENTAL RETURN WEEKLY
$425 per week
$1350 per week
$925 per week uplift
$22,100 per year gross
$70,000 per year gross
$47,900 per year uplift
Micro-apartment # 4 is positioned in one of the former bedrooms.
Why embark on a high income real estate (HI-RES) Co-living investment?
Despite the fact that at time of writing, Janet and Roger still hadn’t seen the property in person because of Melbourne’s COVID lockdowns (!), they are clear on the benefits of their investment.
- They’re contributing to a social good, providing affordable, decent housing. Ethical investing is important to them.
- The community-building nature of these apartments is another plus. “Loneliness is considered the biggest health risk in the country,” Janet emphasises. “It is a cause of mental and physical ill-health, and we hope our engagement with HI-RES will make a tangible difference to the quality of life of all our tenants.”
- HI-RES addresses their sustainability concerns around the environmental impact from urban sprawl encroaching on agricultural spaces and natural habitat, as Australia continues to build large houses with few people in them.
- With their positive cashflow investment property, the couple is setting themselves up to achieve long-term capital gain and wealth-building.
- They’ve been able to leverage on property loans at a time of low interest rates, with plenty of margin built in should interest rates rise.
- With their superannuation skewed toward shares, they’ve been able to spread their investment and risk profile through property.
- And finally, the hope is that with positive cashflow properties providing income, they’ll be able to retire earlier, comfortably, if they choose to do so, as. And still build heritage wealth for their family and for philanthropic causes.
GET STARTED WITH INVIDA TODAY. Book your 1-on-1 Strategy Call HERE.
Janet has a word of caution for anybody buying through a trust and a company as they have. “You do need to budget for a few extra expenses – set-up fees, legal advice, and accountancy advice. However, the asset protection involved in purchasing through a trust gives peace of mind.”
You also need to factor in the time lag between setting up your company, then getting your documents together and sorting our your banking package and loans. “Another thing that’s been helpful about being connected to the IAN UGARTE community, is they’ve been able to recommend accountants and legal partners that we’ve been happy with,” Janet says.
And if Australia’s housing unaffordability problem is suddenly solved?
Janet believes that in the extremely unlikely event that housing affordability is no longer an issue in Australia, they will be able to reverse engineer their properties and turn them back into regular rentals.
According to Janet, “It’s an upside of the way these conversions are done. They’re not putting up brick walls, so if you wanted to you could pull it all out again. It gives you that flexibility.” It’s a win-win.
Find out more about my High Income Real Estate Course (HI-RES) HERE.