Originally from Canada, HI-RES students Sandra and Richard have been real estate investors for decades. With their combined skills and experience (HR/finance and construction), they were well positioned for success.
But an investment decision made after the global financial crisis had left them struggling to recover financially.
They were among many to invest in US property, purchasing 18 houses with a business partner.
“We were very excited in the beginning,” Sandra says. “But it just went from bad to worse.”
The money they invested in the US was tied up for 10 years. When they got their money back and were free to move on, they were keen to buy property in Australia. But they realised they couldn’t afford to make another mistake.
“We needed to get educated,” Sandra says. And that’s when they came across my High Income Real Estate (HI-RES) Course.
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The former living room and fining room is now one of 4 micro-apartments.
A new concept for two Canadians
Sandra and Richard weren’t familiar with HI-RES property investing, or micro-apartments, despite being seasoned real estate investors. And despite Richard’s background as a master builder, with a number of owner-builder projects under his belt.
“Quite a few people told us about it, but for us it was really strange – there’s nothing like that where we’re from,” Sandra says.
Then they went to one of Ian Ugarte’s free Positive Cash Flow Live seminars.
“It was an eye opener,” Sandra says. Hearing Ian Ugarte speak, they learned about the bigger picture of housing affordability in Australia, and the HI-RES philosophy.
“It was a strategy that would help other people and help us reach our financial goals as well. It was like a win-win and it gave us a purpose for our investing,” Sandra says.
The garage is now micro-apartment # 2. A wall built in front of the garage door can be removed at a later date to convert the property back to single family living.
Taking the next steps
That first, free seminar spurred them on to do the full HI-RES course, and then refresher high Intensity Training Weekend in 2020.
As part of that training they received information and spreadsheets which gave Richard and Sandra confidence that they were doing the right thing. “There’s a lot of information out there, but we wouldn’t have known how to do the numbers if it wasn’t for the HI-RES program,” Sandra says.
The couple then engaged INVIDA (formerly known as ‘Do It For You’) to find a suitable property to be bought through their self-managed super fund (SMSF). It would be the first in a series of property investments based around positive cashflow.
“We were really keen and motivated,” Sandra says. “We wanted to do it all straightaway.”
SCROLL DOWN FOR THE FULL PROJECT FINANCIALS.
Upstairs, micro-apartment 3 benefits from a separate bedroom with study nook. All micro-apartments have separate climate control with fans and split system air-conditioners.
An additional upstairs bedroom is now the cozy sitting room and kitchen for micro-apartment 3.
One of the two upstairs bathrooms now connects to micro-apartment 3, creating a self-contained 1 bedroom layout.
Then COVID struck
As the pandemic picked up pace globally, Richard and Sandra started questioning whether they were doing the right thing.
Were they paying too much for the house? Should they even be buying a house? Would they find tenants? Would four people want to share their house?
“When fear gets into you, you can find excuses not to do things,” Sandra says. “We decided not to think about it – to just do it.”
“I remember at the training Ian was saying, you have to get uncomfortable sometimes to get results; so we said, no, we’re not going to let COVID stop us. We thought, if we don’t do it now we’ll never do it; and we just trusted the process,” she says.
To this day, they believe they paid a very good price for their first HI-RES property. And as Richard says, if they had waited any longer, it would have delayed them getting into the second house, and the third. They really needed to start that process.
A four-week renovation – and voila!
Richard and Sandra could have done it themselves, but they saw INVIDA as an investment.
“We both work full time, we’re very busy. If we managed the project ourselves, it would have taken an extra 6 months to do it because we could only have committed so many hours per week,” Richard says.
“At the end of the day we would have lost rental income for four to six months.”
From planning to finished renovation took about 3 months, with the renovation itself only four weeks
“There was no wasted time, we were quite impressed. We’ve built houses ourselves, we know how difficult it is to have all the different trades lined up and not having delays,” Sandra says.
The INVIDA team also kept strictly to the agreed budget. When a certifier issue arose, Ian Ugarte called Sandra and Richard personally to help them through the options and give advice; he also responded to questions on Facebook within 24 hours.
At the top of the stairs a new entry door creates the adjoining rooms that are now micro-apartment 4.
The former large walk-in robe in the master bedroom was the ideal space to create a kitchenette for micro-apartment 4.
A clean up and styling was all that was needed for the upstairs bathroom that now connects to micro-apartment 4.
The proof is in the rent
The INVIDA team created four micro-apartments in the four-bedroom house by adding two additional bathrooms and four kitchenettes.
The property earns $1250 a week rent, which is $820/week more than the house earned before the conversion. It’s also $50/week higher than the original forecast in their feasibility analysis.
“That was another good surprise,” Richard says. At the moment they’re leaving that cash in the bank to save for their next project, also to be purchased in their SMSF.
PURCHASE PRICE: $430,000
RENOVATION COST: $70,500 + Styling
RENTAL RETURN WEEKLY
$430 per week
$1250 per week
$820 per week uplift
$22,360 per year gross
$65,000 per year gross
$42,640 per year uplift
Building a sound financial future
Richard and Sandra have now lived in Australia for 11 years. They’ve been very conscious of the need to prepare themselves financially for retirement.
“We started planning for retirement very late; we’ve got a lot of catching up to do,” Sandra says.
From their base in South East Queensland, Richard and Sandra are now optimistic about the future. Their HI-RES strategy has helped turn things around.
“Our superannuation was literally going downhill during COVID,” Sandra says. “This project has changed things for us. We have finally stopped the losses in our super.”
One of their main motivations as real estate investors is to allow Richard to retire from his physical job in construction. In seven years they’d like to be completely reliant on their investment properties for income. Ideally Richard would divide his time between looking after their properties, and doing some investment projects on the side.
“No more tools for Richard. And for me, I’m already working part-time, but I’d like to be even more part-time,” Sandra says.
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Residents now share a large communal kitchen area to gather in if they choose to, and a communal laundry space.
Helping out their community
It suits Richard and Sandra – having a goal of profit, but having a secondary purpose behind their investing – helping with housing affordability.
“I’m still shocked at how expensive rent is in Australia,” Sandra says. “It’s about double what people pay in Canada.”
Now they can offer their tenants a small home at an affordable price. “They don’t have to mow the grass, or pay electricity. Everything is included, so they’ve just got one number they have to pay,” Sandra says. And hopefully their tenants can save some money as well, to buy something one day.
Not to mention, that it makes things less complicated for co-tenants who might otherwise be liable for each other when they sign a lease. The HI-RES strategy protects everyone because each tenant has their own lease agreement.
“Everyone wins with this kind of project,” Sandra says.
“We’d done some real estate courses in the past,” Richard adds. “But they were sometimes too good to be true. Ian and his team are honest and down to earth. As committed real estate investors, we’re very glad we discovered this strategy.”